In this regular feature, partners at Reynolds Porter Chamberlain will deal with legal questions sent in by readers. These need not be limited to insurance related matters, but can relate to any area of your activity. For this first issue we have chosen three issues we know are of concern: data protection, leasehold property and employment
Q. I know that there are Data Protection rules about the computer records I hold, but is it true that the rules now extend to all my records?
Paul Matthews confirms that they do, and explains what else is in the new rules:
Most of the provisions in the Data Protection Act 1998 became fully operational with effect from October 2001. Unlike its predecessor, DPA 1994, the 1998 Act applies to paper records as well as those held on computers. The important point to remember is that the Act applies to data (whether computerised or manual) held about employees and clients (data subjects).
The Act imposes on brokers an obligation to comply with eight data protection principles. In summary, personal data should be processed fairly and lawfully and only for the specified purposes to which the client consents. The data should be adequate and accurate, and should not be kept for longer than is necessary.
Brokers are also required to take appropriate technical and organisational measures to ensure compliance with the Act. Consequently, there should be internal controls to ensure that:
Both clients and employees have rights (on payment of a small fee) to obtain details of the data held about them and the source of that data. In addition, data subjects have rights to:
(i) Prevent data processing likely to cause damage or distress
(ii) Prevent processing for the purposes of direct marketing
(iii) Require a broker to rectify, block, erase or destroy any inaccurate personal data.
Any data subject who suffers damage or distress by virtue of the contravention of the Act is entitled to seek compensation if the broker did not take reasonable care to comply with the provision concerned. In addition, data subjects can apply direct to the Information Commissioner to enforce their rights under the Act.
Finally, brokers who process computer records are required to register with the Information Commissioner, providing such particulars as their name and address, the description of personal data being processed and a description of the purposes for which the data is processed. In order to ensure compliance with the Act, brokers should appoint data controllers to audit filing systems to bring them into line.
Paul Matthews is in RPC's professional liability department. Contact him on pdm@rpc.co.uk .
Q. We're paying a very high rent for our offices, but we are stuck with a lease with several years to run. What can we do?
David Haywood runs through the complexities of leases:
Many businesses occupy premises under the terms of leases entered into several years ago, which doubtless impose very onerous obligations on the tenant. If properly advised at the time, the tenant may well have a break clause, allowing the lease to be determined prematurely on a fixed date or dates. This can be advantageous to a tenant, particularly where the premises are no longer suitable.
Although the terms of individual break clauses vary, most of them provide for a series of preconditions to be satisfied by the tenant. A period of notice, which can vary between three and 12 months, will certainly be required. Other conditions include the payment of a sum of money to the landlord and no rental arrears. These are easily dealt with, either by the timely service of the break notice or the payment of a known sum of money.
Other conditions are virtually impossible to satisfy. These include confirmation of full compliance with all the repairing covenants as almost any item of disrepair will be treated as failure to comply. Another condition, that vacant possession of the premises be given on the break date, can also fail if the tenant cannot get rid of subtenants in time.
Conditions attached to break clauses are construed very strictly by the courts, especially those relating to time limits. To be certain of exercising the break successfully the tenant must be able to comply fully with all his obligations.
If you are a tenant considering moving from your present premises, first check whether you have a break clause. If so, look at the break date, the notice period, the preconditions and how the notice is to be served. If a large sum of money is required, it may not be economic to proceed. Alternatively, if there are no onerous preconditions it might be in your best interests to do so. However, if the break is exercised, it is not possible to change your mind and withdraw the notice.
Sometimes tenants are tempted to break leases not because they want to leave but where they are paying too much rent. Serving a break notice will put pressure on your landlord, but will test your negotiating skills if the landlord calls your bluff and you are forced to leave the premises against your better interests. Much will depend upon the state of the letting market at the time and the availability of alternative space.
If you do not have a break clause in your lease, or miss the break date, you can always try to assign the lease or underlet. However, this may prove to be a time consuming and expensive process and, most important, will not in itself free you from your contingent obligations to the landlord. If the assignee defaults, you will be liable to pay the arrears and will then be faced with paying rent on premises you no longer occupy.
To summarise, the proper exercise of a break clause can free a tenant from onerous provisions in a lease, but there are a number of hurdles to be overcome and forward planning is essential. The moral therefore is to look at your lease now or run the risk of missing a golden opportunity.
David Haywood is in the property department at RPC. Contact him on dgh@rpc.co.uk .
Q. It seems to be so easy these days for people to bring unfair dismissal claims. How can we limit our exposure?
Geraldine Elliott warns of proposed changes you need to know about:
Readers should be on the lookout for a new piece of legislation, which is likely to come on to the statute books in the summer and could be a trap for the unwary.
The new rules concern disciplinary and grievance procedures. They are aimed at concentrating resolution of disputes between employer and employee in the workplace, not in the employment tribunal. Under the rules there will be a three stage procedure, which will apply both to the disciplinary process (whether or not it results in dismissal) and to employee grievances. It requires the employer to put his concerns about the employee in writing. He must then hold a meeting with the employee and (at the request of the employee) allow an appeal. The new procedures will form part of all employees' contracts of employment.
The implications of failing to follow the procedure would be serious. First of all, an employer who does not do so will find himself faced with the possibility of an automatic unfair dismissal, irrespective of the substantive merits of the dismissal. Secondly, there will be provision for a guaranteed minimum compensation level (four weeks' pay) for that dismissal. In addition, normal compensation awards may be increased by the tribunal where the procedure has not been followed.
Constructive dismissal claims pose a threat to some employers. These new rules will have an effect on those claims - this time to the benefit of the employer, rather than the reverse. Aggrieved employees will be obliged to pursue a grievance with the employer under the new three stage process outlined above. But an employee who feels he has been treated badly and decides to resign and claim constructive dismissal may be caught by these rules. If he fails first to institute a grievance process he could find that the tribunal refuses to hear the constructive dismissal claim.
For many brokers the new procedures will formalise processes which are already in place, but because the penalties for disregarding these procedures will be severe, employers do so at their peril. n
Geraldine Elliott is in RPC's employment department. Contact her on gre@rpc.co.uk .
The legal surgery is coordinated by Stuart White, a partner in Reynolds Porter Chamberlain's insurance and reinsurance department.
If you need more information about any of the above topics, please contact the partner concerned. If you have a legal query about another topic, email Stuart on sgw@rpc.co.uk and the appropriate person at RPC will contact you to discuss it.
The initial discussion is free of charge. Depending on the query, either the discussion should be enough to sort it out, or there may be a need for further work, in which case you would be free either to make appropriate arrangements with RPC or to instruct any other firm.
