Insight Article Archives

The Future of Digital Identity

Posted on September 19, 2016 - 4:36 pm by Penny Dewar

AML in the Regulated Sector: A Quick Guide

Knowing the legal framework

Regulated businesses and nominated compliance and reporting officers employed therein are regarded by politicians and law enforcement agents as gatekeepers. We are required and expected to know the statutory and regulatory regime governing our obligations and what is required of us.

For those of us working in the regulated sectors, our Anti Money Laundering (and Terrorist Financing) obligations can be ascertained from the following legislation and regulations, namely:

the Terrorism Act 2000;
Part 7 of The Proceeds of Crime Act 2002 (POCA);
the Money Laundering Regulations 2007; and
various obligations arising out of international treaties and conventions, not the least of which are EU AML Directives. We are currently working with the third European Directive. The fourth has been enacted, more of which later.

All of the above have been amended to varying degrees by subsequent legislation and it is easy to find online up-to-date legislation and regulations incorporating the current source material with amendments. See for example www.legislation.gov.uk.

Although this presentation deals with AML, I mention the Terrorism Act as a reminder that preventing criminal proceeds from going to fund terrorist activity grows ever more significant.

Our primary obligations

Our obligations are essentially three-fold:

to take appropriate measures to avoid our businesses being used for money laundering (and terrorist financing);
to report it where we suspect it is occurring (SARs); and
to keep adequate records so that suspicious activity can be properly investigated and prosecuted.

KYC: Know your customer/client also known as CDD: client/customer due diligence

Knowing our client/customer and performing client due diligence is at the heart of measures we must adopt in order to be compliant and our obligations are set out fairly comprehensively in Regulations 5-15 of the 2007 Money Laundering Regulations.

What is required?

Regulation 5 explains what is required for ordinary customer due diligence, namely: identifying the customer/client and verifying that identity through a reliable and independent source; and where there is a beneficial owner who is not the customer/client, identifying that owner and taking adequate measures to verify that identity on a risk-sensitive basis.

We are also required to obtain information on the purposes and intended nature of the business relationship.

When is it required?

Regulation 7 provides three triggers for requiring CDD measures to be undertaken:

when (actually before) we establish the business relationship or carry out a transaction;
when we suspect money laundering or terrorist financing; and/or
where we doubt the veracity or adequacy of the documents, data or information previously obtained for identification and verification purposes.

Regulation 8 deals with ongoing monitoring (see below), but Regulation 7 also requires us to apply customer due diligence measures to existing customers at other appropriate times.

How do we conduct CDD?

The regulations say what we should do and when, but other than emphasising that we must do so on a risk-sensitive basis, they do not prescribe how we should do this.

Each industry sector and the regulatory bodies in those sectors publish guidance notes on best practices whilst seeking not to detract from the all-important theme that we must adopt a risk-sensitive approach. What is appropriate for one risk factor may not be for another. I still advocate a face-to-face meeting with the client and the production of ID documents where possible and proportionate, but it is difficult in the modern world to think of a better system than that such as is offered by CallCredit where, for a few pounds, you can search the enormous databases available to obtain reliable and independent verification of a client’s identity and, where necessary, beneficial owners. Such searches can also help you in assessing risk depending on the search criteria adopted.

To Emphasise: CDD means not just knowing our client or customer but also their business relationship with us, assessing the risk of exposure to money laundering from that client or relationship and adopting appropriate measures to meet that risk. We are then obliged to monitor it during the relationship.

Ongoing monitoring

We have already seen that Regulation 7 requires customer due diligence measures to be applied to existing customers at other appropriate times. Regulation 8 enforces this obligation and describes ongoing monitoring as meaning the scrutiny of transactions undertaken throughout the course of the relationship so as to ensure that the transaction is consistent with the relevant person’s knowledge of the customer, his business and risk profile and keeping the documents, data and information obtained for the purpose of client/customer due diligence measures up-to-date.

Given that Regulation 20 obliges us to establish and maintain appropriate and risk-sensitive policies and procedures in relation to our obligations, it is essential that you undertake regular documented reviews of your client/customer business relationship if you are not already doing so.

Suspicious activity reports (SAR)

We should all now be familiar with these. Our obligations arise out of part 7 of POCA, particularly sections 330, 331 and 332. SARs are now made to the National Crime Agency (NCA), and according to its first published annual report on SARs, there were over 381,000 in the year 2014/15, over 83% of which came from banks. Other financial institutions accounted for a further 12%, leaving all other sectors responsible for just 5%.

The regime provides that businesses in the regulated sector must appoint a nominated officer, and staff working in that business are provided with a defence from prosecution if they report their suspicions to the nominated officer, who in turn must then decide whether to disclose those suspicions to the NCA by way of a SAR.

Nominated officers (aka Money Laundering Reporting Officers – MLROs) must make a disclosure to the NCA where they know or suspect money laundering or terrorist financing (a subjective test) or where there are reasonable grounds for suspecting suspicious activity (an objective test).

It is worth remembering also that anyone can make a disclosure pursuant to section 338 of POCA where they suspect money laundering, and section 338 of POCA provides them with a defence if they go on to otherwise commit one of the substantive money laundering offences described in sections 327 to 329 of POCA.

Note also that there are defences for delaying or not making a disclosure, but I advise non-lawyers to seek legal advice before making such a decision, given the penalties for failing to do so. Those of you who are lawyers will know that one of the reasonable excuses for not making a SAR is that the information came to you in a situation covered by Legal Professional Privilege, a defence not open to other professionals.

Studying the report, it is pleasing to note that the confidentiality of SARs promised by the regime is working well and that only two breaches of the confidentiality of reports are recorded.

From my own experience, the consent to proceed is working reasonably well, and the seven-day target promised is being met by the NCA, who say that their average response is 3½ days.

Finally, once a disclosure has been made, don’t forget the anti-tipping off requirements of section 333 POCA, which always cause difficulties for professional advisors, putting us in conflict with our duties to keep our clients informed.

Record keeping

Regulation 8 requires us to keep our AML records up to date. Regulation 19 states that we must keep those records for the specified period, which is five years from the end of the business relationship or when the occasional transaction is completed. The records specified are the CDD documents and records supporting the nature of the business relationship. Keeping business records is second nature to most, if not all of us, in the regulated sector and given the e-storage facilities available to us, it will be no easy task to defend an allegation of failing to keep adequate records.

Keeping compliant

There has been relatively little substantive change to the legal framework outlined above for some years now, and the legislation has grown into its existing state since the establishment of the Financial Action Task Force (FATF) in 1989 and the First EU Directive in 1991. There is a wide-ranging network of advice and guidance issued by government and law enforcement agencies and our professional and regulatory bodies out there. It is essential that you obtain the AML guidance notes specific to your sector and that you subscribe to relevant bulletins in relation to anti-money laundering and terrorist financing. I also recommend attending relevant courses and seminars and (of course!) consulting relevant, experienced professionals such as myself should you need more detailed or tailored help in keeping compliant.

There simply is no excuse for not keeping up-to-date, given the enormous amount of material and training available.

And don’t forget the need to train all staff in ML and TF awareness (regulation 21).

The Fourth EU Directive

It was enacted in June 2015 and requires full implementation by June 2017. The current thinking is that it should not be too difficult to assimilate the changes into our current framework, as the emphasis is very much on expanding the concept of ultimate beneficial ownership and the need for enhanced customer due diligence in that area. One significant change is the need to establish central registers of corporate ownership details.

It also expands the definition of Politically Exposed Persons to those operating within the boundaries of the United Kingdom and for those involved in the gambling sector; it takes the regulations beyond just casinos.

Summary

I will finish where I started. Those of us who work in the regulated sector and those of us who are compliance or reporting officers in that sector are no longer regarded as businessmen; we are gatekeepers. We are required and expected to take risk-based measures to avoid our businesses being targeted by criminals to launder the proceeds of criminal conduct or to fund terrorism. If, despite such measures, we are unlucky enough to fall foul of the activities of terrorist funders or money launderers, we need to be able to show that we have adopted all the measures required of us, that if there were reasonable grounds for suspecting ML, we reported it and that we have kept full, proper and adequate records of the measures taken by us and our appropriately trained staff.

If we can’t do all of this, then we may well face civil, regulatory and even criminal sanctions, as well as loss of business reputation and goodwill.

Note and disclaimer. This is the text of a short oral presentation and must not be taken as a definitive guide on any part of the law concerning money laundering and terrorist financing. There are many exceptions to the general principles outlined above. Please seek professional help on a retained basis should you need to do so.

Speak to COLP Susan Humble for more information on digital identity today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Workplace investigations

Posted on February 12, 2016 - 2:38 pm by riaabgmanager

Organisational preparation

The ACAS Code of Practice on Disciplinary and Grievance Procedures emphasises the importance of carrying out necessary workplace investigations of potential disciplinary matters without unreasonable delay in order to establish the facts of the case. This is an important step employers often either overlook entirely or do not handle properly. This ACAS guidance is, therefore, welcome and worthy of careful consideration.

It is possible to settle most problems quickly and without undue process. An employer should therefore consider whether a quiet word or informal action might be all that is required to resolve a matter.

If an informal chat is not practical or possible, the employer should consider a number of factors before commencing an investigation:

Will a preliminary investigation help?
Does the matter warrant further action?
Do any internal policies or procedures require an investigation?
Should the employer suspend the subject(s) of the investigation pending its outcome?

An employer should act promptly if an investigation is necessary. Upon instigating an investigation, an employer should decide the precise purpose and scope of the investigation, how long it will take, who should oversee the matter within the organisation and who should be the investigator.

Keep an investigation confidential. You may put temporary measures in place while you conduct the investigation, such as suspension or employee transfer.

Unless there is a contractual right to suspend an employee without pay (which would be unusual), the suspension should always be on full pay and confirmed in writing, with a clarification that the suspension does not connote guilt or any indication of the likely outcome of the investigation.

Investigator’s preparation

Once you have decided to conduct an investigation, it may be beneficial to create an investigation plan to follow, providing a structured approach. Preparation may include:

Checking internal policies and procedures.
Identifying sources of evidence.
Identifying the parties relevant to the investigation.
Deciding in what order to collect evidence.
Arranging where meetings should take place.
Contacting the relevant parties and their managers.
Keeping managers informed of the process.

Handling a workplace investigation meeting

While investigation meetings are often needed, some workplace investigations only require collecting written and physical evidence. An investigation meeting is an opportunity for an investigator to interview the individual involved or someone with information relating to the matter under investigation.

Although there is no statutory right for an employee to be accompanied at an investigation meeting (as it is not a disciplinary meeting), not being accompanied could leave the individual at an unfair disadvantage and may be provided for in a workplace policy. Therefore, it is often safer to offer the employee the option of having a fellow employee accompany him or her at an investigatory meeting, particularly if the facts under investigation are serious in nature.

Gathering evidence

Any investigator appointed should, insofar as possible, be unconnected with matters under investigation. The investigator should remember their role is to establish the facts of the matter. They should consider evidence that supports the allegations and that undermines them. Once collected, an investigator should analyse each piece of evidence objectively and consider:

What does the evidence reveal?
Are there any doubts over the credibility and reliability of the evidence?
Is the evidence supported or contradicted by any other evidence?
Do the results suggest further evidence needs collecting?
Should they prepare written witness statements?

Evidence to consider collating includes witness statements, written records and documentation (e.g. attendance sheets and paper copies of electronic material), physical evidence (e.g. CCTV, computer and phone records) and searches of personal possessions.

If the investigator needs to prepare and rely on witness statements, it may take further investigation to verify or undermine the information given. The investigator may also need to make omissions to avoid the identification of the witnesses.

Writing a workplace investigation report

It may be helpful if the investigating officer prepares a report summarising the steps taken in the workplace investigation, the investigations, and the evidence available regarding them. Such a report might assist with the conduct of the disciplinary hearing. Any investigation report should cover all the facts that were and were not established and whether there were any mitigating circumstances to consider. To exclude any information may leave an investigation open to accusations of bias and filtering evidence to suit one’s findings.

The report should reflect the investigator’s own conclusions. While an investigator may seek advice from a third party, such as HR, the conclusions should be theirs.

An investigator will often be asked to make a recommendation. Any recommendation should be restricted to suggesting whether any further action may be necessary or beneficial. In most circumstances, an investigator should recommend:

FORMAL ACTION

To initiate a disciplinary hearing.
Changes to an organisation’s policy or procedure.
Further investigation into matters uncovered.

INFORMAL ACTION

Training or coaching for parties involved.
Counselling for the parties involved.
Mediation for the parties involved.
Notification that further similar action may result in disciplinary action.

NO FURTHER ACTION

Counselling, mediation or another form of support may be beneficial to the parties involved and the organisation.

It is important to note that it should be the decision maker, not the investigator, who decides whether or not a disciplinary hearing will be held.

After a workplace investigation completes

Once an investigator completes their investigation and hands in their report, they will not usually be involved in further action other than the following possible matters:

Discussing the report in person with the individual/panel they report to.
Attending the disciplinary hearing.
Advising on any amendments or updates to the organisation’s policies and procedures.

There will usually be a need to retain investigation reports for a period. The report should be securely disposed of once it becomes irrelevant or outdated.

Contact Karen Cole if you require any help with a workplace investigation.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Fulfilling your lease formalities

Posted on January 23, 2015 - 2:39 pm by riaabgmanager

The Court of Appeal decision in the case of Lankester & Son Ltd v Robert David Rennie and Anne Rennie reaffirms that tenants must ensure they follow all the appropriate legal lease formalities when assigning a lease. This ensures the effective assignment of the lease and releases the outgoing tenant from its obligations under the lease.

In this case, the signed but undated transfer regarding the lease assignment was not delivered in the legal sense. On the case’s particular facts, there was no estoppel or implied surrender of the lease. Therefore, the lease remained vested in the tenant, who remained liable under the lease covenants. In this case, the original tenant vacated the premises and allowed the new tenant into occupation without a formal assignment. The new tenant paid rent to the landlord for some time and then sought to vacate. The landlord asserted on the one hand, that the new tenant was liable for the rent but, on the other hand, argued that the lease had not been properly assigned and the original tenant was liable for the rent.

The Court of Appeal held that there had been no transfer of legal title, as registration had not been effected and that the original tenant remained the tenant under the lease.

This case affirms the warning to outgoing tenants to ensure the completion of all legal lease formalities before allowing the assignee into an occupation. Following this course will avoid nasty shocks in the future. Landlords also need to be careful not to inadvertently find themselves estopped from denying an assignment has occurred.

Contact John Gillette if you have any queries on whether you’ve fulfilled your lease formalities.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Squatters: What to do when they return

Posted on January 16, 2015 - 2:48 pm by riaabgmanager

Landlords have been plagued by removing one set of squatters only to find that another set, or indeed the same ones, have returned shortly thereafter. This is particularly more so since the criminalisation of squatting in residential premises in 2012.

To remove squatters, a landlord must obtain an order for possession in the local county court to the premises against “persons unknown” and the county court can enforce bailiffs. Transfer to the High Court can speed up a possession order.

What then happens if they return, as you can only enforce a writ of possession once?

A landlord does not need to go through the process again. He can apply for a writ of restitution, which is effectively a writ in aid of another writ.

The Court must give leave for the issue of the writ of restitution, even where the re-occupation is not by the same persons. Potentially, as long as there is a sufficient link between the two events, the Court should after a period grant the writ.

If you’ve got squatters and need assistance, speak to property litigator Laura St-Gallay today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Commercial leases: What to do when a tenant breaches

Posted on January 16, 2015 - 2:48 pm by riaabgmanager

Forfeiture

One option possibly open to a landlord is the right to forfeit a commercial lease or re-enter where the tenant is in breach of the commercial lease or on the occurrence of certain events set out in the commercial lease, such as the tenant’s insolvency.

Before taking any steps, the landlord should consider whether it is commercially in its interest to take the property back. It might want to do this if granting a new tenancy on superior or similar terms. However, suppose the market no longer supports the current letting terms, or there will likely be a void period. In that case, it may be in the landlord’s best interests to keep the existing tenancy in place and pursue alternative remedies.

Statute and common law govern the right to forfeit, and therefore the landlord needs to be very careful in its dealings with the tenant and ensure nothing is done to waive that right, such as treating the commercial lease as continuing. It is advisable to cease communications and put a rent stop in place. Still, the specific breach can be considered directly with one of our team who can advise how best to communicate, if at all, with the tenant to avoid such problems.

If the tenant forfeits the commercial lease, the risk is the ousted tenant may still make an application for relief from forfeiture.

Before entering into a new commercial lease, it is advisable to consider the position further and put the former tenant on written notice that they must make an application promptly if they intend to do so.

Do not get caught out by not serving the appropriate notice. For all breaches of covenant (except for the non-payment of rent), the landlord must serve a section 146 notice under the Law of Property Act 1925 requiring the breach(es) to be remedied if they can be remedied.

Again for advice on what would be considered a reasonable period of notice, this will depend on the individual circumstances of the case, and we can advise further. Further statutory obligations arise in relation to breaches of a repair covenant in the lease if the Leasehold Property (Repairs) Act 1938 applies and it is advisable to attach a schedule of dilapidations in some cases to the notice.

Tactically it can be advisable in some cases for a landlord to serve a section 146 notice where a landlord does not actually intend to forfeit the commercial lease, but it can prompt a tenant to remedy the breaches. Further considerations apply to premises let under a long commercial lease.

Self-Help for breach of repair covenants

There are limits to the amount of damages that a landlord can recover for the breach of the tenant’s repair covenants during the term of a commercial lease. So, in some cases, a landlord may enter the property and carry out the works itself if the lease provides for this (known as a “Jervis v Harris” clause).

An advantage of this type of clause in your lease means that the sums expended can be recovered from the tenant as a debt. However, landlords need to be very careful to ensure that the works do not go beyond the specific disrepair. Otherwise they could be liable for trespass if they have no right of re-entry for such additional works. Advice from a surveyor is prudent in such circumstances in conjunction with legal advice.

If you have a tenant in breach of a commercial lease, speak to property litigator, Laura St-Gallay.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

What happens when you only receive part of an enforcement debt?

Posted on January 16, 2015 - 2:47 pm by riaabgmanager

Receiving part of an enforcement debt can occur in situations where the sale proceeds did not achieve the full amount, an offer for settlement was made and accepted by the creditor, or there is a payment by instalment arrangement agreed upon.

The Taking Control of Goods Regulations 2013 have clarified the situation to work out how the part payment is allocated towards the principal sum and fees.

Where goods have been sold at auction, the funds are allocated as follows:

The auctioneer’s fee.
The compliance fee (currently £75 plus VAT) to the enforcement officer.
Allowable disbursements such as locksmiths, storage fees etc.
Balance split pro rata between the judgment debt itself and the enforcement fees.
When the debtor and the creditor agree on a settlement sum, the balance is split pro rata between the creditor and the enforcement fees after payment of the compliance fee.

The same applies as above when there is an instalment plan agreed upon. After the compliance fee is paid, split the sum pro rata.

In instances of co-ownership of goods, the co-owner must first receive their share of the proceeds proportionate to their ownership and split the balance as per the rules bulleted above.

If you’ve only received part of an enforcement debt and have a query, contact Laura St-Gallay today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Consumer protection

Posted on January 15, 2015 - 2:36 pm by riaabgmanager

Amendments made to the Consumer Protection from Unfair Trading Regulations 2008 mean that from 1 October 2014, consumers who are victims of misleading or aggressive practices can use these regulations for redress.

The redress rights only apply to a contract or payment for the sale or supply of a product made after 1 October 2014.

The definition includes a tenancy or service contract between a trader and a consumer, and there must have been a “prohibited practice”.

The definition of “trader” is broad and covers someone acting for the purposes of their business, trade or profession. Therefore, the definition can cover buy-to-let landlords. However, the redress rights do not apply to sales or purchases of real estate, social housing or lettings falling outside of Part 1 of the Housing Act 1988.

So what is a “prohibited practice”?

The regulations define a “prohibited practice” as an act, omission, course of conduct, or representation that is either “misleading” or “aggressive”. Misleading can include situations where the information is factually correct, but the overall presentation would mislead the average consumer.

This prohibited practice must be a significant factor in the consumer’s decision to enter into the contract. This will differ on the individual circumstances of each case.

How do the consumer protection changes affect landlords?

The rights of redress could increase void periods if tenants seek to determine tenancy agreements under these powers. They could also bring potential negligence claims against agents. Therefore, ensuring not only the tenancy agreement itself is properly explained to the tenant and information given, but that any agent acting on the landlord’s behalf to market and tenant the property are acting in the same way.

Businesses already operating in the private rented sector should know their consumer protection duties. They should

have appropriate compliance procedures in place
verify the accuracy of any statements made in marketing material
keep accurate records
train staff appropriately.

They must also ensure that all charges and fees are transparent and that they are made aware of them at the outset. For instance, you should discuss and document:

information about deposit requirements
guarantors
the terms of the agreement
what happens at the end of the tenancy, and
how it can be brought to an end.

We recommend noting down any questions asked, the responses given and getting the tenants to sign the same confirming the accuracy of the information provided and their understanding of it.

How do the consumer protection changes affect tenants?

Amongst other provisions, assured shorthold tenants can now:

bring civil proceedings to unwind their tenancies
get a full refund
get a discount on their rent, and
claim damages for additional losses or any harm they have suffered.

The new rights also cover holiday accommodation leases and contracts for agency services. However, actions available to tenants will depend on their timing.

Timings for tenants

If a tenant acts in the first month of the assured shorthold tenancy, they can indicate to the landlord that they want to terminate the assured shorthold tenancy and recover the full rent and deposit back. They can do this either by agreement or by court proceedings, and no deduction will be made for the time they have been in occupation. Alternatively, the tenant can seek a rent discount and damages. In either case, they must demonstrate an actual loss.

If the tenant seeks to take action after the first month but before 90 days from the start of the assured shorthold tenancy, the tenant can still seek to terminate the assured shorthold tenancy, but will not get a full refund of rent or deposit.

After 90 days have expired, the tenant loses the right to unwind the assured shorthold tenancy. However, they may still claim discounted rent and/or damages.

Conclusion

These powerful new rules potentially can have quite a negative impact on landlords and give tenants an upper hand, so getting it right beforehand will become all the more important.

Speak to property litigator Laura St-Gallay today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Business lease applications

Posted on January 14, 2015 - 2:37 pm by riaabgmanager

In Lie v Mohile, the Court of Appeal held that an application for a new business tenancy made by one of two business partners was not valid.

This upholds the established case law of Jacobs v Chaudhuri in that all joint tenants must join in an application under the Landlord and Tenant Act 1954 unless the tenants can take advantage of one of the statutory exceptions.

Section 41A provides an exception for partnerships where not all of the joint tenants continue to use the demised premises for the purposes of the partnership business, namely:

The lease must be vested in at least two joint tenants;
The demise must include property occupied for the purposes of the business;
The business must, at some time during the tenancy, have been carried on in partnership by all of the joint tenants;
at least one of the joint tenants must currently carry out the business, either alone or in partnership with others and occupy no part of the property, under the tenancy, for the purposes of the business carried on by the other joint tenants or tenants;
It is very important, not only when a protected lease is ending but at the start of a business, that the legal structure is considered in view of any application. Doctors and dentists, in particular, often practice from shared premises, and there may be circumstances where vesting property interests in a special purpose vehicle (SPV), such as a limited company or limited liability partnership, may help avoid disputes in the future. It is sensible to take legal advice on a corporate and property level and to consider any tax implications.

Speak to property litigator Laura St-Gallay today about your business lease application.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

A notice to quit served by one joint tenant can determine the tenancy

Posted on January 13, 2015 - 2:35 pm by riaabgmanager

The Supreme Court has ruled that a notice to quit served by one joint tenant determines the tenancy and does not infringe on European Human Rights.

In the case of Sims v Dacorum Borough Council, the Court of Appeal dismissed an appeal against an earlier Court of Appeal decision. The Court held that the existing law allowed a joint secure tenant to end a tenancy unilaterally and would not interfere with the co-tenant’s rights under Article 8 (the right to respect home and family life) and Article 1 (the right to peaceful enjoyment of possessions). Had the Supreme Court ruled the other way, a situation could have arisen whereby a tenant, having served a notice to quit, had to remain a tenant against their will, leading to other human rights questions.

Whilst this is a welcome relief to many housing authorities and private landlords, the specific wording in the tenancy agreement provided for determination by a single joint tenant, so it is advisable to check the wording of a tenancy agreement carefully where there are joint tenancies.

For more information, speak to property litigator Laura St-Gallay.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

How to hire an employee

Posted on October 16, 2014 - 2:38 pm by riaabgmanager

This article provides an overview of the employment law you need to know and highlights the key legal issues a business needs to consider when hiring an employee. You should talk to a lawyer for a complete understanding of how it may affect you.

Before advertising to hire an employee

Ensure all staff involved in the recruitment process have had equal opportunities for training (and they continue to receive it while working for the business).

Draw up the following documentation:

A job description, which sets out the title and main purpose of the job, the place of the jobholder within the business and
the main tasks or responsibilities of the post.
A person specification details the experience, expertise and qualifications, skills and abilities necessary for the job. Split the requirements between those “essential” for the job and those merely “desirable”.
Ensure that none of the requirements in either document discriminates against any group of employees. Consider whether any requirements for specific qualifications, working hours or times, travel, age ranges, or dress are necessary for the role.
Consider whether the job needs to be full-time or open to part-time, home working, flexible working or job sharing. If a
business specifies that the job is full-time, it may need to justify its decision.

The advertisement to hire an employee

Should the job be advertised internally, externally or both? Consider using specialist publications, websites and agencies to target different communities, ages and sexes.

Think carefully when writing the advert. Protection from discrimination because of a protected characteristic (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex or sexual orientation) covers all areas of employment, including job adverts. For example, avoid using language that might imply only someone of a certain age would be suitable (for example, “mature”, “experienced”, or “young”).

Inform any employees absent from work (including women on maternity leave or those on long-term sick leave) of the vacancy
to enable them to apply. Failure to do so could amount to discrimination.

The application

Use a standard application form to compare individual applicants’ answers against the selection criteria and to help avoid potential unlawful discrimination claims.

Draw up a shortlist using the same job description and person specification criteria. Every applicant should be marked against the same criteria to help avoid any potential unlawful discrimination claims.

If a business is making redundancies, it must consider applications for suitable vacancies from employees selected for redundancy ahead of external applicants. A business must offer any women selected for redundancy while on maternity leave a suitable alternative vacancy (where one is available) in priority to other potentially redundant employees.

Pre-employment health questions

In most cases, a business cannot ask potential recruits questions about their health. For example, businesses should avoid asking about applicants’ sickness absence records. However, in some circumstances, a business is entitled to ask health-related questions. For example, asking an applicant for a job in a warehouse whether they have any health problems that may prevent them from lifting or handling heavy items. Businesses can also check whether an applicant has any special requirements it needs to take into account when arranging interviews, such as wheelchair access.

The interview

Think about when and where the interview should take place. For example:

• check whether the interview venue has access for disabled candidates;
interviewing during a religious holiday could discriminate against applicants from that particular religion; or
candidates with children may ask for an interview to be conducted at a particular time.

Ask all shortlisted candidates the same or similar questions to compare answers and to avoid the possibility of a discrimination claim.

Avoid asking questions about a candidate’s personal life unless they are directly relevant to the job’s requirements. For example, asking a female candidate whether she plans to have children is unacceptable.

Keep a paper trail throughout the process to demonstrate how the business reached its decision to select the successful
candidate. This should include:

• selection criteria;
notes on the shortlisting process;
interview questions;
notes of panellists’ assessments of the interviewees.

If requested, it is good practice to provide feedback to unsuccessful candidates. A failure to do so could indicate a
decision-based on discriminatory grounds.

The offer

Make a written offer to the successful candidate. Consider whether to set a time limit for acceptance and specify that
acceptance should be in writing.

A business can make the offer conditional on various criteria, provided they are not discriminatory. For example:

providing satisfactory references; or
confirmation that the employee is free to work in the UK or has an appropriate work permit or immigration approval to work.

Before making a job offer, ensure the applicant confirms they are not bound by any enforceable restrictive covenants from their previous job; otherwise, the former employer could sue the business (most likely along with the applicant). Employers use restrictive covenants in employment contracts to protect their business. They restrict the activities of an employee, generally after employment has ended. We frequently draft, advise on and act for clients in disputes over the enforceability of such covenants.

The contract

Consider whether the contract should be permanent or for a fixed term. If a business decides that a fixed-term contract is appropriate, it may need to justify its decision. Remember that an employee on a fixed-term or part-time
contract should not be treated any less favourably than a permanent employee should. For example, they should be allowed access to a company bonus scheme or instead receive an equivalent benefit.

Probationary periods

You can include a probationary period in the contract. This will enable the business to assess the employee and vice versa. It also
gives it the flexibility to dismiss someone using a shorter notice period of at least one week.

Probationary periods typically last between three to six months and can be extended with the employee’s consent at the end of the term. For example, if the employee was sick and the business could not assess their performance adequately, it may want to extend the period.

Before you hire an employee, speak to our employment lawyer, Karen Cole, today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

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AML in the Regulated Sector: A Quick Guide

Knowing the legal framework

Our primary obligations

KYC: Know your customer/client also known as CDD: client/customer due diligence

How do we conduct CDD?

Ongoing monitoring

Suspicious activity reports (SAR)

Record keeping

Keeping compliant

The Fourth EU Directive

Summary

Organisational preparation

Investigator’s preparation

Handling a workplace investigation meeting

Gathering evidence

Writing a workplace investigation report

FORMAL ACTION

INFORMAL ACTION

NO FURTHER ACTION

After a workplace investigation completes

What then happens if they return, as you can only enforce a writ of possession once?

Forfeiture

Self-Help for breach of repair covenants

So what is a “prohibited practice”?

How do the consumer protection changes affect landlords?

How do the consumer protection changes affect tenants?

Timings for tenants

Conclusion

Before advertising to hire an employee

The advertisement to hire an employee

The application

Pre-employment health questions

The interview

The offer

The contract

Probationary periods

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