Saturday, 29 March 2014

Staff discounts can prove costly

Companies have been warned that staff discounts may be a perk of the job but they can quickly get out of hand.

Tina Chander, from our employment law team at Martin-Kaye Solicitors in Telford, said many companies offered discounts on their products and services to their employees, and some also extended the offer to family and friends.

“Some of the biggest names in retailing in the UK are renowned for their amazing staff discounts – with companies like Waitrose, Sainsbury’s and John Lewis offering up to 20 or even 25%. But for smaller companies, what begins as a staff incentive can quickly snowball, and rather than having clear benefits for your business, it can become a nightmare.”

Tina said it wasn’t only companies that widened their offer to their employees’ extended families and friends who were at risk – those who only allowed employees to benefit from reduced rates were also vulnerable.

“You may find your staff agree to buy products or services for other people, and maybe decide to split the difference between them. In this way, your staff are receiving the cash you could have earned from a direct sale. If this is just a one-off, then you may not be too worried about the situation, but if begins to happen regularly, your profits could be hit hard.

“And equally if you open up the scheme to friends and family, your staff may agree to help anyone take advantage of the reduced prices, even people they haven’t met before, as long as there’s a financial benefit in it for them.”

Tina said companies were under no obligation to offer a staff discount to anyone, but if they decided to go ahead, they should have strict rules in place.

“It’s wise to agree that employees must work for you for a certain time before they qualify for a discount, and make it clear they should not personally profit from the scheme or if they do, they’ll risk being disciplined. Put a limit on how many times they can use the staff discount, and reserve the right to change the terms of the scheme or withdraw it at any time.”

Tina said the policy should be regularly reviewed and records of all discounts should be kept to help companies spot any potential over-use. “Everyone likes a bargain and everyone loves a perk, but it’s important to protect your business from people prepared to over-step the mark.”

Monday, 24 March 2014

Record keeping can be simplified

Small businesses struggling to keep up with time-consuming admin will be relieved to hear it can be kept to a minimum.

Tina Chander, from our employment law team, said keeping accurate company records was vital in order to stay on the right side of the law.

“You need to keep statutory records of course, but it’s about knowing what’s essential and how to keep on top of things with as little of your precious time taken up as possible.”

Tina said The Companies Act 2006 set out the rules for exactly what information every company needed to keep.

“You’ll need a register of members/shareholders, a list of directors and company secretaries, details of anyone who has a right over assets of the company such as a bank, minutes of directors’ and shareholders’ meetings, and accounts. And if you don’t keep proper records, as a director of the company you will be held personally responsible, so it’s important to know where you stand.”

Tina said for anyone who was the sole director and shareholder of a company, records were just something that had to be dealt with.

“But if there are other people involved, the importance of your company records is greater, as you may need to rely on them if a dispute ever occurs. Minutes of your board meetings will prove beyond a shadow of a doubt what was agreed, and so the records will protect you – this is something to take into consideration even if you don’t believe you are ever likely to disagree with your fellow directors.”

Tina said anyone who detested dealing with paperwork, or who was just too busy to find the time to keep the records up-to-date, could look at alternative arrangements.

“You can now use free or cost-effective software that will guide you through your record keeping electronically, which will reduce the time it takes, and which also ensures your records are in the right format. Or you could appoint an external company to handle your requirements, although this of course will be at an extra cost, but you might decide it’s worth it to have one less thing to worry about.”

Thursday, 20 March 2014

Deposit bonus for savvy tenants

Buy-to-let landlords have been warned that savvy tenants could be exploiting the rules to their own advantage when it comes to their deposit.

Andrew Oranjuik, from our litigation team, said most residential landlords were aware that if they received a deposit from a shorthold tenant, it must paid into a formal tenancy deposit scheme.

“The rules were introduced to stop landlords withholding the deposit at the end of a tenancy, often for the flimsiest of reasons. I believe it’s a good thing to have the rules in place to protect tenants, but landlords must be aware of the consequences they will face if they don’t follow the guidelines correctly.”

Andrew said that within 30 days of receiving the deposit, a landlord must pay it into an approved scheme and inform the tenant of their actions.

“If you don’t take this step, the tenant can take their case to court and the court will have no other option than to rule against the landlord, ordering you to pay the tenant between one and three times the value of the original deposit.This rule applies even if you have already returned the deposit to the tenant in full at the end of their tenancy.

“Such a move can bring a real windfall for your tenant, and we have seen a noticeable increase in tenants becoming more and more savvy and willing to cash in on their landlords’ failure to comply with the strict guidance.

“And not only could you find yourself facing a payout that seems unfair, failing to deal with your tenant’s deposit correctly could cause difficulties when you try to take the property back. With a rise in the number of people taking advantage of favourable price rates to acquire buy-to-let properties, issues like this can have a real impact on many people.

“You need to make sure every detail is correct before you let the property out, as it can be very expensive if anything is left undone.”