In this issue

Meade King and Bankruptcy
Disciplinary hearings - Employment
Rights Act 1999
Bad weather and redundancy
NHS and Long-term Care Reforms
Company Directors Part 2
CCTV and Human Rights
What is "Reasonable"?
Companies House Website

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Editorial

Christmas greetings from all of us at Meade-King. A very happy Christmas and an equally prosperous New Year. This time of year provides everyone with the opportunity of a welcome, if fleeting, respite from the rigours of the profit and loss account, so we hope that all our friends enjoy the festive season. And please don't forget our Christmas Quiz. It is hopefully not too difficult and the first six correct entries will win a bottle of seasonal bubbly.

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"The Brewery Boys have got a Bloody Nose. How Refreshing - how Heineken".

These were the words of Conservative Welsh Assembly Member and former Minister Rod Richards after bankruptcy proceedings were dismissed in London.

The petition followed an alleged default by Mr. Richards in his Individual Voluntary Arrangement. Mr. Richards maintained that Whitbread Brewery (a major creditor) had been the driving force behind the decision of the Supervisor of his IVA to file the petition. Whitbread was alleged to have had political motives. Had the Bankruptcy Order been made Mr Richards career as an elected politician would have been brought to an end.

Keith Mahoney of Meade-King who acted for Mr Richards said:

"The decision of the court was exactly what we expected. We had consistently argued that the bankruptcy petition should never have been presented, and should have been withdrawn. That position has been entirely vindicated."

Keith, who also had conduct of the case of Re Keenan (the definitive case in this area of law) described the unprecedented scenes at the court. It is unusual for a bankruptcy hearing to be attended by anyone other than those immediately involved. In this case it was "standing room only with 17 journalists crammed into a very small court. When Mr. Richards left the court he was confronted by three separate television crews."

"Meade-King has a great reputation in this field" - Chambers Guide to the Legal Profession 2000. Congratulations are due to the firm's Insolvency department not only for this ringing endorsement from Chambers but also for mentions in the latest editions of Legal 500 and Legal Expert

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Disciplinary hearings

The Employment Rights Act 1999 gave new guidelines for the conduct of disciplinary and grievance hearings. These have now been put into effect. The most important change is that the employee now has a statutory right to choose a companion to accompany him at a disciplinary hearing. The companion

• may be a trade union representative or a work colleague. The employer must allow the worker a reasonable opportunity to have the companion of his choice: if the companion is not available on the day scheduled for the hearing the employer must be willing to change the date provided that is reasonable and that a new date can be fixed within five days
  
  
• should be permitted to address the hearing (a change to the previous law) but not to answer questions on behalf of the employee
  
  
• should be allowed to confer with the employee during the hearing

If an employer does not follow these guidelines the employee may complain to an Employment Tribunal. A dismissal which follows a disciplinary hearing that is not conducted in this way is likely to be judged unfair.

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Bad weather layoffs

Can an employer make staff redundant because bad weather or transport problems mean they cannot work? Redundancy is a decision that involves taking a long term view and it is unlikely to be justifiable because of a temporary condition such as a fuel shortage or bad weather. A temporary lay off may be possible but that depends on the contract. If there is a contractual right to lay off then the employer may use it and the employee will then probably only be entitled to receive a statutory guarantee payment (currently £16.10 per day). If there is no contractual right to a layoff then it will generally be a breach of contract which may lead to an unfair dismissal claim.

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NHS and Long-term Care Reforms

Currently, people aged 65 and over use two-thirds of general and acute hospital beds and represent 40% of all emergency admissions. Partly to prevent "bed blocking" by elderly clients, the Government has introduced a number of long term measures to address the problem.

• Investment of £1.3 billion by 2003\2004 for intermediate care and related services together with targeting the inequalities in the present funding system
  
  
• The implementation, in 2002, of a national care standards commission to monitor and provide national bench marks for residential and nursing care services
  
  
• Rapid response teams to be set up to prevent unnecessary admission to hospital and enable older people to be independent and cared for closer to home
  
  
• From 2002 integrated home care teams to arrange appropriate care for patients on discharge to assist them to live independently at home with intensive rehabilitation services and recuperation facilities for those requiring care between leaving hospital and returning home
  
  
• For the first three months of admission to residential or nursing care the value of a person's home will be disregarded from the means test
  
  
• From October 2000 Local Authorities will be given additional financial help through special ring faced grants so that no person will be forced to sell their home to go into care. This will not however prevent local authorities placing a charge on the house to be recouped at a later date
  
  
• From October 2001 there will be free nursing care for those who need long-term care although personal care including washing, bathing and feeding is unlikely to be free
  
  
• From April 2001 the upper capital limit for which patients have to pay a contribution towards their care will be increased from the current level of £16,000 to £18,000. At present, if a persons capital is below £10,000 they do not have to make a contribution towards care. The new guidelines do not increase this level but this will probably be dealt with in due course

With the elderly population on the increase, the measures are intended to allow patients to retain their independence whilst the standard of care they receive is not compromised in any way. However, the measures fall short of the Royal Commission's recommendations and the system may be too complex for individuals to understand. Should you know of any person who is likely to require long term residential or nursing care please contact Richard Boulding or Jackie Martin for further advice.

Future articles concerning the elderly will concentrate on the difficult issue of mental capacity and the solutions available both to the elderly client themselves and to their carers.

Congratulations to the firm's Probate and Trusts department for yet another mention this year in Chambers Guide to the Legal Profession. It described Meade-King as "a notable firm [with] a long standing reputation in this field".

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The Company Director

The autumn edition of The Orchard saw the first of a series of articles on directorship and considered the directors' duties of good faith and skill and care. This edition looks at those to whom a director's duties are owed and highlights some statutory duties imposed by the companies legislation.

A director owes duties to his company, its creditors and its employees.

The Company

The general rule is that a director's duties are owed to the company and not to individual shareholders, nor to the company's creditors

Creditors

The law does not afford a direct personal remedy to creditors where directors have mismanaged the company's affairs or even misappropriated assets. It is recognised however by the courts that, once a company is insolvent, there is a change in substance of the directors' duties so that, in exercising their functions, they should then have regard to the interests of creditors generally. It does not follow however that the duty is then owed to any particular creditor or creditors

Employees

Directors are now obliged by law to have regard to the company's employees in general when performing their function - but this is an obligation to the company and not to any particular employee or employees. Consequently, a breach would not give rise to a claim directly by an employee or a trade union

Statutory Duties

Companies' legislation imposes many duties on directors and provides for often onerous sanctions for breach. What follows is an outline only of a small number of important statutory duties:

Substantial Property Transactions - s.320, Companies Act 1985

An ordinary resolution of the company is required if a director intends to acquire a non-cash asset from the company where the asset is valued at £100,000 or more or represents at least 10% of the company's asset value.

A breach of section 320 may result in the transaction being set aside or, if this is no longer an effective remedy, the director being liable to account to the company for any profit made or to indemnify the company if it has suffered a loss.

Loans to Directors - ss.330-342

Subject to some small exceptions, a director should not take a loan from his company. The exceptions broadly allow directors to borrow small amounts (currently £5,000) or specific amounts to meet legitimate business expenditure.

Accounting Records - ss.221-222

In general terms, accounting records must be kept which enable the company's transactions to be explained and which also disclose the company's financial position at any given time with reasonable accuracy. They must be open to inspection by the company's officers at all times and be preserved for three years (private company) or six years (public company).

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Big Brother is Watching You

Much has been written in relation to the Human Rights Act and the effect the Act will have in relation to personal injury surveillance videos. It has gone almost unnoticed that there are in fact data protection issues in relation to CCTV videos. People must be aware of the fact that they are being taped and they must be notified for instance by seeing a notice on the premises. The tapes also need to be wiped clean after a period of time in line with the idea that information is not being kept for longer than necessary. Even CCTV information must only be collected fairly, e.g. it is acceptable to video tape people at a bar/till but CCTVs should not operate in a toilet area. With CCTV cameras in shops/ businesses bear in mind that cameras may only look into their own business and not face directly on to someone else's property.

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Was it reasonable?

The Court of Appeal has recently looked at how an Employment Tribunal should judge 'reasonableness' in an employer's decision to dismiss. The review of the law followed a series of cases in which the courts were trying to change established practice in favour of employees.

In an unfair dismissal case, the Tribunal has to answer two questions. The first is:

What was the reason for the dismissal?

That is simply a question of fact.

The second is:

Did the employer act reasonably in deciding to dismiss?

The traditional guidance to Tribunals on the second question has been to look at what a reasonable employer would do in the circumstances, taking into account the size and administrative resources of the company.

The heretical view in the recent cases was that the Tribunal should in effect substitute its own view of what was reasonable.

The Court of Appeal in reviewing the law said that this was wrong and that the Tribunal should be judging reasonableness from the point of view of the employer i.e. it should look at what a reasonable employer would have done and not what the Tribunal Chairman himself would have done. This is an important review of the law which, to many employers' surprise, shifts the emphasis in their favour.

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Companies House On Line

At present, any company registered in England and Wales must conduct its business with Companies House using the post. The Companies Act 1985 (Electronic Communications) Order 2000 aims to provide an on line alternative to businesses who wish to incorporate, re-register companies and file documents at Companies House by electronic means. The Order is not yet in force but it is anticipated that it will be next year.

It will be possible for a company and its members to communicate electronically financial statements, reports, accounts, notices of meetings and notices appointing proxies etc. Companies can make significant savings if they choose to conduct their business on line.

Enquirers can now access copies of the main Companies House forms on its website. These forms are completed on screen but currently require printing out, signing and returning as paper copies back to Companies House.

Authentication of electronic signatures is of course critical to all forms of e-communication to ensure that it is:

• unique to the signatory
  
  
• solely controlled by the signatory
  
  
• capable of being linked to the relevant document in a manner which would not corrupt any subsequent changes to that document, eg Companies House returns

At this stage, Companies House envisages using some form of registration process whereby companies who wish to make their returns on line will need to be provided with a pin number/password which will be posted to the registered office address of the company for security purposes. Once the initial pin number/password is obtained by the company, it will then be able to use this service on line.

The technology is not quite there but Companies House has invested heavily in its programme to computerise its service and will want to keep to its target for next year.

Watch this space! Alternatively contact Companies House at www.companies house.gov.uk.

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