Commercial Landlords need to be energy efficient

Commercial property landlords in England will be legally required to upgrade the energy efficiency of their properties to at least Band “E” standard by 2018 before they can be leased to new or renewing tenants, the UK government has confirmed.

Over time, it is likely that the minimum E standard will rise.

From April 2018, it will be unlawful to let commercial (and residential) properties with an EPC rating of F or G, the two lowest grades of energy efficiency. The new rules will be extended to cover all leases by 2023. It is estimated that 20% of non-domestic properties could be in the F or G bracket.

Where a landlord sells the interest in the property before the works to bring it up to the minimum efficiency standard, the successor landlord will inherit liability.

Tenants may worry that some of the standard clauses in the lease will oblige them to effect works to improve the energy efficiency or to pay through the service charge for the landlords to do the work.

Assistance

Some assistance may come from the government with the Green Deal (“GD”) initiative. The GD may provide a financial solution to support energy efficiency refurbishment and retro-fit projects. Landlords and sub-letting occupiers will need to achieve an EPC rating of “E” or have implemented the maximum package allowable under the GD even if they fall short of an E rating.

Before 2018

–          All rentable  properties need to have an EPC assessment

–          Where the EPC rating is F or G or is at risk of becoming so, an Energy Efficiency Plan should be put in place to improve the energy efficiency of the property. Energy efficiency improvements should take advantage of void periods, lease breaks and/or be included as part of an on-going maintenance and plant renewal programme.

–          Energy efficiency works should be implemented before April 2018.

POTENTIAL EFFECT OF “BREXIT” ON EMPLOYMENT LAW

With the upcoming referendum, there are numerous concerns on the potential effect of the UK leaving the EU, none less than the potential implications on employment law. Although a large number of UK employment laws have originated from the EU, it is unlikely that a “Brexit” will have considerable impact on employment law. Wholesale changes to TUPE rights, for example, would be considerably unpopular and such fundamental changes are likely to be politically difficult.

There may be small changes however.

Human Rights Act

Should the Human Rights Act be repealed or watered down, this will have significant impact on trade unions. It would be possible to propose laws to make it tougher for trade unions to commence strike action as well as restricting other freedoms and rights of trade unions.

Holiday Pay and Working Time

Although unlikely that there will be any change to the legal obligation to have paid holiday, other changes such as the 48 hour weekly working time limit may be scrapped or amended, which could be popular with employers.

A simpler method of calculating holiday pay may be introduced to avoid adjustments relating to non-guaranteed overtime and commission payments. Also the requirement for employers to pay workers on sick leave in lieu of holidays on termination may be removed or changed.

Agency Workers

There may be changes to the current requirements for employers to provide agency staff with the same core terms and conditions as directly employed staff after 12 weeks; as well as the provisions requiring employers to notify employee representatives of certain information relating to agency workers in collective redundancy and TUPE transfer situations could change.

Employee Consultation and Discrimination

Again, there are unlikely to be substantial changes to the requirements to inform and consult employees, albeit that these regulations can be somewhat cumbersome. Similarly, removal or dilution of discrimination and equal pay protections are unlikely to happen due to the complications with the voters, as they are fundamental to current employee law.

Immigration

It would seem that a “Brexit” could cause significant issues with regards to immigration, both in regards to sending UK employees to the EU and also receiving people from current member states to the UK. Free movement of workers within the EU allows UK businesses to send their employees abroad to work at facilities in other member states free of regulatory burdens. Removing this right could mean that UK employers sending staff abroad would have to go back to applying for visas.

These assumptions are based on the UK leaving the EU altogether, but depending on the form that “Brexit” negotiations take the UK could seek to remain within the European Economic Area (EEA) or European Free Trade Area (EFTA). These negotiations could leave the UK bound by existing EU directives on working time, agency workers and collective consultation without the ability to influence these laws.

The Modern Slavery Act 2015 will require large commercial organisations, which are carrying on any part of their business in the UK with a global turnover of £36 million or more, to publish a slavery and human trafficking statement in each financial year. This requirement is expected to come into effect in October 2015.

The organisation must set out in the statement the steps it has taken that year to ensure that slavery or human trafficking is not happening within its business or supply chains, or state that it has not taken any such steps.

The Government considers that large commercial organisations have the influence and buying power to effect change in their supply chains to tackle the issue of modern day slavery and human trafficking.

The desired effect of the statement is to provide transparency to consumers, investors and members of the public about the steps, or lack thereof, that organisations are taking to eliminate slavery and human trafficking in their businesses and supply chains. It is considered that this transparency and public scrutiny will put commercial pressure on organisations to take action, due to the reputational damage and competitive disadvantage if they do not.

It is expected that this reporting requirement will encourage greater due diligence on and management of suppliers and will be particularly pertinent for organisations in sectors identified as suffering from modern slavery issues, such as the clothing, textiles and construction sectors.

Commercial organisations which fail to produce a statement as required under this Act may face enforcement proceedings by the Secretary of State.

We firstly would like to take the time to thank all those involved with the Directors Question Time Seminar, and especially to Barnes Roffe and HSBC for their promotion and for hosting the event itself.  The Seminar began with a general question about the ways in which a Seller of a business can make the process easier to manage.  Julian Goulding began the discussion on this topic and it quickly became the overall theme of the night.  As such, four key areas were identified as being essential to managing a sale:

Planning – This is the most important factor to consider.  Don’t wait until the Buyer begins enquiries, so have your anticipated answers ready.  This can’t be stressed enough.

Momentum – If the process moves too slowly all involved will lose steam and the whole endeavour will grind to a halt.  Keep yourself involved in the process and it won’t run the risk of stagnation.

Time – Plan for a third longer than you anticipate the sale to take and take into account the time of year.  Any holiday period is a major factor to consider even if it is still some time away.

Stress – This isn’t an after-hours project.  At some point in the process, this will take up a good part, if not most of your time and attention.  Try to effect a practical management strategy so as to give time to complete this project.

The points above bring projects such as this well within acceptable standards.  Keep in mind however that even with a dedicated legal team, your input is what will make the process as smooth and efficient as possible.

This question was examined in the high-profile case between celebrity chef, Gordon Ramsey and Gary Love. The focus of this case was the relationship between Gordon Ramsey (“Mr Ramsey”) and his father-in-law Christopher Hutcheson (“Mr Hutcheson”).  In this case the High Court considered the scope of an agent’s authority and the use of a signature machine.

Mr Ramsey had left the management of his business wholly to his father-in-law. Throughout this arrangement, Mr Ramsey did not expect Mr Hutcheson to keep him informed of all the details of the business transactions and he knew that he was not being kept informed of all transactions. Mr Hutcheson used a signature machine to execute the principal’s signature on legal documents, which Mr Ramsey was aware of. A dispute arose about whether Mr Hutcheson had the necessary authority to commit Mr Ramsey to a contact using the signature machine.

The Court examined the working relationship that Mr Ramsey and Mr Hutcheson had, which spanned twenty years. The Court found that the long relationship that the pair had was strengthened by their personal relationship as father-in-law and son-in-law. Their relationship was based on total trust. The Court held that Mr Hutcheson had the sufficient authority to enter into a personal guarantee and contract on Mr Ramsey’s behalf based on the way that they had conducted their dealings in their twenty-year working relationship.

This case highlighted the importance of principals clearly setting out a clear scope of their agents’ authority. By having a clear range of activities set out of what an agent is allowed to do, disputes about agents exceeding their authority can be avoided. This matter also demonstrated that signature machines can bind a party so long as there is appropriate authority to use it. This case will be of importance particularly to family businesses where family members are more likely to have agent/principal relationships centred on trust. Businesses need to be aware of the authority given to its agents and particularly how personal relationships can impact on the authority that an agent has.

We are delighted to announce our participation in “Directors’ Corporate Finance Question Time”, a Business seminar to be held on the 26th of February 2015. Our very own Julian Goulding will be on a panel of legal, financial, and tax experts to answer your questions about buying, growing, and selling your business.

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