Monthly Archives: October 2012

If hurricane Sandy came to your business?

We are always more vulnerable to the unexpected than we think. Not so long ago Croydon businesses (and others in the UK) were struggling with the after effects of riot and fire. Since then flood and landslide have upset a lot of UK businesses as we lurched from hosepipe ban and drought, to floods.
Many businesses had real trouble getting paid by their insurers after disaster struck – some of which was because they kept all their receipts and books in the premises that suffered the disaster! (Note to self — off site backups and storage are not optional.) Others simply didn’t have the kind of insurance cover they thought they had.

Hurricanes are not common in the UK, though we had the rare experience of trading through the 1987 hurricane which was centred at the top of the hill we lived on. Two weeks of power outages and phone outages taught us a lot about contingency planning, and we managed to muddle through somehow. Statistically it ought to be 100 years till the UK gets another hurricane that strong, but there is always something unexpected round the corner for business owners.

What are you staff plans for when disaster strikes? If we get snowed in, or floods take over the area, or transport strikes hit? What would happen if neither you nor your staff could reach your premises (or open them) for a fortnight? It’s a chilling thought for most of us, isn’t it?

The planning for the 2012 Olympics taught many companies that they could have people work from home, or change core hours, and still provide a service. It won’t carry you through if the whole country is off line (like the Eastern seaboard of the USA) but having a plan for what you are going to do about/with/for staff is a good place to begin.

Ask yourself:

1) Who could work from home? What equipment and arrangements would they need? Do we have them in place, or how quickly could we get them in place? Have we done a trial run?

2) What are we going to do if we can’t open our main place of business? Will staff still need to be paid if we don’t open? Do we have a plan to open somewhere else? Do our contracts allow us to designate holiday, lay offs? What are we entitled to do?

3) What if all or some of the staff can’t turn up? What if some do turn up, but very late after long and difficult journeys. Who gets paid? Who doesn’t? Can we set expectations?

4) What about parents whose children cannot go to school? Are they clear about dependants’ leave? Are you?

5) What if your business premises are not fit for use for an extended period of time? Do you have a plan to trade from somewhere else? Do you have insurance that covers you just for the cost of repairing your premises? Or do you have insurance that covers you for loss of revenue too? Check your policy — you may not have what you hope for.

6) If you have legal expenses insurers, do you have to check with them first before you can lay off staff or send them home? You may find you are not insured if you don’t get their sign-off. What happens if your insurers are not available? It’s time to check out the small print.

7) What are you going to do about health and safety? There comes a point when it is not safe to encourage people to travel to work/stay at work, etc. How are you going to judge when it is time to say enough is enough?

Many small businesses never recover from the financial losses of a disaster. Many big businesses only cope by calling on the resources of other divisions or companies within the group. Whilst disasters can be times of great camaraderie and heroism, they can also be times when businesses and jobs are swept away, never to return.

Our hearts go out to the people affected by the hurricane on the East coast of the USA. But it’s also a warning to us to be ready for the unexpected.

If you want more information on who is entitled to be paid when disaster strikes, click here

Annabel Kaye is Managing Director of Irenicon Ltd a specialist employment law consultancy

Tel: 08452 303050 Fax: 08452 303060
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com
You can follow Annabel on Twitter

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Filed under contract, employment law, flexible working, pay

Out of the frying pan into the fire?

George Osborne‘s recent announcement of plans for a new “employee-owner” contract of employment has set the cat among the pigeons.

Initial reactions varied from believing this is the introduction of dismissal at will by the back door, – a substantial erosion of employee rights and an opportunity for unscrupulous bosses to take advantage.

Any business enthusiasm might be premature.

Sweeping aside employment rights that derive from Europe is not that easy.  There has been a long-standing and fundamental rule that people cannot contract out of their employment rights, precisely to make sure that employee protections are not whittled away.

It is also far from clear that UK’s employment regulation (already the lightest in Europe) is a cause of or contributor to unemployment, or that softening it yet further would increase employment.

Business perspective

Setting up minority shareholdings in a business is NOT a ‘low cost’ enterprise.  If it is not carefully and thoughtfully done ( and properly documented), nightmare scenarios and expensive disputes can present themselves when an individual leaves.

Without a good shareholder agreement, that is properly ‘tuned’ to the particular business, unexpected and unwanted consequences abound.

How are shares going to be valued?   Who is going to buy the employee’s shares when they leave?   What if no-one wants them, or no-one has the money to buy them?  Will the founders lose control of the company by granting so many shares they are no longer the majority shareholders?  Will existing investors agree?    We could go on……..

Employee perspective

A minority shareholder in a private limited company is in a weak position unless there is a sound shareholder agreement in place.

Shareholders’ rights

As we know from experience, the enforcement of minority shareholder rights is more expensive to mediate or litigate than any unfair dismissal claim.   We have seen founders give away too much of their company in exchange for too little and minority shareholders unable to cash in on  their investment despite the company going on to be worth money.

Out of the frying pan into the fire

Out of the frying pan into the fire comes to mind.

Is is the government going to abolish minority shareholder rights on the grounds they are red tape and impede business?  

Annabel Kaye is Managing Director of Irenicon Ltd and Christopher Head is a barrister and Director of Irenicon Limited.
Tel: 08452 303050 Fax: 08452 303060
www.irenicon.co.uk
www.koffeeklatch.co.uk

You can follow Annabel on Twitter

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Filed under employment law