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The potential pitfalls of unlimited annual leave

Posted on: March 20th, 2024 by Natasha Cox

Many employers including LinkedIn, Netflix, Eventbrite and Dropbox are now offering their employees unlimited annual leave.

Unlimited leave reflects a significant uplift on the statutory minimum position. Under the Working Time Regulations 1998, full-time employees are legally entitled to 5.6 weeks’ paid holiday each year, which translates to 28 days, including bank holidays. Part-time staff are also entitled to 5.6 weeks, the number of days being dictated by how pro-rated their working time is.

While undoubtedly a great selling point to potential new recruits, is unlimited annual leave more hassle than its worth for an employer?

Potentially, yes. Employers need to be extremely careful when implementing an unlimited annual leave policy because failing to set appropriate expectations and creating a clear and well-structured policy could lead to significant problems. For example, how does one calculate the annual leave owing (or owed) when an employee’s employment comes to an end if this is not specified in their contract or the leave policy? Likewise with the continued accumulation of leave during a period of family leave.

No employer is likely to be content with an employee taking 52 weeks’ annual leave in a leave year, not least because they won’t be able to do the job that they’re employed to do. If you are offering unlimited annual leave, employers must ensure adoption of and adherence to minimum performance criteria, as well as having robust performance measures in place to objectively assess how well the employee is performing.

Further, employees will still need their manager’s permission to take time off, which could result in the policy being enforced differently from one manager to another. This may lead to accusations of favouritism, or differing treatment of employees in relation to any of the nine protected characteristics under the Equality Act 2010.

Lack of cover during an employee’s holiday may also discourage them from taking time off, undermining the incentive for annual leave altogether.

It is ultimately important to strike a balance between the needs of the business for employees to carry out the jobs they are employed to do, and the ability to attract and retain the right talent. While offering unlimited annual leave is certainly likely to assist with recruitment and retention, its implementation needs careful handling to avoid unintended consequences.

Talk to us if you would like to discuss the pros and cons of enhanced employee benefits.

Lawrence Stephens advises Blue Shield Capital on complex bridging loan

Posted on: March 19th, 2024 by Maverick Freedlander

Lawrence Stephens’ Banking and Real Estate Finance teams recently advised Blue Shield Capital on a 12-month bridging loan in a complicated deal structure which involved a high amount of property due diligence, multiple contemplated changes in deal structure and complex legal issues that required multi-disciplinary support from the LS team.  

The £3.4 million loan facilitates the purchase of a portfolio of 18 flats across Wembley and Harrow. The Lawrence Stephens and Blue Shield Capital teams worked seamlessly together to secure a successful completion for the client.

The team from Lawrence Stephens was led by Director and Head of Banking, Ajoy Bose-Mallick on the banking & finance aspects and Senior Associate Rachel Coulthard on the real estate finance side. They received crucial assistance from a cross-departmental team including Director Gregory Palos, Senior Associates Ashley Wright and Abtin Yeganeh, Solicitor Bola Kim, and Trainee Solicitors Electra Kallidou, Sophie Morton and Alex Ruder.

Ajoy commented: “As always, it was a pleasure to work with the stellar team at Blue Shield Capital to complete this complicated transaction for the client, which makes an exciting addition to their real estate financing loan book.”

Stephen Messias and Goli-Michelle Banan ranked in Spear’s Property Index 2024

Posted on: March 13th, 2024 by Maverick Freedlander

We are delighted to share that Director and Head of Residential Real Estate Goli-Michelle Banan and Director in our Commercial Real Estate team and Co-Founder of Lawrence Stephens Stephen Messias have been ranked in the Spear’s Property Advisers’ Index 2024 as Top Recommended Property Lawyers.

The Spear’s Property Advisers’ index recognises the best advisers to buy, sell, manage and invest in super-prime property in London, the UK and abroad. 

These rankings are decided on the basis of peer nominations, client feedback, interviews, data supplied by firms, and extensive research by Spear’s.

Click here to see the full rankings.

The Transparency Reporting Pilot

Posted on: February 29th, 2024 by Maverick Freedlander

Every year, thousands of families are deeply affected by the decisions made by the Family Court. Historically, very little was known to the public about how the Court operated, often leading to the family justice system being criticised for being too secretive.

To address these concerns, the Transparency Reporting Pilot (‘the Pilot’) was introduced in the Family Courts of Leeds, Carlisle and Cardiff in January 2023. Following a successful year, the Pilot was extended to a total of 16 Family Courts in England and Wales on 29 January 2024. 

The Pilot authorises accredited journalists and ‘legal bloggers’ to report on what they see and hear during Family Court proceedings. Reporters will also have access to confidential court documents and be able to engage in discussions with parties to the proceedings.

Before publicising their observations, reporters will need to obtain a Transparency Order from the court, which sets out exactly what they may or may not publicise in each individual case. Additionally, reporters must anonymise the parties to ensure that their identity is not disclosed.

The implementation of the Pilot is significant as it represents a departure from legislation that previously prevented the publication of this material. For the first time, hundreds of Family Court cases are now reported on in mainstream media including BBC News, The Daily Mail and The Guardian.

With this new transparency, the Pilot is credited with improving public understanding and confidence in the family justice system, as first-hand reports of family cases (including specifics of the court’s procedures and decision-making processes) are now available to the public.

This is crucial because, statistically, a significant proportion of the population will become embroiled in legal proceedings following the breakdown of a relationship. The Pilot enables the public and parties to approach proceedings with greater confidence, understanding and clarity.   

The Pilot has also improved public confidence in the family justice system. Reporters are now able to name the professionals involved in the court proceedings, including the Judges, legal representatives and local authority workers. Where this information is publicly available, the public will be able to scrutinise the decisions and actions of these professionals. This scrutiny, in turn, may lead to professionals “upping their game”, ultimately improving the system and ensuring a better outcome for the parties.

Following the extension of the Transparency Reporting Pilot, the judiciary has continued to review its impact. So far, the reviews have suggested that the Pilot has significantly increased public trust and confidence in the family courts whilst protecting the parties’ confidentiality. If the Pilot’s positive effects persist, it is possible that it will eventually become a permanent fixture and be extended to all Family Courts in England and Wales.

At Lawrence Stephens, our Family team offers bespoke advice and a wide range of services including divorces, both domestic and international, financial settlements and claims involving overseas assets, for a diverse range of clients including professionals and HNW individuals.

Lawrence Stephens advise Blue Shield Capital on £5.7 million bridging loan

Posted on: February 23rd, 2024 by Maverick Freedlander

Lawrence Stephens’ Banking and Real Estate Finance teams recently advised Blue Shield Capital on a £5.7 million 12-month bridging loan. The loan was structured as a development exit loan on a block of 14 residential apartments located in Dorset.

The teams from Lawrence Stephens and Blue Shield Capital worked hard to expedite a swift completion and have subsequently liaised with the borrower on the sale of several of the residential apartments.

On the banking side, the team from Lawrence Stephens was led by Head of Banking and Director Ajoy Bose-Mallick, with assistance from Senior Associate Ashley Wright and Trainee Solicitor Electra Kallidou. Senior Associate Rachel Coulthard advised on the Real Estate elements of this loan.

Ajoy commented: “It was a pleasure working with the team from Blue Shield Capital to complete this transaction. Well done to all those involved in getting this deal over the line with special thanks going to the Blue Shield Capital team on their entrepreneurial and dynamic spirit to complete the deal and to Rachel who was proactive in reviewing the property aspects of this deal in real time”

Lawrence Stephens acts for Gibson on new Gibson Garage opening

Posted on: February 23rd, 2024 by Maverick Freedlander

We are delighted to share that Lawrence Stephens assisted Gibson, the world-famous guitar manufacturer, in the opening of its new retail concept, Gibson Garage, the first outside of Nashville on Eastcastle Street, in the heart of London.

Director and Head of Commercial Real Estate, Danny Schwarz, handled the leasing aspects. Tom Pemberton, Director in the Construction and Development Finance department, facilitated the construction element.

Lawrence Stephens has acted for Gibson for over 15 years and oversaw the move of its showroom from Rathbone Street to Eastcastle Street, which has been in the making for over two years, with the official opening taking place on 24 February. We are very excited to continue to be part of the Gibson journey.

Click here to learn more about the Gibson Garage London.

Lawrence Stephens acts for Activate Group Limited in acquisition by Elysian Capital

Posted on: February 1st, 2024 by Maverick Freedlander

Lawrence Stephens’ Corporate and Commercial team recently acted for Activate Group Limited in its acquisition by Elysian Capital, in a deal which was completed on 22 January 2024.

Handling over 250,000 claims a year, Activate Group provides accident management services to insurance groups and corporate fleet operators. Their acquisition by private equity firm Elysian Capital will provide investment to allow the group to continue to grow and develop its UK operations.

The team was led by Managing Director Steven Bernstein, with assistance from Senior Associate Angela McCarthy and solicitors Lucy Cadley, Carla Bernstein, and Avni Patel.

Steven commented: “Growing from a small start-up to a UK-wide business, this acquisition represents an exciting new chapter for Activate, as the group continues to build upon its existing services while retaining its core expertise and identity.

“It was a pleasure to work alongside Hannah and the team from Activate to secure a result which pleased all parties – and represents exciting new growth for the Activate business.”

Hannah Wilcox, CEO of Activate Group, commented: “Steven and the team at Lawrence Stephens handled the deal smoothly and professionally, and provided crucial legal and commercial advice. They achieved excellent results on our behalf, and we are delighted to begin this new relationship with Elysian, which will allow us to continue to expand and advance our operations under a larger umbrella.”

Lawrence Stephens selects Trekstock as its 2024 charity partner

Posted on: January 26th, 2024 by Maverick Freedlander

We are delighted to share that Lawrence Stephens has selected Trekstock – a charity that provides resources to young adults living with a cancer diagnosis – as its charity partner of the year for 2024!

Trekstock was founded in 2009 by Sophie Epstone after she became aware of a huge gap in tailored support services for people diagnosed with cancer in their 20s or 30s.

Trekstock’s mission is to ensure that every young adult in their 20s or 30s living with cancer and its after-effects gets the tailored support they’re looking for. The charity provides a comprehensive collection of events, specialist programmes, resources, and an online forum, designed specifically for the Trekstock community to meet their needs, whatever stage they are at in living with cancer.

Lawrence Stephens are proud to support a worthy cause. In further support, the team is excited to take part in Trekstock’s Trek This City challenge – a 10-mile trek through nine Royal Parks from Richmond to London Bridge, which will take place on 19 May 2024.

Lawrence Stephens will offer its office space to Trekstock for hosting events throughout the year, so watch this space for more information in the coming months!

Managing Director, Steven Bernstein comments: “We are all delighted to begin this partnership with a charity doing such important work. Trekstock makes a massive difference in the lives of young people with cancer, and we are delighted to support such an important cause.”

Founder of Trekstock, Sophie Epstone comments: “We at Trekstock are so excited to work with the team at Lawrence Stephens this year! It is deeply gratifying to be chosen as Lawrence Stephens’ charity partner, and we look forward to furthering our shared goal of helping young people experiencing the effects of cancer.”

For more information about Trekstock and how to support their important work, follow the link here.

Proposal to reintroduce employment tribunal fees

Posted on: January 10th, 2024 by Natasha Cox

The government has announced a consultation on the proposal to reintroduce fees for bringing employment tribunal claims.

First introduced in 2013, employment tribunal fees saw claimants having to pay separate fees to issue their claims and to have them heard. Fee levels differed according to the nature of the claim.

On 26 July 2017, the Supreme Court declared employment tribunal fees to be an unlawful interference with the common law right of access to justice and the fees were subsequently abolished.  

However, the government has now announced proposals to reintroduce tribunal fees. Under the proposed scheme, tribunal issue fees would be at the flat rate of £55 per claim. In the event of a multi-claimant claim, the fee would be unchanged, with the multiple claimants being treated as a single entity. No separate hearing fee would be payable.

The £55 fee would also apply on lodging an appeal in the Employment Appeal Tribunal (EAT), however the fee would apply per tribunal decision, direction or order being appealed. Therefore, an appellant seeking to appeal more than one tribunal decision or direction could incur multiples of the £55 fee.

A fee exemption would apply in the case of claims in which individuals are seeking a right to payment from the national insurance fund. Further, individuals could apply under the Help with Fees remission scheme where eligible. 

Based on 2022-23 volumes, the government estimates that the proposed fees could generate between £1.3 million and £1.7 million a year from 2025-26 onwards. It is expected that, if the consultation is successful, these new fees will be implemented from November 2024. For now, the status quo remains and claimants may continue to submit claims free of charge. However given the modest level of proposed fees and the cost of administering the employment tribunal, it is arguably not unreasonable to expect that fees will be reintroduced.

James Lyons comments on Tui’s delisting from the London Stock Exchange in Law360

Posted on: January 8th, 2024 by Maverick Freedlander

James Lyons, Director in the Corporate and Commercial team, discusses the wider market implications of travel giant Tui’s plan to delist from the London Stock Exchange, in Law360.

James’ comments were published in Law360, 05 January 2024, and can be found here.

“Whilst some may perceive this as a blow to the appeal of a UK listing, this decision should be viewed within the particular context of TUI, a German company borne out of a legacy merger.  It already has listings in Frankfurt and Hanover, and more than 75 per cent of the trading in its shares occurs in Germany, so this is a decision which appears to be being made for reasons very specific to TUI rather than necessarily reflective of the London market itself.  

“But it is indicative of the global competitive listing environment and another example to demonstrate why the FCA cannot rest on its laurels and should continue to push forward with changes to retain the appeal of the London market for international businesses.”

Round up of 2023 employment law

Posted on: December 18th, 2023 by Natasha Cox

As 2023 draws to an end, the employment team at Lawrence Stephens examines employment law developments of 2023 and what we’re expecting in 2024.

Holiday and holiday pay

Changes have also been made to the Working Time Regulations 1998.

All employees are entitled to 5.6 weeks’ annual leave entitlement per leave year. The 5.6 weeks is split into two ‘pots’: one pot of ordinary leave, which is four weeks, and one pot of 1.6 weeks additional leave.

Ordinary annual leave should be paid at the employee’s ‘normal’ rate of pay. This does not necessarily apply to the additional leave.

The government is amending regulations to set out what elements of pay are to be included as ‘normal’ for the purposes of the first four weeks’ leave entitlement. Unfortunately, the regulations do not list specific payments that should be included, and instead refer to certain categories, including:

  • payments, including commission payments, which are ‘intrinsically linked’ to the performance of tasks that a worker is contractually obliged to carry out;
  • payments for professional or personal status relating to length of service, seniority or professional qualification; and
  • other payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation.

As per previous case law, results-based commission, certain overtime payments, allowances, etc., will still be caught, however there is still uncertainty about payments such as annual or semi-annual bonuses, and it remains to be seen whether this amendment changes much.

For irregular hours workers and part-year workers (both now defined in the regulations), the government is also introducing a new method to calculate their holiday entitlement. Essentially, an irregular hour worker or a part-year worker accrues annual leave at the rate of 12.07% of the number of hours worked, subject to a maximum of 28 days per leave year. A worker will be an ‘irregular hours worker’ if the number of paid hours that they work is ‘wholly or mostly variable’. A worker will be a ‘part-year worker’ if they are required to work only part of that year and there are periods of at least a week in which they are not required to work (and for which they are not paid). This change is intended to address the issues caused by the Supreme Court’s decision in Harpur Trust v. Brazel, in which it held that part-year workers were entitled to 5.6 weeks’ leave per year, irrespective of the hours they worked. 

The government is also introducing ‘rolled up holiday pay’ for irregular hours workers and part-year workers. Rolled up holiday pay is a system under which a worker’s holiday pay is included in their basic pay, rather than paying them when their holiday is actually taken. The practice has been unlawful since 2006 but will now be lawful under the updated regulations.

These changes come into force on 1 January 2024 for holiday years commencing on or after 1 April 2024.

TUPE

The government has announced its intention to change the transfer of undertaking consultation obligations so that there can be direct consultation with affected staff for businesses with fewer than 50 employees, or businesses of any size with fewer than 10 transferring employees. This assumes in both cases that no existing employee representatives are already in place. The regulations are expected to come into force on 1 January 2024 and the changes will apply to transfers that take place on or after 1 July 2024.

National Insurance and Minimum Wage

Class 1 employee NICs will be cut from 12% to 10% from 6 January 2024.

The NICs holiday for veterans in their first year of civilian employment will be extended to 5 April 2025.

For the self-employed, Class 2 NICs will be abolished, and the main rate of Class 4 self-employed NICs reduced from 9% to 8%, from 6 April 2024.

New national minimum wage rates to apply from 1 April 2024 have also been announced, along with a change to the threshold for being eligible for the highest rate. Over 21s will now be entitled to £11.44 per hour, with 18- to 20-year-olds being entitled to £8.60 per hour. 16- to 17-year-olds and apprentices will be entitled to £6.40 per hour.

Fire and rehire

The government has issued a draft Code of Practice on dismissal and re-engagement. It is designed to cover situations such those seen recently with P&O, where an employer makes changes to terms and conditions by dismissing employees under their old contracts and offers to re-engage them on new contracts (with less favourable terms and conditions).

The aim of the code is to clarify how employers should behave when seeking to change employees’ terms and conditions of employment. A court or tribunal will be able to take the code into account when considering relevant cases and they will have the power to increase an employee’s compensation by up to 25% if an employer unreasonably fails to comply with the code. They could also decrease any award by up to 25% where an employee has unreasonably failed to comply.

The consultation on the Code closed on 18 April 2023 and it is anticipated that the government’s response will be delivered in Spring 2024. While the code is still in draft form it is not binding, but any proposed fire and rehire processes should be carefully considered in the meantime.

Flexible working

The Flexible Working (Amendment) Regulations 2023 come into force on 6 April 2024. The regulations amend the existing Flexible Working Regulations 2014 so that the right to make a flexible working application becomes a ‘day one right’ on 6 April 2024. Currently employees must have 26 weeks’ continuous service to make a flexible working request under the legislation (however, nothing prevents employers and employees agreeing flexible working arrangements between themselves, whether formally through contractual variations, or informally). 

It is assumed that the other flexible working reforms contained in the Employment Relations (Flexible Working) Act 2023 will also commence on that date, but this has not yet been confirmed. These reforms will:

  • allow employees to make two flexible working applications every 12 months instead of one;
  • remove the requirement for employees to have to explain what effect they think their flexible working request will have on the employer;
  • require employers to consult with the employee before refusing their flexible working application; and
  • require employers to respond to flexible working requests within two months instead of three months.

Carer’s leave

The draft Carers’ Leave Act 2023 (Commencement) Regulations 2023 have been published, bringing the Carers’ Leave Act 2023 into force from 6 April 2024.

The draft regulations set out important detail relating to the Act. They state that the legislation will cover employees in England, Wales and Scotland. To be entitled to the provision, employees need to be providing long term care. Carer’s leave will be able to be taken in half or full days, up to and including taking a block of a whole week of leave at once. In a similar way to other types of leave, the notice an employee needs to give to take the leave is twice the length of time that needs to be taken. Leave requests do not need to be made in writing.

Employees taking carer’s leave will have the same employment protections associated with other forms of family related leave. This includes protection from dismissal or detriment as a result of having taken the leave.

The draft regulations still need to be passed by Parliament and it is also expected that guidance will be made available before 6 April.

Strike action

The Strikes (Minimum Service Levels) Act 2023 was passed in July. The act gives powers to make regulations to set minimum service levels in certain industries during strike action. The government has now made regulations under these powers to set minimum service levels for ambulance, railway and border security staff. Although the regulations are not yet in force, they are expected to be by the end of the year. A draft code of practice has also been laid before Parliament, but no minimum service levels are yet in force.

Lawrence Stephens completes warehouse lease for LT Foods Europe

Posted on: December 6th, 2023 by Maverick Freedlander

We are pleased to announce that Lawrence Stephens’ Commercial Real Estate team have recently completed the new lease of a warehouse site for valued client LT Foods Europe Holdings Limited.

LT Foods, an established global food company, currently manufacture and distribute the leading rice brand in India and are the number one speciality food brand in the U.S.  Located in Harlow, the 90,000 square feet warehouse will be used for the storage and manufacturing of rice and other food products, allowing the company to fully establish its UK business and presence.

Working hard to get this deal across the line, the team from Lawrence Stephens was led by Directors Danny Schwarz and Nisha Saigal, with assistance from trainee solicitor Alex Ruder.

Nisha Saigal commented: “We are delighted to have completed this deal for LT Foods Europe. Through this new lease, the company will be able to substantially expand its offering and establish its UK business – a bright future ahead!”

Chairman, Vijay Arora at LT Food Holdings commented: “As we take the next steps for our company, the new warehouse lease will allow us to grow and strengthen our business in the UK. The assistance and advice from the team at Lawrence Stephens was truly invaluable in securing the swift and effective completion of this deal.”