Despite the public mood being highly critical of bankers’ bonuses, the High Court has upheld bonus claims by investment bank employees who were employed by or seconded to Dresdner Kleinwort Ltd.

In Attrill and others v Dresdner Kleinwort Ltd and Commerzbank AG [2012] bankers were told that they would participate in a guaranteed minimum bonus pool subject to an assessment of individual performance. The High Court held that the employer was contractually bound to pay the bonuses as the information given to the employees amounted to a promise that gave rise to a contractual obligation and was not, as the employer argued, a promise that was binding in honour only. It was sufficiently certain and had been intended to create legally binding obligations.

The case highlights the fact that employees should take advice on bonuses which are not paid out. It also referred to the case of Khatri v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2010], in which Gannons advised a successful claimant who recovered a contractual bonus worth in excess of £1.2million.

In the case of Seldon v Clarkson Wright and Jakes the Supreme Court has held that the justification tests for direct and indirect age discrimination are different. Indirect age discrimination can be justified by purely individual reasons particular to the employer’s situation while direct discrimination can only be justified by reference to legitimate objectives of a public interest nature. However, the Court held that that workforce planning, staff retention and limiting the need to performance manage are legitimate aims capable of justifying discrimination.

A partner in a law firm was forced to retire at the end of the calendar year in which he reached the age of 65. The Supreme Court found that the compulsory retirement age set out in the firm’s deed of partnership was a directly discriminatory measure but it was capable of justification as it was based on legitimate policy aims as identified by the ECJ ‘inter-generational fairness’ and ‘dignity.’ The case has now been remitted back to the employment tribunal for it to determine whether the selection of a specific age of 65 was a proportionate means of achieving those aims in the circumstances of the business.

From a practical perspective, though it may be possible to justify a compulsory retirement age, it seems that employers will have to produce convincing evidence of the effect that their retirement age will have on achieving their aim in order to justify it. It remains to be seen the type and extent of evidence which may be required.

Just as businesses can no longer ignore the opportunities presented by social media now they can no longer ignore the threats. There have been many examples in recent cases including one employee posting on Facebook: “I work in a nursery and I do not mean with plants” (Whitham v Club 24 t/a Venturato) and an employee at Apple posting derogatory comments about the company’s products (Crisp v Apple). Whether a dismissal for gross misconduct can be justified or not will depend on the circumstances and the policies the employer has in place. In the former case, the dismissal was not held to be justified but in the latter, partly helped by Apple’s clear policies, the dismissal was upheld.

Employers must also take care to ensure their monitoring policies are clear and look at the steps to justify them looking at Facebook accounts and the like. Employers should also have a clear policy on social media, aligned with their disciplinary policies, as a means of protection against employees letting off steam and the inevitable claims for unfair dismissal that will follow.

One of the key changes which will come into force on 6 April 2012 is the increase in the qualifying period from one year to two years for standard unfair dismissal claims. Employees whose employment commences on or after 6 April 2012 will normally need to have accrued two years’ service with their employer before they are able to claim unfair dismissal. It is important to be aware that the increase in qualifying period applies only to those employees whose employment begins on or after 6 April 2012 and therefore, for example, if an employee has accrued one month’s employment on 6 April 2012 he or she will still be able to bring an unfair dismissal claim if dismissed after one year’s service. There will also continue to be circumstances when it will not be necessary to have accrued any length of service for an unfair dismissal claim, a dismissal by reason of exercising maternity/paternity rights being one such circumstance.

The rationale for the increase in the qualifying period is not entirely clear. The government has stated that it will give employers more confidence in recruiting employees; it will allow employees and employers more time to resolve issues in the work place; and it will ease the burden on the employment tribunal process.

All three reasons justifying the increase are questionable. Business groups have advocated that reducing the qualifying period will encourage businesses to recruit with employers having greater flexibility to dismiss than before, but it is hard to see that this will be a material factor in determining hiring policies. It is also difficult to see why increasing the qualifying period will encourage more issues to be resolved between employee and employer, rather than simply making it easier for employers to dismiss. Lastly, does increasing the qualifying period in order to lighten the burden on the employment process really provide justifiable grounds?

There is often disagreement between the shareholders of a company and the board of directors on executive remuneration. We have all read about the disgruntled shareholders of large PLCs and banks with regards to executive remuneration but what about in smaller companies? Best practice for larger organisations doesn’t necessarily translate to smaller firms - should SMEs be subject to the same rigorous approach and possible future changes to the law as the larger companies?

While not paying themselves excessive bonuses at the expense of the shareholders, directors still need to be adequately remunerated (whether by way of salary or shares) to encourage them to drive the business forward. Quite simply, smaller companies are unlikely to survive for long without the directors on board. However, it is important that remuneration decisions are made transparently and ideally, depending on the company’s resources, by an independent remuneration committee.

The Quoted Companies Alliance has, this month, published guidelines to address the void between the larger PLCs and smaller companies. The QCA guidelines recommend that an independent remuneration committee should consult with the shareholders on its decisions so as to build trust and minimise conflicts with shareholders. Ultimately, what is best practice for a company’s remuneration policy will depend on the size and stage of development of the company in question.

Men earn more than women – no shocks there. What is shocking is the little known fact amongst the female camp that men work on their careers whilst women work in their careers. What does this mean and why do I say this?

Our experience is that women rarely negotiate their pay and often take positions without a clear reporting line or job description, leaving them in the firing line in redundancy rounds. We speak to many professional women who have never negotiated an employment contract and feel that, particularly in a recession, now is the time to keep their heads down and not cause a fuss. In other words, they are grateful and risk averse in the extreme. It is commonly accepted that girls are trained from an early age to be compliant and not to be direct. This is evidenced by a study into the gender pay gap in the financial services sector in 2009 which found that 86% of male graduates were more highly paid than female graduates – the conclusion was the male graduates believed they were worth more and therefore asked for more.

We generally find that our male clients prioritise their employment contracts and do not sign on the dotted line until they have had the contract checked out and/or negotiated by a lawyer. They are often already planning the next move, so issues such as notice periods and restrictive covenants are crucial to the aspirational male.

Employment contract provisions, particularly in a recession, are critical to protect your position and to date we have not heard of a case of anyone being fired for asking for a pay rise. So the message to women is…. get negotiating for your future and believe in your worth! Rally support from people who understand the difference in approach between males and females to counteract female natural instinct with male thinking.

Gannons is presenting a seminar, entitled “How to negotiate your employment contract” on 19 March 2012 at the American Lawyer's Association in London. Click here to book your place now http://www.gannons.co.uk/events/284-seminar-negotiating-employment-contracts

At the time when an employer considers redundancy necessary, one of the major areas in which a company can trip up is around the redundancy procedure. There is a risk that the employer will isolate redundancies to, for example, the employee who is losing a specific client or the business development manager of a particular department that is closing down.

All too often senior executives fail to realise that there has to be proper consideration of an appropriate pool of potential candidates for redundancy and the choice must not be determined by a convenient decision to let a pre-selected employee go. It is much easier for employers to state that the number of candidates in the pool matches the number to be dismissed – typically a pool of one for a single dismissal - but is this legitimate?

The employee will often complain that it is unfair because there is no selection process. However, two recent cases in the Employment Appeal Tribunal have emphasised that this is not only fair but if the employer has properly applied its mind to the pool, it can be very difficult for the employee to challenge the decision. An employment tribunal will not decide whether the employer was right or wrong objectively, key will be whether the employer’s decision was a reasonable one even if another employer (and even the tribunal) might come to a different conclusion.

The right procedure for employers from a legal perspective is to demonstrate that the correct pool of people has been considered properly and a paper trail of evidence is in place if this procedure is ever challenged by an employee who has been made redundant. Very often this step is overlooked by companies, as it can be tricky in practice – especially if the employer is seeking to achieve a particular result – but it will be viewed very sceptically in a tribunal case.

A recent example involving a pension fund actuary found in favour of the individual because the tribunal established that all actuaries should have been included in the pool and not just the employee whose pension fund had been affected.

In the case of different departments, if there is a business development manager in each but one department closes, all the business development managers probably have the ability to be able to continue the role and could be used by the other departments, so every manager should be included in the redundancy pool.

There is still scope for argument – in these two cases one was won by the employee and the other by the employer. The lessons are that an employer can use a pool of one if it can reasonably explain its thought process but an employee can challenge this in some circumstances.

There is a very generous legitimate tax saving regime known as “entrepreneurs relief” which many people lose out on through lack of awareness and by failing to carry out basic planning. In a nutshell, entrepreneurs relief means that the effective rate of capital gains tax is 10% on gains of up to £10,000,000 during a lifetime.

To benefit from entrepreneurs relief you do not need any fancy tax schemes which risk an enquiry from HMRC. You do need to meet some requirements, however, such as holding at least 5% of the voting shares in a private company and being employed in some capacity (not necessarily full time) by that company for at least 12 months prior to sale.

The relief applies to share sales or asset sales. Not many partners realise that the relief can be claimed when you leave a partnership or LLP and sell your share of the business, often to the other partners. Shareholders and partners should review their position to make sure they will qualify for entrepreneurs relief.

For example, you may have started off with more than 5% of the equity but now hold just under 5% as a result of dilution. You will lose out on entrepreneurs relief unless you are able to increase your shareholding back to the qualifying 5% or more level and hold this for at least a year before disposal, which for some people would be achievable if they knew how to go about addressing the problem. The Budget may alter this, of course, but the Government has not issued any warnings that entrepreneurs relief is about to change.

Watch this space!

The ruling by the Court of Appeal in Tiffin v Lester Aldridge LLP regarding the employee status of solicitor Mr Tiffin highlights the grey area regarding whether an LLP member is an employee or is self employed.

It alerts partners that in the event of unfair dismissal, as in this case, there is a distinction between fixed share partners – as in Mr Tiffin – and salaried partners, and that members should be careful not to rely on the fact that they are employees just because they have a limited voice in the management of the firm or made a minimum capital contribution.

This case, which found Mr Tiffin to be self employed and therefore was not unfairly dismissed, also reinforced that there is not one determining factor that points to this decision and if individual partners are unsure of their status they should seek legal advice.

What it also demonstrates is that the law is a moving feast and that clarity is best sought before it becomes an issue.

To assist partners Gannons has produced a document that highlights the differences between employees and partners, and this can be downloaded from www.gannons.co.uk

While the news Sir Fred is a sirno longer may be just desserts and will undoubtedly fuel the current craze forbanker bashing, is it not going too far to blame the current economic woes onthe bankers, as is widely being suggested in the media? Let’s not forgetthat many people got rich on consumer spending on credit and fairy tale houseprices, and the current situation is the inevitable hangover of the fallout nowfaced from this major root cause. Shouldn’t we bash the consumers who getsucked in so easily by the advertiser’s dream and allow themselves to becomeputty in their hands with the aim of keeping up with the Jones’s.

Personally, I don’t believe we are experiencing a recession as such inthe South East but more a change of lifestyle which entails living within yourmeans. This can only be good practice moving forward and a salutarymessage to pass onto our children.

The proposed employment law changes around employmentdisputes and unfair dismissal as well as the new proposed health & safetyregulations published this week, which are set to take effect in the UK in 2012,are yet another stark reminder of the increasing bureaucracy facingbusinesses.

On the one hand, the nanny state is fuelling the mushroominglegal profession that is growing up around compliance and the requirement forUK businesses to meet the ever growing EU regulations. On the other hand, companies need an evergrowing admin function to deal with and manage the increasingly long red tape.

Set against this background is the dearth of investment thatbanks are prepared to make in businesses, especially SMEs, holding back manypotentially promising companies and their very talented founders.

Business angels, private investors and VCs are around, andtheir booty can be extremely enticing for many entrepreneurs. But it’s not all rosy in the garden of growthby investment. I recently read anexcellent article in Real Business by Karen Darby, founder of SimplySwitchabout ‘Why venture capitalists are evil’ http://realbusiness.co.uk/news/why-venture-capitalists-are-evil. In this no holds barred account of herpersonal journey through VC-land she tells of the triumph and despair she enduredat the hands of venture capitalists. VCsand banks are effectively in the business of advancing credit for high returns viadifferent avenues and just as consumers have found out to their cost, credit isa risky business.

So where are businesses looking to assist their development? The successful businesses we advise arefavouring strategic partnerships and joint ventures as a way to grow and avoidcredit. Organic growth is nowincreasingly respected. It is easy tomeasure success by turnover or number of employees and forget that turnover isvanity but profit is sanity. It justrequires a change of mindset to see that the business landscape is not as grimas it may first appear; there are plenty of avenues to explore and differentways to configure business growth without paying a heavyprice.

This week’s stark warning that Britain will head into a second recession next year has sent the doom mongers into a state of unadulterated frenzy. With the prospect of another downturn and further job losses on the horizon, the clamour for the heads of those leading our failing financial institutions and the purported ‘fat cats’ is growing stronger. Yet while the baying persists, the word on the high street is that the Jones’s are also taking a long hard look at their own behaviour.

For too long keeping up appearances has been the driving force behind a considerable amount of consumer spend. Now, as budgets tighten, must-have items are no longer regarded as critical causing a shift in shopping habits. It is this fundamental change in behaviour that is fuelling the recession as much as the goings-on in the financial sector.

So the question is, when liquidity returns, will consumer spending revert to its former glory days or will the age of restraint endure?

To my mind, global destruction and consumers’ flippant attitude to spending have gone hand in hand. While the one-wash T-shirt and throw-away consumables have spurned countless industries all over the world, these have also led to the demise of our moral responsibility to the environment and to our society.

If we choose to reconsider what we purchase in the future, yes jobs and organisations will be in jeopardy. But as was proven by the dramatic closures of industries like the coal mines under the Thatcher government, new doors do open and the new emerging sectors like sustainable agri-tourism create an improved environment and far more palatable way of living.

So to create a world that is progressive yet sustainable, let’s not just berate the City for its failings, let’s consider the ripple effects of our own behaviour and change our own mindset. Ultimately, it will be for the good.