Legal News

July 2013

New Fee Structure for Employment Tribunals

Despite opposition from lawyers and trade unions, the end of July will see the introduction of fees for all Employment and Employment Appeal Tribunals. From this point onwards employees will have to pay an upfront fee to submit a claim, and then a further fee to proceed to a hearing. The exact figures will vary from case to case, but will be between £160 and £250 for the initial claim and between £230 and £950 for the hearing fee, depending on the nature and complexity of the claim. If there are multiple claimants these figures increase dramatically.

At the time of writing, there is no fee at all to submit a claim to an employment tribunal. The purpose of the new structure aims to discourage claimants from taking a chance with an unfounded claim as they are unlikely to lose anything in the process. The courts will have the power to order the losing side to pay the fee costs for the successful party, increasing the risk for employers. The fees may discourage employees and unions from bringing claims that have little chance of success and partially take some of the burden off the crowded tribunal system. On the other hand, concerns have been raised about the fees increasing the complexity of settling costs and sorting out disputes over a relatively low sum of money – say for instance, a figure less than the actual fee itself – once more putting unnecessary pressure on the tribunal system. While applicants with a low income can apply for a fee remission, there is also unease over the impact this structure will have on the accessibility of justice to those who cannot afford the increasing prices.

Following protests and petitions it has recently been announced that the request for an interim order to stop the system from being introduced was refused, and the fees will be going ahead at the end of July. However, there will be a full hearing later this year to decide on the legality of the scheme. If this hearing decides against the Ministry of Justice then all fees that have already been paid will be refunded.

Using corporate veil to displace jurisdiction clause.  The court’s approach on Article 23 Brussels Regulation  explained.

June 2013

Antonio Gramsci Shipping Corporation and others v Aviars Lembergs

Background

Antonio Gramsci Shipping Corporation (“the owner”) entered into charter-parties allowing five offshore companies (“the Corporate Defendants”) to use their vessels. The owner alleged that the Corporate Defendants were actually chartering the vessels at less than the market rate and then making a profit through sub-chartering them at the higher price. The contracts that the two parties had entered into contained a jurisdiction clause stating that any disputes were to be held in the English Courts, and the owner obtained judgement against the Corporate Defendants in this way. However, the owner then sought to make two individuals, “S” and “L”, who were allegedly in control of the Corporate Defendants at the time, and domiciled in Latvia, liable for the diverted profits.

Original Judgement

The case against S took place first, where the owner claimed that the individuals established the Corporate Defendants as a device for the purpose of dividing profits, and this justifies lifting the corporate veil to make the controllers of the corporation accountable. The owner claimed that S should be liable under the jurisdiction of the English courts, largely relying on Article 23 of the Brussels Regulation, which provides that where parties have agreed that a particular jurisdiction is to apply, that choice is final. In this case it was argued that by virtue of the jurisdictional clauses in the contract with the corporate entity, the controller of the corporate entity could be held to those terms. The court approved of this direct contractual route to deciding liability, and held that piercing the corporate veil was justifiable, and even though the contracts were entered into with the corporations, the owner could proceed against the individual who controlled the corporation as a façade to conceal wrongdoing under the jurisdiction of the English courts.

However, by the time the case against L was heard another judgement on an unrelated but very similar case altered the decision process.

The judge in VTB Capital v Nutritek International Corp. disagreed with result of S’s case and rejected this direct contractual route to jurisdiction. The Supreme Court then confirmed that there is no tenable ground to establish jurisdiction through contractual clauses when the implicated individual was not a party to the contract. In light of these developments the court was bound to reject the claim against L. The judgement concluded that assuming it were possible to demonstrate consensus without a formal contract, that consensus must be established in fact, and without any evidence that L ever expressed or indicated agreement to jurisdiction it is not permissible to raise the corporate veil to reveal L as a party to the contracts.

Appeal

As an appeal was allowed in the VTB case, it was also allowed here. The owner claimed that insufficient weight had been given to the European jurisprudence on this point (the VTB case focusing on English law) and that Article 23 can cover ‘deemed consent’ rather than actual consent to a jurisdiction in particular circumstances.

The court had to consider whether the director or controller of a corporate body who has used that corporation as a façade to conceal wrongdoing by entering into a contract with another, can be regarded as having consented to the obligations of that contract – in this case the jurisdictional clauses. Did the judge err in holding that L cannot have been said to ‘agree’ to the terms of the contract, nor can he be held jointly liable along with the Corporate Defendants?

The court held that the examples given of ‘deemed consent’ were not relevant to this particular case – there is no identifiable principle upon which the nature of a contract could justify a deemed consent in the absence of actual consent. It may be that with the transfer of a contract, or of all the rights and obligations it provides, a third party will incur liability but this is not the case here. While there is some flexibility over oral and written agreement, there is still a need for a consensus to be clear and precise. Despite praise for the eloquence of the claims, the appeal was dismissed.

Remarks

This case, alongside VTB Capital, further clarifies the position on piercing the corporate veil. We are reminded that this is not an automatic process, even when someone has controlled a company as a device to conceal wrongdoing. Merely establishing the purpose of the corporation and that an individual was indeed in charge at the time is not enough to justify making that individual liable for a transaction or action of the corporation. This would undermine the principle of law that a contract is an autonomous undertaking between the parties involved, and throw the recognition of the independent will of the parties – the fundamental basis of contracts – into doubt. Indeed, the judgement makes clear that the purpose of Article 23 under the Brussels Regulation is to ensure that the choice of jurisdiction is freely chosen by the parties to the agreement.

 

Property: Meaning of a “house” , Leasehold Reform Act 1967, breach of covenant to adapt

Stuart Henley & Others v Edmund Cohen        Court of Appeal

25 May 2013

The Court of Appeal has further reduced the scope of the Leasehold Reform Act 1967 by ruling that a shop with a residential flat above does not constitute a “house”.

The Issues

The dispute is over the right for a leaseholder to enfranchise under the Leasehold Reform Act 1967. For this to happen, the building must fit the statutory description of a “house”. The court needed to decide whether a particular ground floor shop with a first floor adapted into a flat counts under this description.

The next question is over the rights of the leaseholders (the claimants), who had acted in breach of covenant to adapt the upper floor for living in – the court must decide whether this disqualifies them from acquiring the freehold (from the defendants).

Facts

A lease for a property with a ground floor shop and first floor storage space, along a parade of similar two-storey buildings, was originally signed in 1935 with a term for 99 years. The claimants in this case were registered as proprietors in 2004 and they sub-let the ground floor shop. This ground floor is completely separate from the first floor, which can only be reached by a flight of steps and door to the rear of the building.

The lease includes a clause that forbids any alteration to the “plan, elevation or architectural design” without the consent of the freeholder. The claimants applied for permission to renovate the first floor, with the idea that they could make it habitable and then apply for leasehold enfranchisement. The freeholder rejected the application (as he did not want the lease to be bought out) but the claimants went ahead with the works anyway, and once this was completed filed for enfranchisement.

The court had declared that the claimants were not entitled to the freehold. The judge considered the appearance of the property as shop in a parade of shops, the separate uses of the two floors and lack of accessibility between them, and the lack of intent or design for residential use in the history of the property. Even though the premises had been adapted for living in recently, it could not reasonably be called a house for the purposes of the 1967 Act. On top of this, the alterations they had made to the property put the claimants in breach of the lease, and so they could not lawfully rely on a wrong to enforce their rights.

The appellants relied heavily on the authority of Tandon v Trustees of Spurgeons Homes (1982) which illustrates that enfranchisement extends to mixed unit premises, such as premises that have been adapted for residential occupation. They also contested the interpretation of “plan” in the lease and claimed that the judge had erred in law in saying the claimants needed the freeholder’s permission make alterations.

Held

The original judgements in both parts of the case were upheld. The appellants relied on a case (Tandon) that was different in a very significant characteristic: the physical integration of the shop and flat, and the comparison was not accurate. The judge’s reasoning on this point was clear and valid, and could not be overturned. The breach issue did not need to be detailed after this point, as the appeal had already been lost, but the judge expressed a view for the sake of future clarity. It is unacceptable to instigate a statutory right based on an act that was unlawful and committed for the sake of enforcing that right. The law should not and does not allow someone to enforce a right based on a wrong.

Remarks

This judgement adds to the authorities surrounding enfranchisement, as the interpretation of a house “reasonably so called” is given a narrower meaning here. A key message is that properties consisting of two integrated parts may be treated differently from those with independent units. Also, the judgement here gave considerable weight to the “history and character” of the premise, rather than relying solely on the use at the date of the notice. Other factors such as the physical appearance of the premises, the proportions of the building and the terms of the lease must all be considered on a case-by case basis.

Careful consideration was taken of the appropriate authorities that applied in this case, each side finding that case law upheld their argument. The difficulty of the court lies in applying the authorities to a particular circumstance, and it must be remembered that small details or dissimilarities can undermine a case. The debate over the application of case law here emphasises the uncertainty surrounding this issue.

Employment: compliance of discipline and grievance procedures and assessment of pension loss,

19 May 2013

Lund v St Edmund’s School                   Employment Appeal Tribunal

Statutory discipline and grievance procedures – ACAS Code – unfair dismissal – pension loss – teacher

The Facts

Mr Lund brought a claim for unfair dismissal against his former employer St Edmund’s School. He had been dissatisfied with the equipment used in his teaching and took some days off due to stress. On his return he was suspended on full pay and underwent a consultation from a psychiatrist. There was no underlying medical problem found, but Mr Lund was dismissed due to his relations with other employees being affected, and ‘an irreparable breakdown in the employment relationship’.

The tribunal decided that the dismissal was unfair: Mr Lund had no warning and no opportunity to appeal and there had been no attempt to deal with Mr Lund’s concerns before relationships with colleagues and the school broke down. However, Mr Lund had also through his own behaviour contributed substantially to his own dismissal, and so the tribunal reduced the basic and compensatory awards by 65%.

Appeal

Mr Lund then appealed against the level of compensation awarded by the tribunal. In the case of an unfair dismissal governed by the Trade Union and Labour Relations (Consolidation) Act 1992, a tribunal has the power to increase the award for compensation. The tribunal made a brief reference to this code of practice and decided it did not apply because firstly, Mr Lund had contributed to the dismissal and secondly, the dismissal was not caused by Mr Lund’s conduct directly but by the effects of his conduct (the breakdown in trust and confidence). This judgement was in error, as whether or not he contributed to the dismissal Mr Lund should not be denied compensation for the school’s failure to act in accordance with fair procedure, a failure which was independent of his actions. As for the second point, while the judgement that the dismissal was due to the effects of Mr Lund’s conduct, rather than his direct behaviour is an ambiguous distinction, this does not change the fact that the code applies to situations where a disciplinary procedure has or should have been invoked – regardless of the outcome. The tribunal now has an obligation to consider the merits of raising the award.

Mr Lund also appealed against the calculation of his pension loss. The tribunal awarded a sum based on the school’s contributions to his pension for one year’s worth of loss. The methodology used by the tribunal was flawed and failed to consider the chances of Mr Lund finding future employment that would include a pension to compensate for the one he lost. There was no explanation for limiting the loss of pension to one year from the date of loss, as he should be entitled to compensation for the pension he would have received had he not been dismissed, up to retirement age.

The reasoning of the original tribunal was flawed, as clearly if you have two self contained businesses, the sale of one will not affect the employees of the other. The claimants’ dismissal was a result of the decision to shut down that business, notwithstanding the earlier intention to transfer some of them. It was held that the TUPE laws come into effect once the transfer has been completed, which would make the breach or compliance with the rules final.

Remarks

Once an ex-employee has been penalised for causing the dismissal, as here with the 65% reduction, he cannot then be punished again by omitting to raise the compensation for the employer’s failure to comply with the law and relevant codes of practice. The tribunal must consider an uplift in compensation.

The tribunal erred in assuming that the method used to assess the pension payments was appropriate simply because Mr Lund suggested it. The job of the tribunal here was to decide on the most appropriate assessment which it failed to do. The tribunal will now face the (original) task of judging the chances of the ex-employee finding an equivalent pension and whether to take a ‘simplified approach’ or a ‘substantial loss approach’ according to the guidance laid out for employment tribunals, as this is the method for awarding pension loss payments.

New Immigration Bill – landlords beware

17 May 2013

The Queen’s speech, which fell on May 8th, outlines the legislative agenda for the coming year. One major focus this year is the upcoming Immigration Bill which aims to “ensure that this country attracts people who will contribute and deters those who will not.” The focus on controlling immigration looks ahead to the end of the year, when the labour market restrictions on migrants from Romania and Bulgaria will be lifted, and amidst the increased success of more radical political parties like UKIP. It will be some months before the Bill is published in full, but some measures have been released.

One new proposal will make landlords legally responsible for checking the immigration status of potential tenants. Landlords will be required to seek copies of passports and visas and ensure the tenant is legally in the country, and will face fines that go up to thousands of pounds if they do not comply. There are not yet any details of the measures, such as the exact level of fines or how lay people are expected to establish the authenticity of any documents. These plans are expected to be targeted at letting rooms in multi-occupancy properties, but the regulations will be universal and apply to all landlords. Almost 2 million buy-to-let property owners are expected to be affected.

Professionals and commentators in the industry have already raised concerns that the government is essentially shifting responsibility for enforcing immigration policy onto the general public, and causing more unnecessary red tape and potential risk for landlords. It is also possible that if passed, the Bill could lead to rises in rent as the additional expenses have to be covered, and that discrimination against those with foreign backgrounds will increase.

Other proposals include larger fines for employers of illegal immigrants (the sum currently stands at £5,000) and restricting access to the NHS for foreign nationals. It will also be more difficult to utilise Article 8 (the right to a private and family life) to prevent deportation.

The meaning of “affected employees” under TUPE,      I Lab Facilities Ltd v Metcalfe & Others   EAT

11 May 2013

The obligation to inform and consult employees under TUPE laws only stands in respect to a transfer that actually proceeds.

Facts

The claimants were employed by a company in the film and television industry called I Lab UK. This company had merged a few years before with another called RKT, specialising in post production work. Aside from pooling certain resources these businesses remained separate, with different staff, locations and functions. The claimants were part of the post production team. The company got into financial difficulty and went into liquidation. After some uncertainty the original business was sold to I Lab Facilities Ltd (in the same ownership) and the post production business was closed down.

Initially the plan had been that the successor company would take on some of the post production business too, and the employees were told of this arrangement. However in the space of a few weeks the situation changed and the eventual decision was that only the original business would be transferred.

The claimants argued that there had been a breach of the obligation to inform and consult “affected employees” of the transfer under regulation 13 of TUPE law. The Tribunal held that the employees were “clearly affected by the relevant transfer by being effectively excluded from it, having been informed that they would be a part of it” and duly awarded compensation. I Lab Facilities (as the only solvent business in question) then appealed on the basis that the claimants were employees in the business that was shut down, not transferred, and so they were not affected by the TUPE laws.

Held

The reasoning of the original tribunal was flawed, as clearly if you have two self contained businesses, the sale of one will not affect the employees of the other. The claimants’ dismissal was a result of the decision to shut down that business, notwithstanding the earlier intention to transfer some of them. It was held that the TUPE laws come into effect once the transfer has been completed, which would make the breach or compliance with the rules final.

Remarks

This case is useful in defining what TUPE laws mean by an “affected employee”. The Appeal Tribunal differentiates between the loss of employment directly linked to the sale of the business and the indirect effect of selling just one part. If TUPE is to be used then the direct cause of the loss of employment must be carefully analysed.

In this instance, statutory obligations come into effect after the completion of the fact (here, the sale of the business) as only then can something be objectively judged to have happened or not and a breach can be properly identified.

EAT examine the scope of English employment law in Dhunna v Creditsights Ltd.

22 April 2013

The decision of an employment tribunal was challenged when it decided it did not have the jurisdiction to hear a case of unfair dismissal. The appeal looks at the difficult task of determining the scope English employment law.

Background:

Mr Dhunna was employed by Creditsights Ltd, (“Ltd”) which was based in London with a parent company based in New York. He initially worked in London, but was keen to have a role solely with the Middle East and Africa, and moved to Dubai when an office was opened there.

There was some confusion over the nature of this office, and whether Mr Dhunna was a representative of the business carried on in London, or in fact part of an international business headed by the New York office. (For example, all the sales and invoices handled from London. On the other hand his line manager’s office was a subsidiary of New York, and the decision to dismiss Mr Dhunna was taken there.)

The tribunal had to decide whether someone who is an employee of a UK company who works and lives abroad falls within the scope of English employment law. At time of the tribunal the most recent authority (“Serco”) gave the general rule that the place of employment is decisive, and a connection to the UK must be particularly strong and “the circumstances would have to be unusual” to overcome this.

Certain exceptions to the general rule were provided and the tribunal held that Mr Dhunna failed to fall into these categories. It decided that the Dubai office was not a representative office and that Mr Dhunna was essentially part of the Asian side of a global operation. It concluded there was not a sufficient connection to the UK and so the tribunal did not have jurisdiction over the matter.

Appeal:

It was held that the approach which the tribunal followed has been replaced with subsequent authorities. The method of determining the jurisdiction of the law is to ask whether the claimant’s employment has stronger connections with British employment law than with any other system of law. The examples given in the Serco case are simply that: it is the general principle that is of importance and should be applied. So, there must be an unusually and especially strong connection with English law here, but the comparison is with the jurisdiction in which the employee works.

Mr Dhunna’s appeal rested on the basis that his contract was governed by English law and he had no particular connection to Dubai. It was held that while many of the facts support the conclusion that Mr Dhunna was not within the scope of English law, the question of the relative strength of connection to English law and that of Dubai was not sufficiently addressed by the original tribunal.

The appeal was allowed and the complaint remitted to a different Employment Judge to determine whether a tribunal has territorial jurisdiction to hear the Claimant’s claims of unfair dismissal.

Remarks:

International companies should take note of the complexities of employment law jurisdiction and bear in mind that the principles to be applied are: the general rule is that the place of employment is decisive, but where the employment has much stronger connections with the UK and UK employment law than any other system, the employee may be able to claim for unfair dismissal and other rights under UK law.

The country the employee lives in is relevant, and where they live and/or work in the UK the comparison of connections is not required. Note that ties with a third country may diminish the connection with the UK, and render it insufficient to be covered by UK law.

The particular interest here is the speed with which the law can change. While the decisions of tribunals are entitled to ‘considerable respect’ and reasonable judgements will not be interfered with, approaches to the application of the law do evolve. It is necessary to keep up with the latest developments in case law, as this case demonstrates a substantial change in arguments between the original tribunal and the appeal.

New Employment Guidelines: Belief Rights in the Workplace

12 April 2013

Following the decisions of the European Court of Human Rights in January 2013 on religious rights in the workplace, new guidelines have been published expanding on the implications for employers and employees.

Previously, the generally held view was that a practice was only protected by your human rights if it was required by your particular religion or belief. The new judgment confirms that a practice motivated, influenced or inspired by, and which is sufficiently linked to, the religion or belief will be protected regardless of whether it is a mandatory requirement.

The four combined cases were brought by Christians, but the judgment affects workplace policies towards those with any religion or none. The guidelines are specific that the “law protects adherents to all the generally recognised religions, as well as druids and pagans, for example. It also protects people without any religion or belief, including humanists and atheists.”

A document for employers has been published, detailing the need to accommodate genuine beliefs in the work environment. Official advice is to consider all reasonable requests regarding religious, or belief-based, practices, whether this be a manifestation of belief (such as a piece of clothing or jewellery), time off for specific purposes, or adapting duties (such as avoiding contact with alcohol or meat).

 

‘Qs and As of selling homemade food in the UK’ – March 2013

 

  • Which government department, if any, control / regulate homemade food products?

All issues relating to food hygiene and health and safety are the responsibility of the Food Standard Agency http://www.food.gov.uk/ , which are enforced and monitored through the local authorities. An individual would have to contact the local council for licensing, health and safety, and training requirements. They would control and regulate any food business or distribution in their area, including homemade goods that are intended for sale.

  • Any specific requirements for (a) food production, (b) package, and (c) transportation in respect of these homemade foods.

Main legislation to be aware of:          The Food Safety Act 1990

The General Food Law Regulation (EC) 178/2002

The General Food Regulations 2004

The Food Hygiene (England) Regulations 2006

These are the regulations that cover all food production and distribution:

Food must be safe for consumption; labelling, advertising and presentation of food must not mislead consumers; must be able to identify the source of ingredients; unsafe food must be withdrawn / recalled. Records of food safety procedures must be kept.

There are no specific regulations for homemade foods – the exact requirements and procedure will vary by region according to the local council.

SFBB (Safer Food; Better Business) is a pack developed by the FSA to help small businesses comply with health and safety regulations.

  • Consumers when they have encountered issues of quality, which department, or where, they can make complaints to?

Contact the local council, the environmental health service – as they are responsible for the enforcement of hygiene standards and handle complaints about food quality, hygiene and safety issues. Contact the trading standards office of the local authority for complaints about food labelling, or ingredients.

  • If one complaints, how much is the maximum compensation they can get?

The relevant authorities will investigate.

You may get warnings; if you are found guilty of seriously contravening hygiene laws you may be liable for fines and/or prosecution.

Compensation for a victim / complainant would depend on the case.

  • For these food producers, what kind of certificates they need to carry in order to allow production.  Also any food hygiene certificate?

Any individual would have to contact the environmental health service at their local authority before starting their business. Inspections can be carried out at any time.

You do not need a hygiene certificate to produce food – though these are available and some would prefer to have one as a sign of quality / reliability.

  • When profits are made, where to declare the profit for tax purposes.

By law if anyone make profits of selling, he / she has to register a business and pay the relevant tax.  But if the payment is difficult to trace and the sale operation is not of a massive scale, the HMRC will be very difficult to police this area.  He / she could easily explain away that the fee they charge is to cover the costs and there is no profit element.

 

 EU to cap bankers’ bonuses to one year’s pay

19 March 2013

Under the “Basel III rules” which is a financial reform package introducing higher capital requirements for banks, the EU have proposed to cap bankers’ annual bonuses to one year’s salary. Bonuses of up to twice the annual salary would have to be authorised by holders of a half of a bank’s shares. This would require votes of at least 65% of shareholders owning half the shares represented, or 75% of votes if there is no quorum. If a bank issues a bonus beyond the level of a banker’s annual salary then a quarter of the whole bonus must be deferred for at least five years.

This new cap is expected to be incorporated into UK national law by 1 January 2014. Both David Cameron and Boris Johnson have joined forces criticising this plan fearing that it would stifle Britain’s role as a global banking centre. Chancellor George Brown has also criticised it and will also try to block the plans, claiming it would prevent City firms hiring the best staff, prompting an exodus of top talent to New York.

Daniel Cheung, a partner at Maxwell Alves Solicitors, said: “In economic terms, it is arguable this handicap will make the UK less competitive in the global marketplace. On a legal front, the European Commission may have exceeded their EU powers as Article 153(5) TFEU states that EU legislative powers shall not apply to pay and a possible action under Article 340 TFEU may ensue. In employment law terms, further redundancies and downsizing may follow if the UK becomes less competitive. On a practical point, the income and bonuses from the UK financial industry forms a large part of total UK tax receipts and making up this deficit may be a further problem”.

£50,000 investment for Post-Study Work (PSW) visa holders

15 March 2013

The final group of Post-Study Work (PSW) visa holders will have their visas expiring some time next year in 2014. Due to the difficult economic climate, many have been unable to find an employer who is willing to sponsor them under the Tier 2 General visa. Therefore, this £50,000 entrepreneur investment is an option for them to consider if they wish to remain in the UK long-term. Having actually done both this £50k PSW visa as well as the standard £200,000 Entrepreneur visa for a variety of businesses, we can analyse and inform you what the UKBA are looking for to grant the visa. All our clients wish to ensure they are able to obtain the Indefinite Leave to Remain after 5 years and so we will describe what should be done once the £50k visa is obtained. Stricter immigration rules that were enforced from 31 January 2013 will also be analysed. In making our analysis, we hope that applicants can succeed in their visa for both their benefit, and to the benefit of the UK economy by creating more jobs.

Background to the £50,000 PSW visa

This PSW £50,000 investment category was created on 6 April 2012 for those who are holding a PSW visa. This is not like the other £50,000 investment programs where a world class project is required and the UK Border Agency only gives 1,000 visas a year. This new PSW Entrepreneur Visa does not have a quota at all. This visa is similar to the £200,000 Entrepreneurship visa, in that the visa will first be granted for 3 years, followed by 2 years upon extension. Then after 5 years, the applicant can apply for Indefinite Leave to Remain. However, the difference is that more documents are required in order to obtain the £50,000 PSW visa in the first place and therefore early preparation is crucial.

Requirement

The main requirements to obtain the £50k PSW visa is:

  • The applicant is currently holding a PSW visa.
  • He has £50,000 available in funds. He can use the monies of a third party, such as a family or friend but a lawyer’s declaration is required to confirm the validity of the third party’s declaration. A maximum of 2 people can apply as business partners to invest a total of £50,000, but both must be PSW holders. For example, both people are PSW holders and they just need to have £25,000 each.
  • He must still be registered as self-employed or as a company director with evidence dated within the last 3 months before his application. A lot of people ask us if this means that they must only register within the last 3 months and the answer is no. He can be registered before 3 months of the application, but he must show evidence that he is still registered as self-employed or a director within 3 months of the application.
  • He must be engaged in business activity equivalent to at least NVQ Level 4 as stated in the Codes of Practice under the Tier 2 General visa.
  • He has held £900 everyday for a 3 month period before the application.

Being engaged in business activity

The criteria of ‘being engaged in business activity’ requires more explanation. The applicant can be engaged in business activity as a self-employed or an employed person. There is no salary requirement but the title of his work is what is important. For example, if the business is a taxi firm, the main occupation is driving a taxi and this will not qualify for the visa because this is not on the job list for Tier 2 General visas.

However, if for example, the applicant opens a bubble-tea business and makes himself a “Manager, then this title can satisfy the Immigration Rules. This job can satisfy the NVQ Level 4 requirement if his main job role was:

  • to determine staffing, financial, material and other short and long term requirements;
  • ensures that adequate reserves of stock are held and that stock keeping is carried out efficiently;
  • authorises payment for supplies received and decides on sale prices; and
  • examines quality of products and ensures that effective use is made of advertising and display facilities.

We are working with various bubble-tea businesses throughout the UK including their franchises for the £50k PSW visa (e.g. BoboQ Bubble Tea & Coffee). If this is something that is of interest to you, please contact us.

In addition to the job occupation requirement, the applicant needs to provide one or more of the following:

(i)     Advertising or marketing material that has been published locally or nationally, showing his name (and the name of the business if applicable) together with the business activity.

(ii)   Article in a newspaper or other publication showing his name (and the name of the business if applicable) together with the business activity.

(iii)  Information from trade fairs that he has had a stand or given a presentation to market his business.

(iv) Personal registration with a trade body linked to his occupation.

For example, we have assisted clients in advertising their business in the local newspapers and online. We submitted the newspaper itself as well as the webpage printout as the evidence.

A contract is also required which must show:

  • The applicant’s name and the name of the business;
  • The service provided by the applicant’s business; and
  • The name of other party involved in the contract and their contact details.

For example, we have drafted contracts for applicants in the industry that they wish to invest in, such as property development, television production and bubble-tea cafés.

£900 requirement

The maintenance is now £900 which used to be £800. This sum of £900 must be held in your own name for 3 consecutive months before the application.

Genuine investment

The UKBA became suspicious about students misusing the £200,000 funding to obtain the entrepreneur visa and have implemented new rules from 31 January 2013. There is a new requirement that the applicant “genuinely intends to invest the money”. In order to prove this, the following is suggested:

  • A business plan is submitted.
  • The job title (e.g. Manager) is linked to his education (e.g. Business Studies) or his previous experience. A CV can be submitted to help the UKBA.

What to do once you obtain the visa

With the new law, UKBA have the power to cancel an applicant’s visa if they discover that the £50k is no longer ‘available to him’. For example, this could occur if they discover the monies have been used for another application for someone else.

In order to help ensure that the visa can be extended after 3 years and to apply for Indefinite Leave to Remain thereafter, the following should be done:

  • Continue to be registered as a director or self-employed.
  • Hire an accountant from the start.
  • The applicant is still engaged in business.
  • The applicant recruits 2 full-time workers (30 hours per week) from at least the start of the 3rd year.
  • Do not work for other businesses.
  • Do not use public funds.

The requirement to register as a director or self-employed within 6 months of the visa grant applies to the £200k entrepreneur visa only as the applicant for the £50k PSW visa will have of course done this before their application.

The £50k PSW visa application is more difficult than the £200k entrepreneur visa because of the additional documents required. Professional legal advice should be sought before making the application. Maxwell Alves can assist from the beginning of the application until ILR has been granted. We also have links to various businesses throughout the UK including Scotland if you require additional assistance. If you have any questions, please do not hesitate to contact us.

Family legal aid funding withdrawn from April 2013

13 March 2013

From 1st April 2013, the Government has withdrawn public funding for the majority of family law cases. Unless there is an element of domestic violence, for which evidence must be provided, then you are no longer entitled to legal aid to assist you in divorce and financial matters, as well as private children act proceedings. There is still legal aid for care proceedings and to obtain injunctions.

Before commencing proceedings, the courts expect the parties to have attempted mediation to see if an out-of-court settlement can be agreed. To achieve this, mediation or corroborative law can be used, which can save time and money compared to issuing proceedings in court. In mediation, a neutral mediator will facilitate the discussion between you and will not side with either of you nor will he/she provide legal advice. Any settlement agreed is only binding once both parties have received independent legal advice and a consent order is sealed by the court. The mediator cannot prepare the court documents nor finalise the procedure.

In collaborative law, each party has their own lawyer throughout the process to advise their own client. This can certainly help negotiations as the relevant legal tests can be discussed and particularly when there is a lot of acrimony between the parties, as is often the case with family matters. If agreement is reached during the collaborative process, the lawyers can prepare the consent order for it to be approved by the court, which will then be binding on the parties.

Some 250,000 cases of divorce and family breakdown receive legal aid a year, according to figures from Citizens Advice. The withdrawal of legal aid will result in an increase number of litigants in person. This is likely to slow the court process down with litigants going to court ill-prepared, putting forward their feelings rather than legal arguments with emotions running high. Bearing this in mind, we try to achieve affordable legal representation to our clients. Please contact our office and we will endeavour to see if we can assist on your matter further.

Understanding financial requirements for spouse, civil partner and unmarried partner visas

 12 February 2013

New Immigration Rules were set in force from 9 July 2012 which provided for a financial requirement for spouse, civil partner and unmarried partner visas. Frequently, our clients ask us whether they can satisfy the financial requirements. This article analyses and simplifies these provisions so that it is easier for you to understand and looks upon the more common means of satisfying the criteria. The ‘UK partner’ and ‘sponsor’ have the same meaning in this article and are used interchangeably.

Level of financial requirement

The level of financial requirement is £18,600 and increases by £3,800 for the 1st child, and by £2,400 for each additional child. For example:

  • Applicant with no children: £18,600
  • 1 child + Applicant: £22,400
  • 2 children + Applicant: £24,800
  • 3 children + Applicant: £27,200

General rule

The general rule that applies is that only the UK partner’s monies can count and if the applicant is in the UK, then his/her monies can count too. Monies from third parties (e.g. parents, other family members, friends) will not be counted.

Salaried employment for 6 months or more – Category A

Salaried employment, known as Category A, can count if the UK partner (and/or the applicant if they are in the UK) have been working for their current employer for more than 6 months. It is the gross annual salary that is counted.

Can add non-employment income

The most common non-employment income is rental property income and this can be added to the salary that is earned. The property has to be owned by the UK partner or the applicant. For example, the UK partner earns £8,000 gross annual salary. He has rental property income in the past 12 months amounting to £9,000 and he continues to own the property. The sponsor’s total income is therefore £17,000.

Can add cash savings

If the applicant (and/or partner if in the UK) cannot satisfy the £18,600 requirement, then cash savings may be used. The minimum amount of cash savings required is £16,000. The amount of savings that can be used (Y) is:

[Savings (X) – £16,000] / 2.5 = Y

For example, the UK partner has £25,000 savings. (£25,000 – £16,000) divided by 2.5 = £3,600. Therefore £3,600 can be added to the salary earned.

Salaried employment for less than 6 months – Category B

If the UK partner (and/or the applicant if in the UK) have been working for less than 6 months for their current employer, the test will be:

  1. Gross annual income from their current employer must meet the financial requirement; and
  2. Gross annual income for the past 12 months must meet the financial requirement.

Both (1) and (2) must be satisfied. The following two examples illustrate this:

(a)    The applicant’s partner works in the UK. She started a new job 3 months ago and her gross annual salary is £22,000. She meets part (1) of the calculation for Category B because she is in salaried employment at the date of application and her gross annual salary at the date of application meets the financial requirement.

In addition, she must have received in the 12 months prior to the application the level of income required to meet the financial requirement, part (2). Before starting her new job, she worked for other companies for 8 months during the last 12 months. The total she earned from this employment in the last 12 months was £20,000.

She can use Category B to meet the financial requirement because she earned more than £18,600 in the last 12 months and is currently in a job also paying at least £18,600.

(b)   The applicant’s partner works in the UK. She started a new job 3 weeks ago. Her gross annual salary is £20,000. She meets part (1) of the calculation for Category B because she is in salaried employment at the date of application and her gross annual salary at the date of application meets the financial requirement.

In addition she must have received in the 12 months prior to the application the level of income required to meet the financial requirement, part (2). She has had no other job in the last 12 months as she has been travelling and therefore has had no income in the last 12 months.

She meets part (1) the Category B calculation because she is currently in a job paying at least £18,600 but not part (2) as she has not earned more than £18,600 in the last 12 months. Therefore she fails the requirement and cannot apply under Category B.

Can add non-employment income

As with Category A, non-employment income can be added to the salary earned.

Can add cash savings for (1) but not (2)

Cash savings can be added for (1), i.e. the period when the sponsor (or applicant if in the UK) has been working for his/her current employer. However, cash savings cannot be added for (2), i.e. the period when the sponsor (or applicant if in the UK) was not working or working for a previous employer.

Cash savings – Category D

The minimum amount of cash savings required is £16,000 and needs to have been held for more than 6 months.

The following equation is used:

(minus £16,000) divided by 2.5 = y

Where x is the total amount of savings held and y is the amount which can be used towards the financial requirement. 2.5 represents the length of the visa as each visa is granted for 2.5 years.

At the Indefinite Leave to Remain stage, the whole of the amount above £16,000 can be used. The following equation is used:

(x minus £16,000) = y

Self-employment – Category F

If the UK partner (and/or applicant if in the UK) is in self-employment, they can use income from the last full financial year. Self-employment earnings can be combined with salaried employment (Categories A and B) and non-employment income (Category C). However, cash savings cannot be used in combination with self-employment.

This article hopefully assists your understanding of the financial criteria. As each case is different on the facts as well as the complicated Immigration Rules, we do advise that applicants seek expert legal advice before submitting their application.

 Cyprus Property misselling could cost €1bn

12 February 2013

In ‘A Plan for All Reasons: Six Months On’ (a White Paper published by Maxwell Alves Solicitors in the City of London), George Kounis a Consultant with the firm, argues that Cyprus must adopt a plan to clear, what he compares to the “Stables of Aegeas” if the Cyprus Property market which is vital to the economy and the Banks are to breathe again.

“The cost could be up to a billion but it is a necessity that has been ignored for far too long”, he argues.  He points to the Directives issued by the Central Bank of Cyprus since 2003 asking the banks to put the brakes on the property selling frenzy which inevitably created the bubble and the aftermath we are witnessing and warning them against lending in foreign currencies.  “The Banks admit to no wrongdoing, but the evidence says otherwise”, George Kounis continues.  “In any event, what happened is not only morally but also legally wrong and they will be tied up in court battles for many years if they continue to ignore the strength of public sentiment and the determination of their victims to see justice done.”

And it is not only Banks and property developers that made money out of this.  The Government of Cyprus profited from taxes on missold properties, lawyers, sales agents and various other service providers benefited and even HM Revenue and Customs in the UK managed to get its share by claiming tax on interest earned on escrow accounts.  They are now all sitting back watching the banks take people to court for over-inflated loan balances without even bothering to repossess their properties first because they say they are worthless. “This is obscene”, comments Kounis.

Foreign currency mortgages that rose by 40-60% when property values fell by 70% are only part of the story.  Rental incomes have tumbled, and rent guarantees offered by property developers (usually by adding the total guarantee commitment to the price) have been dishonoured. The banks took the risk of lending on overinflated property prices, ignoring the Loan to Value ratios imposed by the Central Bank of Cyprus, but now they do not want to face the losses.  The Government enjoyed the benefits but now refuses to step in.

The White Paper promotes a plan that will see all parties benefit from a fair, effective and prompt settlement. It will cost a lot of money to resolve but, it is money that the various beneficiaries should not have made in the first place and it will be much cheaper than putting thousands of cases through the courts with doubtful results.  It is estimated that loan repayments lost because people have been forced to default run into millions every month. By settling with these borrowers, those that can keep their properties will resume repayments at reduced rates, whereas new buyers will be found for those who cannot afford to keep their properties even if a substantial reduction is made to their loan balances.

Maxwell Alves is not the only firm that represents clients in this predicament but it is the firm that has been proposing a non-litigious approach to the problem on behalf of their clients for some time now.  George Kounis, will be in Cyprus from 25th February to 12th March for high level meetings to promote the proposed plan.

 International Legal News, Feb 2013

Legal news in China:

Interim Provisions on Equity Contributions Involving Foreign-Invested Enterprises

On October 22, 2012, the Interim Provisions of the Ministry of Commerce on Equity Contributions Involving Foreign-Invested Enterprises came into force. The provisions were promulgated to clarify the regulations on equity contributions involving foreign-invested enterprises as provided in the Administrative Measures for the Registration of Capital Contributions Made with Equity. The Interim Provisions are aimed at facilitating and promoting foreign investment in China.  The following points are noteworthy:

● The scope of the provisions is wide.  This affects either domestic enterprises or foreign investors who hold equity in domestic enterprises which can be used for capital contribution.  This measure includes property development in China;

● The total amount of capital contribution shall not exceed the equity appraisal amount, and the total amount of non-monetary property of an invested enterprise shall not exceed 70% of the registered capital of the enterprise;

● Approval procedures involve two different approval authorities: (a) the approval authority for the invested enterprise and (b) the opinions of the provincial approval authority where the equity enterprise is located;

● The regulations stipulate for the first time that a lawyer shall issue a legal opinion on equity contribution: The participation of lawyers is legally required to guarantee the legitimate status and compliance of industrial policies in the equity contribution.

Legal news in  Hong Kong:

15% stamp duty imposes upon foreign buyers of all residential properties in Hong Kong is becoming law.

Following the announcement by the Government of Hong Kong Special Administration Region (SAR) of China imposing Buyer’s Stamp Duty (“BSD”) upon any buyer (person as well as company) who is not Hong Kong Permanent Resident, the relevant provisions are set out in the Stamp Duty (Amendment) Bill 2012 which was published on 28 December 2012.  Upon the enactment of the relevant legislation, BSD is to be charged at a flat rate of 15% on all residential properties, on top of the existing stamp duty and the special stamp duty, if applicable.

The imposing of BSD is the latest of a series of measures that the Hong Kong SAR Government is attempting to cool down the local property market. The BSD is targeting foreign buyers, the majority of whom come from mainland China.  This measure, in turn, prompts the Chinese buyers to go elsewhere like US and Europe to look for investment opportunities.

Legal news in Taiwan:

The coming cancellation of trading the building capacity of the Land Reserved for Public Facilities between private sectors

The Construction and Planning Agency of Ministry of Interior (‘CPA’) announced on 30 January 2013 that CPA will cancel the channel for the developers to trade the building capacity of the Land Reserved for Public Facilities(‘LRPF’) with private sectors. The developers may only purchase the building capacity of LPRF from CPA and the price of the building capacity will be determined by CPA.

The regulatory change aims to prohibit developers to gain considerate profit from purchasing the lands of LRPF from private owners at a low price and transfer the building capacity of LRPF after donating the purchased LRPF to the local government, to their developments. The transfer of building capacity of LRPF increases the building capacity of the development projects which will be sold at a high price to the public. The developers in Taiwan assess the impact of the change may likely result in the developers shift the increased development costs in acquiring the building capacity of LRPF into the sale price of the developments or increase the sale price of the development due to the decreased building capacity.

Legal news in Brazil:

Change in legislation should increase house prices in the coming years in the city of Belo Horizonte, capital of the state of Minas Gerais, in Brazil.

The restrictions in the preparation of projects mentioned by professionals in the field are the result of the Law n 9.959/2010, which, among other changes, established reductions to the coefficient of utilization of land in the city to control and contain the overpopulation in some areas of Belo Horizonte. However, although the constructive potential of the land in the city has declined, industry representatives claim that the price of land had not decreased since the law was changed, which has become increasingly expensive to build real estate projects in the capital.

The costumer should pay the bill as, with the new legislation, within a year or two he will have to spend up to 30% more to buy these properties. Given the prediction of a scenario with rising prices, the industry’s representatives suggest 2013 as a good time to take advantage of the current values and acquire properties in Belo Horizonte. The cost of land acquisition with lower building potential will surely be passed on to the value of the property. That makes this year a good time to buy because prices are still stable.

2013 UKBA Immigration New Law

08 February 2013

UKBA changes immigration rules on Tier 1 (Entrepreneur) January 2013

With effect from 31 January 2013, UKBA introduces  a genuine entrepreneur test which will give UK Border Agency caseworkers the ability to test the credibility of suspicious applicants; and a change that requires the necessary minimum funds to be held, or invested in the business, on an ongoing basis rather than solely at the time of application. (http://www.ukba.homeoffice.gov.uk/sitecontent/newsarticles/2013/january/41-t1-entrepreneur)

A written ministerial statement setting out the changes to the Tier 1 (Entrepreneur) route has been laid in Parliament.

UKBA are introducing the following changes: An introduction of a genuine entrepreneur test which will give UK Border Agency caseworkers the ability to test the credibility of suspicious applicants; and a change that requires the necessary minimum funds to be held, or invested in the business, on an ongoing basis rather than solely at the time of application.

These changes are being made in response to evidence that the route is being targeted by applicants seeking to abuse the Immigration Rules.

If UKBA have not decided the application before 31 January or application submitted on or after this date, they will consider it under the new rules.

UKBA may ask applicant to provide additional information which have 28 days time limit to submit.

If you are applying on or after 31 January and are relying on funds from a third party, the declarations you provide from those third parties will need to confirm that the funds will continue to be available to you until they are used.

UK Immigration: A New Life in the UK test starts on 25 March 2013

A new Life in the UK test will be introduced on 25 March 2013. An updated Life in the UK test handbook is now available to buy. (http://www.ukba.homeoffice.gov.uk/sitecontent/newsarticles/2013/january/37-new-handbook)

An updated Life in the UK test handbook is now available to buy. It has been updated to provide the reader with a more accurate reflection of living in the UK, with a greater focus on British culture and history. The handbook celebrates British achievements and prominent individuals in the fields of science, culture, literature and sport. It also highlights the natural beauty and major landmarks of the UK. There is information on government, democracy, the legal system and how individuals can contribute to their community, plus a greater emphasis on the responsibilities as well as privileges of living in the UK.

A new Life in the UK test will be introduced on 25 March 2013, 8 weeks after publication of the new handbook, to allow candidates time to prepare. Unlike the current test, candidates will be tested on their knowledge of history and the law in the new test.

UK Immigration: Visa for Chinese visitors made easy

The United Kingdom is open for business and tourism and China is one of the UK’s priority markets.  Visa applications for Chinese visitors to the UK are made simplier and faster. (http://www.ukba.homeoffice.gov.uk/sitecontent/newsarticles/2013/january/42-chinese)

The United Kingdom is open for business and tourism and China is one of the UK’s priority markets.

From 2010 to 2011 the UK saw 28 per cent growth in visit visas issued compared to France, which saw 19 per cent growth for the same period. In 2011 they processed more than 283,000 visas from Chinese nationals worldwide.

94 per cent of Chinese visitors who apply for a visa get one; 96 per cent of applicants surveyed who have applied for a visa said that they were satisfied with the service they received; 97 per cent of non-settlement visas from Chinese nationals are processed within 15 days (and 54 per cent within 5 days);

99 per cent of business visit visas are decided within 15 days (75 per cent within 5 days).

 

The average length of a visa application form is 6 pages (including the disclaimer); the average UK visa costs £81, which is multiple entry for 6 months to 5 years. Our website has information and guidance translated into Chinese and applicants have access to a Chinese language phone and email service.

Online application forms will also be translated in Chinese from later this year.

For businesses UKBA have set up a dedicated network of staff to support them with the visa application process.

From spring this year UKBA will offer a service to some businesses where UKBA will go to them to capture fingerprints of their employees travelling to the UK, to help speed up the system even further.