Wednesday, 26 March 2008

Go the extra mile

Shropshire employers must take more notice of staff mileage claims to avoid tax difficulties.

Our Employment Law Specialist, John Mehtam, said with such a busy working environment, employers may be tempted to sign the claims without checking them too thoroughly.

“But this is a risky strategy, and could lead to really serious consequences in terms of tax if you don’t follow the rules. Check that the mileage your staff are claiming for is allowable – this covers travel to business meetings, conferences and temporary places of work. But any travel with a personal element, including travel to and from work, will not qualify."

John said the Taxman had approved mileage allowances for employees using their own vehicles for business travel – the flat rate for cars is 40p per mile for the first 10,000 miles in a tax year, and 25p per mile after that. There are separate rates for company vehicles and motorcycles.

All claims should be in writing including records of each journey and its purpose, such as client/supplier name, start point, destination, date and miles travelled.

“If you don’t follow the rules, the employee will be required to pay tax on any excess mileage payments. And the Taxman will assess your company on the sum total of the overpayments too, so you will be charged interest as well. Any false mileage claims will require the staff involved to pay tax on any excess, and this would also be a disciplinary matter."

Beware of the blog

Bosses must beware of the risks of using internet blogs to promote their company - that's the message from our Employment Law Specialist, John Mehtam.

Corporate blogs can be invaluable in helping to increase publicity, but there are risks and pitfalls with this type of approach, and it's important that employers understand what they're letting themselves in for.

"You need to consider carefully who will write the blog - are you, as a director, going to take it on, or are you going to let your staff have their say?

"If you're writing it yourself, you must be honest, because if you oversell your business, the blog could backfire. The same goes for your employees, so beware of giving them the opportunity to say what they like or you could face serious problems."

John said if you did let your staff loose on the blog, it was vital to make sure they didn't use it to harass each other online, as all employers had a duty of care to protect their employees against bullying in the workplace.

"You should also monitor the blog carefully to make sure the employees don't say anything derogatory about your competitors, or you could face a libel case and as a director, you will be held personally liable.

"Making the most of the latest technology to promote your business is an excellent idea, but you need to take care to avoid the pitfalls such an opportunity creates."

Tuesday, 18 March 2008

Switch it off for energy savings

Shropshire companies could cut their energy costs by up to 90 per cent if they simply switch off their office equipment.

Our Senior Partner Graham Davies said companies must consider their energy policies if they were to make a real difference to their energy bills. "Office equipment accounts for around 20% of a company’s total energy consumption, but in today’s challenging economy, there are ways to cut costs."

Like most companies, we are committed to reducing the impact our business has on the environment, and to making sure we are not incurring unnecessary costs.

"Our research has shown that the most basic way to save money is to turn off our office equipment, because in commercial offices like ours, this makes up nearly a quarter of the total energy bill. The energy consumed by computers and laser printers can be reduced by 75% per year if they are switched off at night, at weekends and during holidays."

Graham said if computer monitors were also switched off when they were not in use, and utilised the standby mode, a company could even cut its energy consumption by 90% each year.

"The guidelines also show that the costs increase by about eight per cent for every degree the temperature of your workplace rises, so it’s important to try to keep the office thermostat at a constant level. We try to keep doors and windows closed and free from draughts, and suggest our staff turn the heating down rather than opening windows if it gets too hot. And if our workplace is empty at weekends or over the holidays, we reduce the heating to a minimum or even turn it off altogether.

"We encourage employees to think about the energy that is being used in all areas of our business, and we closely monitor our fuel bills so that we can share with our staff the difference their efforts are making."

Offer employees a fresh start

Shropshire employers facing a round of tough redundancies should consider offering staff alternative jobs instead.
John Mehtam, our Employment Law Specialist, said an alternative position may be the answer companies were looking for.

"In today’s increasingly competitive marketplace, some employers may well find they face tough decisions, with the harsh reality being that they have no option but to make some of their workers redundant. But have you considered all the options – could you minimise the impact of your difficult position by finding alternative roles for those staff within your organisation instead?"

John said though that this approach may seem to be the perfect solution, but employers needed to make sure they stayed on the right side of the Employment Rights Act 1996 when it came to managing the process.

"The Employment Appeal Tribunal has also set out new guidelines to explain how you should manage the offer of an alternative job and there are definitely pitfalls you need to avoid."

He said employers should offer the person a trial period in the new potential job, usually four weeks. "Communicate clearly to the employees involved how the trial period for an alternative job will operate, right from the start. Ensure they know that if they want to turn down the new job, they must do it within the four week period, otherwise they could forfeit their right to a statutory redundancy payment.

"Make sure too that any proposed alternative employment is actually suitable for the employee. Offering them a job which you know will be beyond their skills or totally out of their remit could put you at risk of an unfair dismissal claim."

There's more to it than you think...

Converting an existing business to a limited company may not be as simple as it sounds - that's the message from Stuart Haynes in our Commercial Team.

"There’s more to it than just adding the word ‘limited’ to your letterheads. Under The Companies Act 1985, every company must display its name outside any premises it trades from. And it must also have the full company name on all letterheads, notices, cheques and orders, together with its place of registration, its company registration number and its registered office.

"And new rules introduced in January 2007 mean this criteria now applies to websites, emails and promotional material too."

Stuart said it was vital for all limited companies to check their literature before using it, or face tough consequences.
"Not only is it a criminal offence to get the details wrong, and your directors could be fined, but if the limited company name is incorrect on cheques and company orders, the directors can also be held personally liable to honour them.

"As the limited company will be seen as a new organisation, you are also likely to need your landlord’s consent before you can continue operating from your existing premises and trade officially under the new name. This should be a formality, but you can’t ignore the rules, as you could otherwise be in breach of covenant and lose the lease altogether.

"And as it’s a new company (even though the business has been around for some time), the landlord will probably want your directors to personally guarantee the lease – he may even want a rent deposit paid in advance."

Stuart said suppliers and customers may well not even notice the difference in your status, but officially you need their consent for your new company to take over existing contracts.

"To solve this issue, send them a copy of an existing contract attached to an agreement that confirms the new company will take over the responsibility for any obligations featured in the original contract."