Scotsman - 16 February 2012

Understandably much of the focus on Rangers entering administration has been on what the future holds for the players, but what of the large backroom staff at Ibrox?

Unlike the players, whose contracts are likely to be time-limited, the backroom staff will be on permanent contracts of employment and therefore are protected at least to some degree by government employment legislation, ie TUPE (the Transfer of Undertakings Protection of Employment Regulations 2006).

TUPE kicks in as soon as there is any possibility of a business changing hands – in this case because an administrator has been appointed.

Rangers staff would then transfer to the new owner.

Administration is not analogous to bankruptcy and therefore, by and large, employees should get to keep their jobs in the meantime.

It is, however, open to the administrators to seek to change employment terms to make the business more likely to attract a buyer.

This is permitted under the legislation where “the sole or principal reason for it is the transfer itself or a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce” and “it is designed to safeguard employment opportunities by ensuring the survival of the business”.

In other words, the administrators are entitled to look at the remuneration packages and other terms of any of the employees with a view to reducing them and reducing the financial burden.

This means that employees such as grounds and office staff should be protected from dismissal, although it would still be possible for the administrators to make staff redundant if they were able to show there was an economic, technical or organisational reason for this.

Where their jobs could be seriously under threat is if, as many are beginning to fear, Rangers is eventually declared insolvent – as happened to Airdrieonians. In that scenario, however, the employees would be entitled to a statutory redundancy payment.

Therefore, the ordinary men and women behind the scenes at Ibrox could be in a better position than the players. Unlike the players, however, they might find securing another job a lot more difficult.

Dawn Robertson is head of employment at Murray Beith Murray

Although the benefits of trusts have been diminished by the general tightening of tax exemptions by various Chancellors over the past decade, experts believe they still have a role to play in personal financial planning.

For this reason trusts will form the core of this year’s spring seminar series on Asset Protection, to be held by Murray Beith Murray. Guest speakers will include Scotsman writer Kirsty McLuckie, who will introduce the idea of using a trust to minimise tax on residential property assets. Protecting family and other small business assets will be addressed by John Hume from Springfords while Mark Christie of Carbon will concentrate on the role of trusts in protecting the death benefit in pension assets.

Peter Shand, partner at Murray Beith Murray, who is providing the legal input on each seminar, said: “These seminars are intended to take a fresh look at asset protection for individuals. With relatively simple tax planning it is possible to come up with some very workable solutions for dealing with larger assets that clients have – including their pensions, property and the family business.”

The seminars will be held in Edinburgh on 22 February and 14 and 28 March.

If you are interested in attending this seminar please contact Gabrielle Coyle on +44 (0)131 220 8842 or email seminars@murraybeith.co.uk

Confused about how much time off workers are entitled to over Christmas? Here, the Murray Beith Employment team run through the basics:

o In the UK, a worker’s (this includes employee’s) holiday entitlement is governed by the Working Time Regulation 1998;

o Each year a worker is entitled to 5.6 weeks’ holiday. This is equivalent to 28 days for someone working full time (5 days’ a week);

o This entitlement includes public and bank holidays;

o In Scotland the Bank holidays are:
New Year's Day;
2 January;
Good Friday;
The first Monday in May;
The first Monday in August;
St Andrews Day (30 November);
Christmas Day;
Boxing Day; and
The last Monday in May.

o In 2012 there will be an additional bank holiday, on 5 June, to mark the Queen's diamond jubilee. The late May bank holiday will be moved to 4 June;

o Scotland, public holidays also include some additional locally declared holidays;

o There is no statutory right to time off (paid or otherwise) on any public holiday. Whether a worker can be required to work on a public holiday is a matter for the contract or, in some cases, simply the employer's managerial prerogative. In many industries or occupations (such as retail, travel or emergency services) working on public holidays is a commercial or operational necessity;

o Where employers allow (or even require) workers to take leave on public holidays, this may count against statutory leave. Despite this, many employers give paid holiday on the public holidays in addition to the statutory leave;

o You can have your holiday year starting whenever suits the business but you must tell the workers in their contracts or other agreement what the leave year is;

o Holiday for the year a worker starts working with you is calculated on a pro-rata basis and leave accrues at the rate of 1/12 of a full year's entitlement at the beginning of each month;

o In calculating accrued holiday entitlement under regulation 15A, where the amount of leave accrued includes a fraction of a day other than a half-day, this fraction should be rounded up to a half-day;

o Under the Working Time Regulations 1998, a worker can give notice if they wish to take statutory holiday. The notice must be at least twice the period of leave that they are requesting;

o An employer may refuse a worker's holiday request by serving a counter-notice. This must be given at least as many calendar days before the proposed leave is due to commence as the number of days which the employer is refusing;

o An employer may give notice ordering a worker to take statutory holiday on specified dates. Such notice must be at least twice the length of the period of leave that the worker is being ordered to take. There are no explicit requirements about the form that this notice must take;

o These notice provisions can be varied by the employment contract or other formal agreement between employer and the worker.

o A worker is entitled to be paid during statutory annual leave at a rate of a week's pay for each week of leave;

o On termination of employment, a worker is entitled to pay in lieu of unused statutory holiday from their final leave year.

And finally…

o If you have atypical workers, such as casual workers, then the holidays may operate differently in your business but remember that all workers are entitled to paid holiday.

o There have been recent changes to the law on holiday pay and periods of sickness absence or maternity pay. If you have any concerns about these, please contact the Team.

o We have used the terms worker here because the Working Time Regulations 1998 apply to workers and employees and not just employees. Any reference to worker above includes employees.

For further information please contact the Murray Beith Employment team on 0131 220 8920.

Third Force News

There has been an encouraging response to the legislation, enacted on 1 April 2011, which permitted those charities in Scotland without company status to apply to the Office of the Scottish Charity Regulator to become a “Scottish Charitable Incorporated Organisation” (SCIO).

The purpose of the legislation was to make charities, particularly small to medium sized ones, more soundly structured from a legal point of view, thus enabling them to achieve the same kind of status as charitable companies without the equivalent set-up and administrative costs that this can involve. And it obviously pressed the right buttons in many quarters, with approximately 70 unincorporated charities believed to have applied for SCIO status since the spring.

However, I am doubtful if there will be similar levels of take-up for the second part of the legislation, which becomes law on 1 January next year and permits those charities, already incorporated, to also apply for SCIO accreditation.

There are good reasons for a small- to medium-sized charity wishing to achieve SCIO status, which provides many of the safeguards of incorporation without the administrative costs. Should a basically-operated charity undergo a substantial loss of capital or earnings, or bills go unpaid, then personal liability could fall on the secretary or treasurer. Committee members could also be held personally liable for any injury or loss caused in any dealings they have with organisation’s members (or a member of the public) unless proper insurances have been put in place.

Incorporation as a SCIO provides committee members with greater protection from liability and claims from third parties against their own assets. This is the same kind of protection that those involved in the running of a limited company would expect to have and it should help to encourage people who are keen to be ‘hands on’ within charitable organisations to take up the responsibilities that go with it.

Effectively, a SCIO is a halfway house between a charity run on basic procedures and one that is incorporated and structured like a conventional company. Consequently, it seems only fair that if you introduce legislation allowing charities in the former category to move up (to a SCIO), the latter should be offered the SCIO option too.

While this ‘levels the playing field’, so to speak, I do not expect to see many charities anxious to ‘trade down’ to SCIO status in the way that their smaller counterparts have wished to ‘trade up’ since April.
By changing its status to a SCIO, a previously incorporated charity will, it is true, become responsible to only one regulatory body – OSCR, the Office of the Scottish Charity Regulator, which might make life tidier, simpler and could reduce annual administration costs.

Financial and administrative savings, however, are likely to be marginal. For example, filing accounts to Companies House once a year costs £30 annual (£15 if the accounts are filed online) which hardly seems a worthwhile reason for removing from the Companies Register. In addition, the Companies Act of 2006 greatly simplified business administration and while the current act still has 1,300 provisions, most of these do not apply to incorporated charities.

One possible motive for becoming a SCIO is that this would rid a charity of the annual challenge to meet the deadline for filing accounts to Companies House (which takes a very benign attitude to those who play by the rules but does start to bare its teeth with companies whose accounts are consistently filed late and/or in an unacceptable format). I would argue, however, that being sufficiently disciplined to meet the deadline for filing properly audited accounts each year is good for a charity – and one more reason for remaining incorporated.

Another danger is that “clients” and fundraisers might be less comfortable dealing with a charity that has changed to SCIO status, even if the latter is seen as a generally positive innovation. Until we know whether SCIOs will become universally recognised, there may still be an element of risk to image, attached to adopting that form. There is also the spectre of the loss of gravitas (which in itself may have an adverse effect on income and funding).

Every situation is different and there may, of course, be some incorporated charities which see real benefits in changing to a SCIO. On balance, however, I believe there are many more reasons for moving up to a SCIO than moving down in the opposite direction.

Peter Shand is a partner with Edinburgh-based law firm, Murray Beith Murray

Dawn Robertson, Head of Employment, writes for Moneysucks on 21 November about your rights as an employee if you are facing redundancy. moneysucks.net

Moneysucks is a website created by Fergus Muirhead, money expert for BBC Scotland, to advise and help people with money issues.

Scotsman newspaper

VLADIMIR Romanov and Heart of Midlothian FC may have taken their eyes off the legal ball if, as has been suggested in The Scotsman and elsewhere, the extended withholding of salaries beyond their due payment date is a means of surreptitiously provoking higher-paid players to find other clubs. But to what extent are professional footballers in general protected by employment law?

Footballers are employees, engaged on a contract of employment like any other hired individuals and are, therefore, given protection against unfair dismissal after 51 weeks of service (which will increase to two years from April 2012). This also includes cases of ‘constructive dismissal’ in which the actions of an employer are deemed to have given an employee no alternative but to resign.

Failure to pay a footballer – like any other employee – is, in most situations, a breach of contract, not to mention an unlawful deduction from wages. As such, the player may be able to resign and claim constructive dismissal. It’s not really in many players’ interests, though, to resign in such a way and therefore players and clubs will try to avoid matters coming to that. It may be that the club undertakes to pay the wages late and the player accepts that undertaking (expressly or by continuing to play). While the player would possibly struggle to argue that the contract was breached until such time as the “new” payment date had passed without payment, if failure to pay does continue there could also be an additional claim related to unlawful deduction of wages when these were not paid.

It is worth nothing that for footballers at the higher end of the wages spectrum, a payout for constructive (or unfair) dismissal probably provides little real compensation, as the statutory cap on this is currently £68,400.

What also differentiates footballers from conventional employees is that they probably have individual contracts in various formats which determine pay. Footballers too are part of the bonus culture.

Players (and those advising them) will also have to bear in mind that there are a host of other rules and regulations which apply to their registration and relationship with a club and which need to be considered alongside employment law. So, while in terms of employment and contract law a player may be entitled to resign and claim constructive dismissal, if he was to do without also considering the specific rules that apply here it could present problems when he tries to sign for another club.

If a player does find himself with a right to claim against his club, however, compensation could include not only recompense for unfair dismissal but also for breach of contract, being potentially the equivalent of their earnings for the unexpired period of the fixed term contract.

• Sarah Chilton is an associate in employment law with the Edinburgh-based firm of solicitors, Murray Beith Murray

Dawn Robertson, Head of Employment, writes for Moneysucks on 27 October about what to think about if you are facing redundancy. moneysucks.net

Moneysucks is a website created by Fergus Muirhead, money expert for BBC Scotland, to advise and help people with money issues.

Property pages - Scotsman newspaper

One of the most fascinating, and frustrating, features about Dragons’ Den is the stubborn attitude displayed by some contenders when it comes to the amount of equity they are prepared to give away in return for a cash injection and entrepreneurial assistance from self-made millionaires.

It goes something like this. The contender asks for a certain amount of money in return for a 10 or 15 per cent stake, often making an initial mistake of over-valuing his or her company. However, when one of the Dragons makes an offer, but insists on an equity stake of 30 or 40 per cent, it is turned down as excessive – while in homes across Britain, viewers are screaming at their television sets: “Take it! Take it!”

Unfortunately the current housing market is a bit like Dragons’ Den, with too many house or flat sellers turning down what might be described as ‘appropriate’ offers because their personal perception of the value of their homes is different from what the ‘market’ is telling them. The result is that the desired sale is further delayed, meaning that growing families continue to share increasingly cramped quarters, or an important, job-related move to another part of the country is put on hold.

This attitude is due to several reasons but one of the main ones is an over-reliance by some sellers on the Home Report. Most professionally involved in the housing market – with the exception of some chartered surveyors – never wanted these in the first place and their limitations are becoming especially apparent in the current economic climate in which both buyers and sellers find themselves.

Too often sellers are looking upon the value placed on a property within a Home Report as a figure from which to negotiate upwards – or at the very least a bottom line price, anything below which they will not contemplate. Unfortunately, the single survey in the Home Reports have been containing less and less detail – for example, most of them do not contain a proper roof examination, the condition being gauged from the ground – and as a result the price arrived at may be somewhat exaggerated.

The lack of detail leads to further surveys and it may be why properties that are sold often do so below the asking price (which is effectively a ‘fixed price’ – fewer sellers have the confidence to ask for ‘offers over’ nowadays).

The reason why so many others fail to find a buyer is due to the huge difference between wanting to sell and not having to sell. The current slow rate of transactions conceals the fact that there is a major underlying requirement for people to move house – despite everything, life goes on as before; families grow, downsize or split up, older people move into care or die, younger people take jobs in another area. But, because a culture of ‘selling first, buying later’ has emerged, there is not the usual spur (such as a looming exit date, or the prospect of paying for a bridging loan) for vendors to take a realistic view.
In this scenario, sellers often fail to distinguish the difference between the highest offer and the best offer, which are not always mutually inclusive. The highest offer is the one with the biggest price tag; but the best offer is often a combination of price and less tangible advantages – such as a superior handover date and, most important of all, the prospective buyer lacking any ‘baggage’ that may delay (and eventually scupper) the planned deal. – Missives are now taking longer to conclude while buyers confirm their funding.
In a nutshell, the best offer is always more likely to result in a sale at an acceptable price – and that, after all, is what any seller should be setting out to achieve.

And there’s a bonus. Anyone who has secured a sale by taking, say, 5 per cent off the asking price is almost certain to make up that ‘loss’, and more, in the price they come to pay for their next home. These prospective buyers become ‘gold dust’ to hopeful sellers and are in a good position to negotiate a discount.

A few buyers abuse their position and come up with what are, frankly, insulting offers and these are rightly turned down by the vendor, no matter how desperate he or she is to sell. But, with goodwill on each side, a deal acceptable to both parties is highly possible.

Rather than look at the price achieved on their sale and that paid on their next purchase, householders should concentrate on the overall net cost (if upsizing) or the net surplus (if downsizing). They may be surprised to find themselves actually end up better off, financially, than would have been the case had the transactions taken place during the ‘boom’ years.

For further information, please contact Sandy Burnett on 0131 225 1200

So, what’s all the fuss about?

Up until now, agency workers often worked under less favourable terms and conditions compared with those recruited directly by the hirer but after 1st October 2011 agency workers who have completed 12 weeks in the same role will be entitled to the same "basic working and employment conditions" to which they would have been entitled had they been directly recruited by the hirer.

If an agency worker considers they have been treated less favourably than someone recruiter directly, they may bring a claim in the employment tribunal. A tribunal can award compensation to the worker if their claim is upheld.

What do employer’s need to know?

That Agency Workers, after a 12 week qualifying period will be entitled to the same basic terms and conditions as someone recruited directly. These terms and conditions include:

o Pay
o Working time
o Night work
o Rest periods
o Annual leave

Agency Workers will, also, after no qualifying period, be entitled to the same collective facilities and amenities as someone recruited directly. These include:

o Canteen or other facilities
o Workplace crèche
o Transport services
o Staff rooms, prayers rooms, mother and baby rooms and waiting rooms
o Drinks and food machines

The Qualifying Period

Any week, during the whole or part of which an agency worker is engaged on an assignment, is counted as a calendar week when calculating whether an agency worker has completed the12 week qualifying period.

The clock will be reset if:
o The agency worker remains with the same hirer but starts a substantially different new role;
o The agency worker starts a new assignment with a new hirer;
o There is a break of more than 6 weeks between assignments with the same hirer.

The clock will be paused in the following circumstances (i.e. the qualifying period will continue to run rather than be reset after a break):
o A break for any reason which is not more than six calendar weeks;
o A break of up to 28 weeks because the agency worker is incapable of work because of sickness or injury;
o Any break for the purpose of taking leave, including annual leave, to which the agency worker is entitled;
o A break of up to 28 weeks to allow the agency worker to perform jury service;
o A break caused by a planned shutdown of the workplace by the hirer (for example, at Christmas); or
o A break caused by a strike, lock out or other industrial action at the hirer's establishment.

The clock will continue to run during the following break periods, even if the worker is not present:
o Pregnancy, childbirth or maternity and which take place either during pregnancy and for up to 26 weeks after childbirth
o The agency worker takes maternity, adoption or paternity leave.

Rights exempt from the 12 week qualifying period

As mentioned above, there are some rights to equal treatment which agency workers acquire from day one of being engaged on an assignment, effective from 1 October. A hirer must ensure that all its agency workers can access its collective facilities and amenities and that its agency workers have access to information about its job vacancies from the first day of their assignment (regulations 12 and 13).

Anti- Avoidance

Anti-avoidance provisions have also been written into the legislation to prevent employers evading the rules. If a structure of assignments develops which is intended to prevent the agency worker from acquiring equal rights, then the agency worker will still be entitled to equal treatment.

Need more help?

If you have any queries about the new regulations and how it will affect your business, including whether you need to make any changes to contracts and policies, contact one of the team at Murray Beith Employment at employment@murraybeith.co.uk

Property pages - Scotsman newspaper

Inheriting a house may expose a person to IHT so how do they pay at a time when buyers are thin on the ground? Graham Scott looks at the options.....

It is now fairly common knowledge that the rate of inheritance tax (i.e. that payable on a person’s estate at death) is 40 per cent. Rising levels of personal wealth, and a failure by government to raise the tax threshold in line with property prices, has left, or will leave, millions of ‘ordinary’ individuals exposed to a levy that, until fairly recently, was considered relevant only to the wealthy.
Financial products such as ISAs and popular people’s shares have all contributed to the increase in personal wealth, but the biggest factor of all has been the rise in residential values, even taking into account the severe downturn in the market since 2008. The biggest single asset bequeathed by most people to beneficiaries (usually though not exclusively their children) is a house, and it is the value of housing that has taken so many estates over the IHT threshold of £325,000 (see note at end.

When the housing market was booming, adult children who were left the family home on the death of their surviving parent, would normally have no difficulty selling the property, quickly and very often at a premium.

But all that has changed. Mortgages are difficult to come by, jobs are being cut and wages kept down, with the result that it is not uncommon for even mainstream properties to take many months, perhaps more than a year, to find a buyer prepared to pay a suitable price. But that won’t stop HMRC wanting its money if the perceived ‘market value’ of the property takes, or helps take, an estate over the IHT threshold
That could put those inheriting in a financial spot if, as is quite common, the deceased parent was ‘asset-rich, cash poor’, which means he or she lived in a prime property but existed on dwindling savings and an annual pension ravaged by the effects of inflation.
So what happens when the value of the late parental home is sufficiently large to make an estate liable for inheritance tax but there is little bequeathed in the form of liquid assets for those inheriting to pay the tax in the short- to-medium term?

Fortunately, HMRC takes what one might be called a relatively benign attitude towards payment of IHT due on property and land (although the tax on ‘moveable’ assets has to be paid in full by no later than six months after the date of death).

People who have not sold a property bequeathed by the time IHT is due can elect to pay the tax in equal annual instalments (plus interest, currently 3 per cent) over a period of 10 years. This is not an open ended commitment, however – the balance of tax owed must be paid in full should the property be sold at a later date. Anyone unable to afford such instalments may be able to obtain a loan secured against thye property from a bank, or they might be able to let out the property in the hope that prices will eventually recover.

Indeed, given the current level of house sales, individuals who are bequeathed a property are increasingly seeking professional advice on the various options open to them. These include weighing up the benefits of ‘riding out’ a depressed market by using the time to carry out a much-needed upgrade; going for a quick sale, albeit at a reduced price, on the basis of ‘cash now’ being preferable to cash at some undetermined future date; or, as already alluded to, taking advantage of a rental market which, at present, seems buoyant.

Although firm evidence is not available, there may also be an emotional dimension in that children are reluctant to let a house with a long-standing family association be sold to total strangers at a discount and are, therefore, prepared to hold out until they secure what would be considered an ‘appropriate’ price for it. However, when a bequeathed property comes as an unexpected ‘windfall’ (e.g.to some distant niece or nephew who barely knew their benefactor) the recipients may be more likely to quickly put the house on the market and settle for the best price available.
Finally, had mum and dad retired to the sun and the home in which they lived out their final years was located in Spain or Portugal, then a bridging loan to pay IHT from a UK bank may be more difficult to obtain, especially given the apparent massive over-supply of flats and villas on the Costas at the present time. Ironically, however, someone who inherits a property on a popular part of the Spanish coast, as opposed to Scotland, could be better off in the long run– as the former is likely to attract as much in rental in a week as the latter does in a month.

PANEL
How IHT will affect those who inherit assets from a deceased person depends on the marital status of the latter. The £325,000 threshold beyond which the tax becomes payable applies to the estate of someone who is divorced or has never married. If the deceased is a widow or widower and inherited all or much of the estate of his or her spouse, then some (or all) of that spouse’s nil rate band allowance may be available on the second death. At best, the threshold can be doubled to £650,000 (i.e. £325,000 x 2). However, a reputable lawyer would not normally cite potential savings in IHT as a reason in itself for getting married!

For further information please contact Graham Scott on 0131 225 1200.