Leasehold Reform (Ground Rent) Act and what it means for you

In an attempt to make the leasehold system fairer, Royal assent was granted for the Leasehold Reform (Ground Rent) Act 2022 on 8th February 2022.

On the 23rd June 2022 Government Guidance published the following:

The Act will make home ownership fairer and more transparent for millions of future leaseholders. The reputation of the leasehold system has been damaged by unfair practices that have seen some leaseholders contractually obligated to pay onerous and escalating ground rents, with no clear service in return. The Act will prevent this from happening in future, tackling significant ambiguity and unfairness for future leaseholders.

For the Act to apply, and the lease to be defined as a “regulated lease”, certain criteria must be satisfied. The lease must:

  1. Be a long lease (more than 21 years) of a single dwelling
  2. Be granted for a premium (purchase price)
  3. Be granted on or after the commencement date, which in most cases is regarded as the 30th June 2022 (the date the Act was brought into force)
  4. Not be considered as an “excepted lease”

If the above is satisfied the landlord must not require a leaseholder to make a payment of prohibited rent (which includes ground rents) nor can the landlord charge an administration fee for collecting rents.

As far as the Act is concerned a permitted rent is a peppercorn rent which has been defined by the Act for the first time as “an annual rent of one peppercorn”.

As well as the Act reducing ground rents to a peppercorn it also protects leaseholders against landlords charging an administrative fee for collecting peppercorn ground rents so as to ensure leasehold properties are more affordable and further to reduce the incentive to charge a leaseholder an actual peppercorn ground rent.

So what does this mean for leaseholders/future leaseholders/you?

The Act does not currently apply to existing leases however, should there be a surrender and re-grant of a lease which extends the term or adds additional property to the demise, there is a possibility the Act may apply subject to the qualifying criterial being met.

There are however, certain leases to which the Act does not apply. These include:

  • Business leases
  • Statutory Lease extensions
  • Community Housing Leases
  • Home Finance Plan Leases
  • Retirement homes up until 1st April 2023 after which it is proposed the Act will apply

Should Landlords fail to comply with the Act, they could face penalties from £500 to £30,000.

 

The UK remains the jurisdiction of choice

Brexit.  Six years on we are still talking about it, perhaps unsurprisingly.  There isn’t a domain that hasn’t been affected by it (or perhaps infected by it, depending on your POV) and never has that been truer of cross-border trade, whatever the sector.  In this article, we look specifically at Brexit’s effects on one form of cross-border trade, UK legal services.

First, some context setting: the UK legal market generated £41.6bn in revenue in 2021 and is the largest legal services market in Europe second only to the US globally, so it is of huge strategic importance to the UK economy.  The export value of English law is attested to by the fact that English is the main choice of governing law for most cross-border transactions globally. 

What’s changed?

 In one sense a lot, in another not very much.  Let’s look first at the changes to the legal landscape post-Brexit, by which we really mean the end of the ‘transition period’ provided for under the UK’s withdrawal agreement with the EU, being midnight on 31 December 2020.

The pre-brexit enforcement regime

  • Prior to 31 December 2020, the cross-border dispute framework was largely a function of EU law and consisted of the following key pillars:
  • The Brussels Regulations, namely the 2001 Brussels Regulation and the Recast Brussels Regulation which in broad terms together regulate the recognition and enforcement of judgments in EU member states.
  • The EU Service Regulation which was widely recognised as facilitating the efficient transmission and service of legal documents between member states.
  • The 2007 Lugano Convention which largely replicates the position under the Brussels Regulations in relation to the recognition and enforcement of judgments in three EFTA states (Iceland, Norway and Switzerland).
  • Rome I and Rome II which determine the law applicable to, respectively, contractual and non-contractual obligations.
  • Beyond the jurisdiction of the EU, jurisdiction and enforcement is dependent on either the existence of bilateral arrangements (which exist for many countries with whom the UK has historical ties, see below) or in the absence of reciprocal arrangements the question falls to be determined under the national law of the country in which recognition/enforcement is sought or the question of jurisdiction falls to be considered.

 

Position post Brexit

  • Post 31 December 2020, the Brussels Regulations and Lugano Convention have fallen away. This represents the biggest impact on cross-border disputes with the result that the Hague Convention on Choice of Court Agreements – to which the UK is a party in its own right as of 1 January 2021 – now takes centre stage as the main reference point for conducting cross-border disputes.  Note the emphasis on commercial disputes because whereas the Brussels Regulations apply to a broad range of civil disputes, Hague’s principal limiting factor is that it only applies to cross-border disputes where there is an exclusive jurisdiction clause in favour of a contracting state (note asymmetric or optional jurisdiction clauses do not qualify).  
  • Hague is also a lot narrower in application, excluding from its ambit certain categories of dispute including consumer, insolvency, IP and insurance (among others). Its other major limitation is that it does not extend to interim relief such as freezing orders that could under certain conditions previously be passported in to other EU member states. 
  • EFTA states are not a party to Hague, meaning the UK’s failure to join Lugano (despite its best efforts) creates a gap between the UK and EFTA states which is mitigated slightly by the fact that Norway and the UK have agreed to continue to apply Lugano; as to the remaining EFTA states, the recognition and enforcement of judgments is a question of the national law of those states.
  • The EU Service Regulation has likewise been revoked and has been substituted for the not too dissimilar Hague Service Convention.
  • Lastly Rome I and II continue to apply as they form part of the package of EU legal instruments which the UK continues to apply post Brexit as “EU retained law”, which in simple terms incorporated EU law as it stood at the end of the transition period in to English law.

 

What are the implications?

Having identified the actual differences in the EU landscape, what does this mean in practice? It is true that the new regime at first blush introduces some mechanical impairments in to the process of conducting cross-border litigation.  But those differences must be balanced against the following considerations:

  • Most commercial agreements contain governing law and exclusive jurisdiction clauses; Hague should extend to most commercial agreements other than those in the specifically excluded categories.
  • As to the recognition and enforcement of judgments between the UK and EU member states that fall in between the Hague/Brussels gap, these will be resolved with reference to national laws. A good number of EU members states have evolved and mature legal systems that provide a reciprocal enforcement regime outside the international treaty/convention framework under which UK judgments can be recognised and enforced. The same point applies to inbound judgments; there is a pre-existing framework in UK law in relation to the recognition and enforcement of inbound judgments from the EU and beyond. 
  • As between the UK and the rest of the world, the UK has bilateral arrangements that deal with the enforcement of judgments with many countries with whom they have historical ties such as Canada, Australia, Cayman Islands, Bermuda, New Zealand, Pakistan, Guernsey, Jersey, BVI, Israel, India (among many others) that remain unchanged.
  • The weaker protections under Hague in terms of the recognition and enforcement of exclusive jurisdiction clauses have been mitigated by the empowerment of the English Courts to issue anti-suit injunctions, otherwise prohibited under the Brussels Regulations regime. This should address the (impolitely termed) “Italian torpedo” scenario where proceedings are issued in one jurisdiction in breach of an exclusive jurisdiction clause.
  • As to issues of service, there are many similarities between the EU Service Regulation and Hague with any differences being partially mitigated by the fact that from 6 April 2021 it is no longer necessary to obtain the permission of the English Court to serve proceedings out of the jurisdiction where there is an English jurisdiction clause (see CPR 6.33(2B)(b)).
  • It is important to bear in mind that a major share of the international dispute resolution market is international arbitration which remains the preferred method of dispute resolution for international litigants. The New York Convention regulating the recognition and enforcement of arbitral awards sits completely outside of the EU framework; if anything arbitration has emerged as a winner (see below).

 

Conclusions

Some perceive a conspiracy of silence as to the adverse impacts of Brexit on the UK more generally.  But there is good reason to believe in the resilience of the UK legal market and that it has largely emerged unscathed; what empirical data there is suggests that Brexit has neither dented English law as a brand nor the Courts of England as the forum of choice for the resolution of disputes. 

We do however caution that it is still early days and warn against complacency.  The recent Portland Commercial Courts Report indicates that between 2021 and 2022 there has been a dip of 20% in the number of Commercial Court judgments that have been issued (possibly a function of the considerable resource constraints the Commercial Court has been experiencing in terms of judge availability) but the trend since 2016 remains upwards.  Moreover, 54% of the litigants in the Commercial Court were international, up from last year’s 50:50 split.  Of these non-UK litigants, the number of nationalities represented in the Commercial Courts has also expanded, with (interestingly) the number of EU litigants increasing slightly from 11.5% to 12% over the last year. 

Beyond the Commercial Courts, London retains its pre-eminence as the preferred seat for arbitration: the number of referrals to the LCIA has increased in 2021/2022 to 444, representing a doubling of its case load of the last 10 years.  The growth in London-seated arbitration is possibly a collateral effect of Brexit in view of the enforcement benefits of the New York Convention.

Lastly, if English law is to be dislodged then there needs to be a viable alternative.  It is true that some economies have started to evolve their own body of commercial law creating competitive pressure on English law. However, much of what gives English law its considerable export value remains: the sophistication and depth of its body of contract law, the malleability of the common law and the potency of its precedent value to market participants.  In short, there are plenty of reasons to be hopeful that English law will maintain its market dominance and that English Courts, and London in particular, will continue to be the forum of choice for the resolution of cross-border disputes.

Explaining the Points-Based UK Immigration System

This system provides flexible arrangements for UK employers to recruit skilled workers from around the world through a number of different immigration routes.

The UK’s previous immigration scheme required a resident labour market test be carried out on businesses recruiting and sponsoring skilled workers. Whilst the resident labour market test has been abolished, the Skilled Worker and Home Office guidance now details the evidence of recruitment requirements that HR staff and recruiters are expected to follow when sponsoring employees on skilled worker visas.

Skilled Worker Visa – requirements

For a Skilled Worker Visa there must be:

  • a certificate of sponsorship for the applicant from an employer (Home Office approved);
  • a sufficiently skilled job;
  • a job meeting the minimum salary requirement —depending on the type of work; and
  • the applicant must satisfy the English language requirement.

A potential hire, meeting the above requirements, independently financial and able to cover the costs of sponsorship is unlikely to encounter barriers to recruitment and is likely to be able to find a role.

Businesses, however, still encounter challenges.

Removal of the Resident Labour Market Test

Businesses wanting to sponsor a skilled worker (under the previous Tier 2 (General) visa) previously had to carry out a resident labour market test (RLMT).  The test was prescriptive and added at least 28 days to the recruitment process. Businesses were required to ensure any vacancy advertised could not be carried out by a UK citizen/settled worker and added to the overall cost  of the hire. If a UK citizen or settled worker had the skills and requirements listed in the job advert, the business could not offer it to the individual requiring sponsorship — even if the stronger candidate.

Whilst the abolition of the resident labour market test, which occurred on 1 January 2021, was great news for businesses – employees can now be brought on board without the long initial delay adding value sooner, there are still administrative and operational challenges which employers need to watch out for (particularly with costs for recruiting from within EU (rather than relying on the free movement of workers)) and particularly in the field of discrimination. It is always useful to have a recap on this.

Potential risks

With the points-based system in place and the removal of the resident labour market test, applicants must not be rejected on the basis of their immigration status.

Stating that only those with the right to work in the UK will be recruited and/or offered employment may lead to race discrimination claims on the grounds of nationality. To avoid this, we would recommend the following steps to avoid potential race discrimination claims:

 Planning and Strategy

  • What level of recruitment as a business is being aimed for this year and where are these vacancies within your business – understand where your vacancies could be mapped on the immigration points-based system:
  • Is the skilled occupation list an option – does the role you require fall into this list?
  • Does the salary offered match the going rate for the role?

Carrying out this exercise will help you prepare and manage your recruitment process. If the role or salary requirements do not meet the immigration points required, then that would be the basis of any rejection — rather than the individual’s immigration status.

Internal Processes and Training

  • Make sure everyone is aware that the resident labour market test no longer applies and that applicants should not be rejected based on their immigration status.
  • Do not state in any job vacancy or advertisement that you do not have a sponsorship licence.
  • Consider applying for a sponsor licence if you are likely to be recruiting a skilled worker — it is currently taking around 8 weeks for the licence to be processed.  This prevents a delay later.
  • Don’t introduce a recruitment policy confirming you only accept applications subject to immigration status and/or from those who do not require sponsorship.
  • Avoid decisions being made based on costs only (further details below).

What if you do not want to be a sponsor?

In a nutshell, if you operate in any way that could place any nationality at a disadvantage, for example, not wanting to incur the costs of sponsoring a worker, or not wanting a sponsor licence, you will have to justify that decision by:

  • being clear on what your legitimate aim is — i.e. what is your real business need; and
  • ensuring that how you achieve that aim is proportionate — i.e. it is reasonably necessary in order to achieve that aim?

Is the cost of sponsorship the only reason for not offering a role to a potential candidate? If so, then you are not going to be able to successfully defend a race discrimination claim. Rather than saying that “it’s too expensive to sponsor a worker”  explore other considerations – to do that you need to know what they are.

For example, it may be that in relation to the administrative, compliance and/or general obligations that go with sponsorship, you just don’t have the resources or expertise to manage that confidently.

The courts recognise and understand that most business decisions have regard to costs, so something cost-driven but not solely cost-based is capable of justification. If not purely cost-based, you do have to be clear on grounds you rely on for not offering the role and be able to demonstrate that your cost-driven approach is proportionate. 

Do you have a genuine vacancy? 

Though there is no longer a requirement to carry out a resident labour market test, you must still have a genuine vacancy – any role advertised must be genuine, meet the relevant skills threshold and salary requirement.   

The best starting point to determine whether an applicant meets the required skills threshold is to consider the vacant role on the Government’s skilled occupation list. The role must not be fake, a sham or created so that an applicant can apply for a visa.

If a vacancy is not capable of being plotted under a relevant job code on the skilled occupation list, there may be a temptation to try and “fit” it under a different job code on the list. If you can genuinely consider, and demonstrate, that the role matches the relevant job code on the list, that should be fine. However, any attempt to make an application for a role that does not fulfil the relevant skill threshold, then you will likely encounter problems with your skilled worker visa/sponsorship application such as:

  • the application being rejected;
  • the application being accepted in error but later investigated, subject to a compliance visit and/or the application being rejected at a later date;
  • the Home Office could consider your application misleading, which could result in:
    • a fine
    • a downgrading of the sponsor licence
    • being on under more scrutiny  i.e. on the Home Office radar re all future applications.

You will need to ensure that you understand the requirements of the vacant role and how that may or may not correspond with the relevant job code on the skilled occupation list. 

Summary

The removal of the resident labour market test gives considerations that need to be factored into the business recruitment and decision-making process, posing real issues for the business which cannot be ignored.

We have seen many changes recently in the world of business immigration law and no doubt will continue to do so, therefore it is essential to ensure you and/or your recruitment team are up to date on the new visas, the points-based system and are clear how to avoid potential discriminatory practices.

If you find you and/or your team isn’t quite as up to speed as you thought, then equality and diversity training and/or training around the visa points-based system may be helpful and we will always be happy to assist.

Enforcing restrictive covenants: a high-risk strategy backfires.

The facts, in brief

 “John” and “Paul” worked for the Claimant, but they left and joined a new recruitment company, “X Ltd” (the names are obviously fictional to protect confidentiality).

X Ltd is a rival recruitment company based in the same building as the Claimant. The two companies both offered IT consultancy, but also had very different businesses in other respects: X Ltd offered recruitment services in the optical field, an area the Claimant did not specialise in at all. This proved to be a critical difference.

The Claimant brought an injunction application by which it attempted to stop John and Paul working for X Ltd, stop them from soliciting members of the Claimant’s staff to leave, and stop them from misusing confidential information. It also sought orders against X Ltd preventing it from inducing John and Paul to breach their obligations.

John and Paul’s employment contracts with the Claimant each contained post-termination restrictive covenants against (1) competition generally; (2) dealings with client and candidates; and (3) soliciting employees to leave. It was these covenants that the Claimant sought to enforce, although as is explained below, there were some important differences between the covenants in John’s and Paul’s respective contracts.

The Claimant tried to infer that the Defendants had acted unlawfully just because of the circumstances. Those circumstances included the fact that John and Paul had both left the Claimant’s employment around the same time, and then both joined X Ltd. There was also grave suspicion that John had taken away a notebook when he left the Claimant, which the Claimant said contained information about its clients, and that as such John was misusing the Claimant’s confidential information.

It all went very wrong for the Claimant.

John

John was a senior recruiter. He had been recruited away from the Claimant by a third party recruiter (and not as a result of any targeted attack by X Ltd, or any conspiracy between John, Paul and X Ltd).

John told the Claimant upon leaving that he was going to join X Ltd to set up an IT division (the Claimant had an IT Division and so on the face of it the Claimant had cause to be concerned about John joining X Ltd). Despite being told this, the Claimant waited about a month – and until after John had already started working for X Ltd – before applying to the Court to stop him working there. That was the Claimant’s first problem, but it was only one of the hurdles it faced.

John recognised – on good advice from Sherrards – that there was at least an arguable case that the restrictive covenant in his contract with the Claimant might be capable of stopping him from working for X Ltd running its new IT Division, and so, taking a sensible approach, John was assigned to a completely different division of X Ltd for the duration of his covenants and both John and X Ltd gave undertakings to the Claimant to this effect, but also gave undertakings that John would not act in breach of the other covenants by contacting the Claimant’s clients or trying to poach its staff. In effect, John was taken out of competition. The Claimant refused to accept this and so applied to Court for an injunction, seeking a total prohibition on John doing any work at all for X Ltd, despite the fact that that is not what they were entitled to ask for because the restrictive covenant in John’s contract did not go that far (and if it did, it would have been too wide to be enforceable).

Come the hearing, the Court dismissed the application against John. It found that the Claimant was not entitled to stop John from working for X Ltd altogether, because that is simply not what John’s covenant extended to. The law does not permit an employer to restrain its employee from engaging in activities that do not compete with that in which the employee was engaged during its employment, and if that is what John’s covenant did (it didn’t), the covenant would have been unenforceable. In other words, the Court took the view that it was arguable that the covenant would stop John from working in IT Recruitment, but that this was not an issue in this case given that John had been assigned to a different division of X Ltd.

The case against John was therefore a classic case of the Claimant “overreaching” – that is, seeking protection that goes beyond what it is entitled to under the covenant. It is to an extent understandable why the Claimant did not want John to continue working for X Ltd at all, but it did not have a proper foundation for doing so, and so it lost.

Paul

The position of Paul was different. He was only a trainee recruitment consultant when he worked for the Claimant, far less senior or experienced than John. He was recruited to X Ltd via a legitimate ad placed via Indeed and, again, there was no evidence that he had been enticed by X Ltd or that he had conspired with John or X Ltd to leave the Claimant.

The Claimant – like with John – sought an injunction from the Court to stop Paul working for the Claimant altogether; not just in an area that was in competition with the Claimant. For the same reasons as with John, the Claimant failed: the covenant in Paul’s contract did not operate to stop him working for X Ltd altogether, and so the Claimant simply had no basis for an injunction to this extent.

But another (major) difference between Paul and John was that the non-compete covenant in Paul’s contract was for 9 months, whereas the same covenant in John’s was for just 6 months. In other words, the Claimant clearly thought it appropriate to restrict its trainees for longer than its senior members of staff. This oddity was never explained by the Claimant (despite a 29-page witness statement adduced in support of the application), and it proved to be a point that was fatal to the Claimant’s application. The Court, at the hearing, took the view that the non-compete covenant in Paul’s contract was simply not enforceable: firstly because it could not be justified in relation to a trainee recruiter at all, but even if it could it went much further duration-wise than would have been permissible, particularly bearing in mind that the same covenant in John’s contract was for a shorter duration.

But that was not the only reason why the Claimant’s case fell down. Even had the Court taken the view that the non-compete covenant in Paul’s contract was enforceable, there was no evidence that Paul was in fact in breach of it. When Paul took up employment with X Ltd, it was into X Ltd’s “Optical” division; an area of recruitment in which (1) the Claimant simply does not operate; and (2) therefore Paul clearly did not operate when he worked for the Claimant. This was the final nail in the coffin in respect of the Claimant’s attempt to enforce the non-compete covenant against Paul. The Claimant had adduced no evidence at all that Paul was engaged in the same kind of activity with X Ltd to that in which he was engaged when he worked for the Claimant. The Claimant was relying entirely on suspicion, and tried to persuade the Court that it would “do no harm” to grant an injunction. The Court robustly disagreed and refused to grant the injunction.

Equally there was simply no evidence that Paul had contacted clients or tried to poach staff members and so the Claimant’s claim for an injunction on those fronts was also flatly rejected.

X Ltd, John and Paul 

There was no evidence whatsoever of John and Paul conspiring (themselves or with X Ltd) to leave the Claimant together. In fact, John was recruited via a third-party recruiter and Paul was recruited via a direct job advertisement in Indeed. The evidence bore all of this out.

What about the claim that John had misused confidential information?

When he left, John took an orange notebook with him. This formed the basis of the Claimant’s application for wide-ranging, extremely draconian, orders that its confidential information be delivered-up, that it be granted computer imaging orders so that it could carry out a forced examination of electronic data, and confessional-style witness statements under compulsion. Such orders are granted only extremely rarely, and when they are granted it is in only the most serious and clear-cut of cases.

Again, the Claimant’s case failed.

 

  1. John’s witness evidence explained that the notebook was his (a point admitted by the Claimant) and that he’d brought it with him to his employment with the Claimant.

 

  1. The notebook contained information that John had placed into it prior to his employment with the Claimant. The Claimant did not attempt to explain if or how John had shared that information with the Claimant, or how the Claimant had acquired some sort of rights to the information.

 

 

  1. The Claimant failed to identify what of the information in the notebook amounted to confidential information – that is, information that amounts to trade secrets, as opposed to what is called “mere” confidential information).

 

  1. The Claimant’s employment contract with John contained a “confidential information” clause, but it was plainly unenforceable (because it tried to render all sorts of non-confidential information as “confidential”.

 

  1. The Claimant’s evidence was generally wholly unsatisfactory.

 

  1. Overall, there was simply no factual basis whatsoever for the Claimant’s claim that there was anything sinister in relation to the disappearance of the notebook.

 

What’s the take away?

The Claimant’s decision to proceed was ambitious and super high-risk. The Claimant’s claim was based on wholesale reliance upon suspicion, as opposed to evidence. Yet the Claimant took a strong-arm approach, doubtless in the hope that the pressure of the situation would force John, Paul and X Ltd to give the Claimant what it wanted. That strategy backfired spectacularly. The Claimant clearly did not expect a fight.

It is perhaps understandable that the Claimant was deeply unhappy that John and Paul had left and joined a rival recruitment company. But it is very dangerous to allow cases like this to be driven by high emotion and anger. What is required in these cases is a very careful, considered approach to all the circumstances, but particularly the evidence. It seems all of this was lacking in this case.

Claimants need to be confident (1) that the restrictive covenants in question are likely to be enforceable; and (2) that the evidence to support the injunction application is there and is sufficiently strong. If the case is beset with difficulties in either of those respects, it is likely that the requisite tests applicable to injunction applications will not be able to be met, with the result that the application fails. Given the extremely high cost associated with injunction applications, failure at the first hurdle tends to prove to be a very expensive lesson indeed.

The Claimant was represented by a highly-reputable law firm and a Queen’s Counsel. Sherrards saw-off the case in conjunction with Jonathan Cohen QC (now KC) of Littleton Chambers, widely reputed as one of the best in his field.

What is the Skilled Worker Sponsor Licence?

As one of several routes designed to allow UK employers to recruit talent from overseas, it is the main route to long-term employment.  Once granted a licence, the organisation is permitted to recruit and sponsor potentially any number of non-UK nationals under the route.

Before applying for the licence, the business must be able to show that:

  • It is a legally operating UK organisation;
  • There is a genuine need for a Skilled Worker Sponsor Licence; and
  • The organisation understands fully its duties and responsibilities as a sponsor with the  appropriate HR systems and processes in place.

The organisation must show a real need for a Sponsor Licence by submitting either evidence that there is a genuine vacancy, a potential suitable candidate requiring sponsorship, or evidence of the organisation’s likely future need to recruit individuals to jobs that meet the Skilled Worker criteria.

Under the scheme, sponsorship will be possible as long as the job that they will be doing is sufficiently skilled to Regulated Qualifications Framework (RQF) Level 3 and they are paid a sufficient salary, at least £10.10 per hour, and £20,480 annually (but dependent upon the type of job being carried out).

In addition, the applicant must be able to show that they have a certain level of proficiency in the English Language.

If you are interested in finding out more about the Skilled Worker Sponsor licence, click here to speak to Partner Emma Peacock.

What is the High Potential Individual Visa?

Launched on 30 May 2022, the new High Potential Individual (“HPI”) visa route is one of several other routes of entry opened this year.

Recent graduates of top overseas universities who want to work or look for work in the UK following completion of their degree are encouraged to utilise this visa. It is designed to attract the “brightest and the best” to the UK.

Applicants must have successfully passed a bachelor’s degree or above from a recognised leading university in the last five years. (Separate lists exist for each of the last 5 academic years, enabling applicants to determine whether their university qualified at the time they graduated).

Employers do not need to sponsor the candidate under this route; the individual must make their own visa application which will include supporting themselves financially and the usual English Language requirement.

Successful applicants will be able to come to the UK for two years (with a bachelor’s degree) or three years (with a PhD) and work in any role. Unfortunately, this route cannot be extended and does not lead to settlement, although it may be possible to switch into another visa route, prior to expiry of the term.

If you are interested in finding out more about the High Potential Individual visa, click here to speak to Partner Emma Peacock.

To read other articles in this series, click on the links below: 

Understanding the new Scale Up visa.

What is the Global Business Mobility Visa.

 

Employer’s responsibilities during the heatwave

Partner in Employment law at Sherrards Joanne Perry answers some common questions ahead of another heatwave:

Do I have to pay employees who are unable to get into work due to travel difficulties?

Take a look at your employment contracts and Employee Handbook. These might specify whether an employee is entitled to be paid if they are unable to get in due to travel problems. If they are silent, however, then the default position is that the obligation is on the employee to get into work, regardless of any difficulties caused by the weather or otherwise. If they do not attend, they are on unauthorised absence and they are arguably not entitled to be paid.

Be careful, however, if you are going to take this approach. Firstly, there is a potential that the employee can argue that failure to make payment in these circumstances is an unauthorised deduction from wages (assuming this is not covered in the employment contract). The defence to this would be that there was no entitlement to pay as no work was done, but it may be an argument you would prefer to avoid. Secondly, you should assess whether the financial benefit of withholding pay is outweighed by the impact on staff morale and productivity. This is particularly so if the weather and travel conditions are extreme and, even with the best of intentions and efforts, employees are unable to get in.

Above all, you should ensure that your approach is consistent. Ideally, tell staff in advance (in written format, e.g. memo or email) what your approach is going to be or, even better, have an “Extreme Weather Policy”.

Consider whether employees are able to work from home, whether alternative travel arrangements can be made or whether there are other ways around the issues – e.g. travelling outside of peak times to avoid the worst of the heat. Otherwise, clearly explain to employees that either: (a) any time off will be unpaid; (b) time off will be paid but that they are expected to make up the time later; or (c) they can request the time off as paid annual leave or unpaid time off for dependant’s leave (see below). Prior notification is particularly important if you have made payments in the past in such circumstances.

As an aside, be careful if you are trying to insist on employees taking annual holiday retrospectively. Employees will need to agree to this unless the contract specifically allows for you to do this.

 

I have an employee who says they cannot come in because their child’s school has closed due to the heat. What shall I do?

Employees with responsibility for a dependant are entitled to emergency time off in circumstances in which there is an unexpected disruption to childcare. Unless the school closure was announced a reasonable time in advance, such that the employee had sufficient time to arrange alternative childcare, this would probably be an emergency situation and employees are entitled to take time off and not suffer any detriment for doing so.

Strictly speaking, the time off is unpaid (unless the contract of employment says otherwise) but employers may again want to consider the impact on morale that this approach would have. Again, it is important to be consistent in your approach. You should be especially careful where other employees who are unable to make it into the office due to travel are being paid.

 

One of my employees failed to come into work today, blaming the heatwave and travel issues. I think he is using it as an excuse and could have easily come in. Where do I stand?

If you believe that an employee is falsely using the weather conditions as an excuse for absence or lateness, this can be treated as a disciplinary matter. If you consider the matter to be serious enough (e.g. if it is a persistent or blatant case), you should investigate in line with your disciplinary policy and take action as appropriate.

However, in less serious or one-off cases, you may be better placed simply having a quiet word with the employee and letting them know that any further time off will have to be taken as holiday or will be unpaid. Bear in mind that it can often be difficult to prove or disprove an employee’s ability to come into work in these circumstances.

 

Our air conditioning isn’t great. Is there a maximum temperature above which I am obliged to shut the workplace?

In short, no, there is technically no maximum temperature above which people aren’t allowed to work. In offices or similar environments, the temperature should be “reasonable”. You should have thermometers around the workplace so that you can check the temperature – although temperature itself is not the sole issue, since humidity, radiant heat sources and clothing are also factors.

The TUC has lobbied for an upper limit on workplace temperature to be introduced – suggesting that employers be forced to take steps when the temperature inside hits 24˚C. Under the TUC’s proposals, staff could be sent home and employers prosecuted if temperatures reach 30˚C (or 27˚C for those whose work is physically demanding).  However, these proposals are currently not reflective of the law.

If your working environment is getting too hot to be considered “reasonable” then you could be putting your staff’s health and safety at risk. If, having taken steps to try to control those risks, the temperature is becoming dangerous enough to endanger health (e.g. through heatstroke etc) then you would be best advised to shut the workplace.

 

The above provides a general guide to issues that might arise. However, each situation is unique and different considerations may apply in your case. We would therefore recommend that you consult a solicitor, or another suitably qualified person, about your specific circumstances.

To find out more about employers responsibilities during a heatwave, click here to speak Employment Partner Jo Perry. 

What is the Global Business Mobility visa?

Introduced in April 2022, this route provides various ways for an overseas business to operate in the UK with 5 categories which include:

  • Senior or Specialist Worker – for a senior overseas manager or specialist employee, located outside the UK undertaking temporary work assignments in the UK business linked to their employer overseas. Particularly useful where an applicant cannot meet the English Language requirements for a Skilled Worker application.
  • UK Expansion Worker visa – allowing an individual to come to the UK to set up a branch of an overseas business, as either a senior manager or a specialist employee.
  • Secondment Worker visa – a new route for overseas workers being seconded to the UK as part of a high value contract (at least £10m per annum and at least £50m overall) by their overseas employer.
  • Graduate Trainee visa – (previously the ICT Graduate Trainee visa category) – allowing staff working at a connected group company on a graduate scheme to come to the UK as part of their training/graduate placement, with a view to them taking up a senior management or specialist position outside the UK.
  • Service Supplier visa – for overseas workers who are either contractual service suppliers employed by an overseas service provider, or a self-employed independent professional and providing services covered by one of the UK’s international trade agreements.

In all cases, the business needs to apply for the sponsor licence and meet strict compliance and audit responsibilities in the usual way.

None of the routes lead to settlement and if this is being contemplated, then longer term options such as the Skilled Worker sponsor application should be considered.

To find out more about Global Business Mobility visas, click here to speak to Immigration Partner Emma Peacock.

For other articles in the series, click here to read: 

Understanding the new Scale-Up visa

What is the High Potential Individual visa?

Understanding the new Scale-Up Visa

A new Scale-Up Visa route will open to applications on 22 August 2022. A new route to entry, this is aimed at individuals with talent, a high level of qualification and skill.

For employers who are registered sponsors and experiencing rapid growth (needing to “scale up”), this route is designed to make the process of sponsoring visas quicker and easier.

Sponsored Scale-up visa applicants must have a valid Certificate of Sponsorship from an A-rated Scale-up sponsor have the specialist skills required to continued growth of the Scale-Up business and authorised by the Home Office to sponsor the job in question under the Scale-up route.

To qualify as a Scale-up, a sponsor will need to show:

  • annualised growth in either turnover or staffing of at least 20% for the previous three-year period and
  • a minimum of 10 employees at the start of the period.

Much of the flexibility of this new route is that unlike other immigration routes, a sponsoring employer need only confirm that an applicant is expected to work for them for at least the first six months of their visa.

The job for which the applicant is sponsored must be (amongst other things):

  • a minimum skill level of RQF Level 6 (graduate level) (on a list published by the Home Office of jobs with their occupation codes and salary ‘going rates; and
  • a salary threshold of at least £33,000 per annum (higher than a Skilled Worker’s £25,600), the ‘going-rate’ for the sponsored job and at least £10.58 per hour; and
  • applicants must meet an English language and finance requirement.

Under this flexible immigration route, a second stage exists during which Scale-up Workers no longer require sponsorship. If applying after two years under the Scale-up visa, a worker would need to show that they had sufficient PAYE earnings for at least 12 months during those initial two years, in addition to a Scale-up Worker’s English language and finance requirements which at this stage are likely to be met automatically.

Provided these criteria are met, the visa application process would then be fast-tracked by the Home Office.

This is a route which could lead to settlement after five years, and applicants could bring dependent family-members. However, the individual would only need to be sponsored for the first six months, meaning that a sponsored employee would have more freedom to leave the employer and work elsewhere.

Employers utilising this route may therefore wish to consider other retention mechanisms, such as bonuses, restrictive covenants or repayment of visa fees on leaving.

If you are interested in finding out more about the new Scale-Up visa, click here to speak to Solicitor and Partner, Emma Peacock.

Read the second article in the series, Global Business Mobility visa by clicking here.

And the third, here: What is the High Potential Individual visa?

“Long-COVID” can now be a disability – what does this mean for your business?

In this case, the Claimant, Terence Burke, was a caretaker who had been off sick for 9 months after experiencing substantial and long-term effects from COVID-19 after contracting the virus in November 2020.  Following a number of fit notes and occupational health reports referencing long-Covid and post viral fatigue syndrome, Mr Burke was dismissed on the grounds of ill health in August 2021. He subsequently brought claims of disability discrimination and  unfair dismissal. The tribunal held at a preliminary hearing that Mr Burke was disabled between the period he contracted the virus and his dismissal and therefore his claim for discrimination was permitted to proceed.

What is long-COVID?

COVID-19 can cause symptoms that last weeks, months or longer after the infection has gone.  This is called “long-COVID” and typical symptoms include: fatigue; brain fog; insomnia; depression and anxiety; chest pain; heart palpitations; dizziness; joint pain and shortness of breath, amongst others.

Practical steps

This decision does not mean that employees with long-COVID will automatically be deemed to be disabled under the Equality Act – whether they are or not will depend on the specific facts of the case. 

In order to support an employee with long-COVID, and protect the business against claims for disability discrimination, you should consider taking the following steps:

  • Communication – Talk to your staff about their condition, the symptoms they experience, whether there are any patterns (e.g. are the symptoms worse at a particular time of day), and whether they feel that their symptoms impact their ability to work, or get to/from work. In order to ensure compliance with the UK-GDPR, the employee should be asked how they want their manager to communicate with the rest of the team about their condition.

 

  • Occupational Health Referral – Consider a referral to gain a medical opinion about the employee’s condition and what reasonable adjustments the business should consider.

 

  • Support – make sure the employee is comfortable with keeping you updated on their condition and what adjustments they might need. Offer details about any employee assistance programme, counselling or other resources which might be available.

 

  • Train managers – anyone who manages staff should have training on how to handle sensitive or difficult conversations, especially in relation to employees’ health and well-being. Specifically, managers should be trained on the company’s relevant policies and how to manage an employee suffering from long-term conditions.

 

  • Policies – You should review and update relevant policies such as equal opportunities and sickness absence policies, to ensure they are fit for purpose and non-discriminatory. 

Although not legally binding, this recent tribunal decision is likely to encourage more claims from employees suffering with long-COVID. With infection rates still climbing, employers will also likely see increasing numbers of employees diagnosed with long-COVID, so it’s important to know how best to manage and support them.

If you would like further information about managing disabled staff or delivering training to managers, please contact the Employment team by clicking here, or speak to Employment Associate Emma O’Meara