Martineau Education Bulletin

July 2009

www.sghmartineau.com

Key contact:
Smita Jamdar
Partner and Head of Education
T: 0870 763 1332
E: smita.jamdar@sghmartineau.com

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Contents

Strategy, Students and Governance

Dealing with "upwards harassment": some common legal problem areas | read
In this article we consider some common legal problems arising from upwards harassment and advise on what universities can do to alleviate the problem.
Employing foreign postgraduate students - areas of confusion | read
Some universities have expressed confusion about assessing the legality of employing their overseas postgraduate students during the course of their studies. We address some of the main areas of confusion.
Signing legal documents - back to smoke-filled rooms? | read
With the advent of fax and email it has become reasonably common for legal documents to be signed in advance and then the signature page attached to the final (and quite possibly amended) version of the document. In this article we examine recent case law that throws doubt on the validity of this approach before looking at recent Law Society guidance on how to carry out "virtual" signings and completions.

Finance, Technology and IP

Will you be sunk by student pirates? | read
With many students involved in peer-to-peer file sharing applications which allow the illegal distribution, copying and storage of copyright materials such as music, films and computer games, this article examines whether universities which provide internet access could be liable for copyright infringement.
A new dimension to protecting rights on Facebook | read
Following the recent announcement by Facebook of a new Vanity URL program, we examine the legal issues for universities, in particular in the context of cyber-squatting, and what universities can do to protect their name.

Estates

Competitive Dialogue Procedure: How universities can dialogue competitively but correctly | read
Following the article in last month's bulletin we now look in more detail at the Competitive Dialogue Procedure: when it can be used and, in particular, how the Competitive Dialogue Phase should be handled in order to minimise the risk of challenge.
Banking on your cheques? | read
This article considers the risks to university landlords of banking cheques received from defaulting tenants in the light of recent case law.

Human Resources

Statutory payments to increase from 1 October 2009 | read
We comment on the recent announcement that redundancy and other statutory payments will increase from October 2009.
Employment Appeal Tribunal clarifies constructive dismissal test after Professor resigns over re-marking exercise | read
We comment on a recent case in which a university Professor resigned after some of his examination marks were over-ruled without his knowledge. In giving its decision, the Employment Appeal Tribunal gave guidance on the correct test when considering whether there has been a constructive dismissal.
Equal Pay - comparators working at different establishments | read
We examine a recent case which provides useful guidance on equal pay comparators who do not work in the same establishment. This will be of importance to universities considering setting up subsidiary companies to carry out commercial activities, as it will assist them in overcoming equal pay claims between staff employed by the main institution and the subsidiary.

Full article details

• Strategy, Students and Governance

Dealing with "upwards harassment": some common legal problem areas | back to top

If reports are to be believed, instances of students “harassing” members of staff are on the rise. The behaviour in question can range from stalking, obvious discrimination and outright abuse to excessive and unreasonable demands for staff time and interaction. The latter is perhaps a consequence of the pervasive consumer and complaints culture, and the former may be a reflection of changing societal attitudes to authority, deference and language (as Lynne Truss describes it, the “Universal Eff-off Reflex”). Whatever the cause, universities are increasingly mindful of the need to take action to protect the interests of their staff, whilst not appearing to deter legitimate criticism and demands or seeming out of touch with modern communication styles and the need to appear receptive to “consumer feedback”.

A number of different legal problems can arise in cases of upwards harassment. Disciplinary procedures and codes of conduct may not proscribe the behaviour in question in sufficiently clear terms. So, for example, many procedures cite the use of offensive words or behaviour as a disciplinary offence. However, what is offensive to a member of staff may be perfectly acceptable to some 18 year olds for whom the use of swearing and personal put-downs is not only the norm, but almost a pre-requisite to successful social interactions.

There is sometimes a thin line between criticism of a member of staff’s professional performance and unacceptable personal abuse. Students will feel, arguably correctly, that they have a right to comment on the former; staff members may construe these comments as having strayed into the latter. The right to criticise the professional service delivered by members of staff of the university as a whole will be protected by the right to freedom of speech enshrined in the European Convention of Human Rights, and any attempt to discipline the student on this basis may be regarded as an unwarranted intrusion into that right, as well as being problematic from a PR point of view. Abuse is not a permissible exercise of the right, and can be the subject of disciplinary action.

Finally, staff may argue that the university has a legal obligation to take action to stop the behaviour, either as part of its general duty to take reasonable steps to protect their health and safety (persistent bullying and harassment being a recognised cause of stress-related illnesses), or because the behaviour is unlawful under anti-discrimination legislation or simply as part of the university’s general duty of trust and confidence that lies at the heart of all employment contracts. Currently, universities are not vicariously liable for discriminatory harassment of their employees by students, except where the conduct amounts to sexual harassment, has been repeated on more than two occasions, and where there were reasonable steps the university could take to prevent a recurrence. When the Equality Bill comes into force, the potential for vicarious liability for discriminatory harassment by students of staff will be extended to all the protected characteristics. Further, staff who feel that they are being subjected to unacceptable behaviour by students may submit grievances, or in extreme cases resign and claim constructive dismissal.

Resolving these tensions is not easy, but steps that might help are:

ensuring that students understand that harassment and bullying of staff will not be permitted. If necessary, include a specific section on it in the student code of conduct, giving examples of conduct which, though apparently normal between students, is not acceptable as between students and members of staff (e.g. swearing or personal comments).
adopting a “zero tolerance policy” to this issue, with a first transgression resulting in advice and possibly a warning as to future conduct, and subsequent transgressions leading to disciplinary action;
developing and publicising protocols for formal requests for feedback and assistance from staff. These might include stipulating that some methods of communication are not appropriate at all (e.g. text messages), or setting manageable response times for others (e.g. e-mail communications);
considering the benefits of de-personalising complaints, at least at the initial stages, by giving students clear guidance as to what they should do if they are dissatisfied with a member of staff’s professional performance. This may make it easier to intervene if students choose instead to ventilate their grievances on internet chatrooms or blogs;
offering support and counselling to staff affected by adverse student feedback or comment, but retaining the ultimate right to decide what action to take. If the real problem is a poorly performing member of staff, the university may not wish to be pressurised into disciplining students, even if the way that the students have chosen to express their dissatisfaction has been inappropriate.

Smita Jamdar
Partner and Head of Education
T: 0870 763 1332
E: smita.jamdar@sghmartineau.com

© Martineau 2009

Employing foreign postgraduate students - areas of confusion | back to top

Many universities employ postgraduate students during the course of their studies, and confusion can arise in determining whether overseas postgraduate students can work in those twilight periods between finishing formal studies and writing up a thesis, between submitting the thesis and the expiry of the student visa, or during a period of appeal against an application for a variation of the existing arrangements, where the Tier 4 visa expires.

Working between writing up and graduation

Students who hold a current valid Tier 4 visa are entitled to work part time during term time (no more than 20 hours) and full time during the university holiday period. That entitlement applies to postgraduate students notwithstanding that their studies may not coincide with the usual academic calendar. Hence, regardless of the fact that students may be writing up their theses during the traditional summer or Christmas holidays, a university may employ their overseas postgraduate students in full time temporary work during those holiday periods.

Working between graduation and expiry of a Tier 4 visa

Frequently, Tier 4 visas will continue to be valid for a number of months after a postgraduate student has graduated from the university. The university may engage that student in temporary employment for the duration of this period, provided that during term time, employment is restricted to 20 hours per week.

Status of students/graduates who appeal against a refusal to extend leave to remain or a refusal to issue a new category of visa (e.g. Tier 2 migrant skilled worker)

A student on a Tier 4 visa has limited leave to enter or remain in the UK. Where a student applies for a variation of that arrangement before the current Tier 4 visa expires, but the visa expires without the application for a variation having been decided, the leave to remain is automatically extended until the application is decided or withdrawn. In addition, where leave is denied, the Tier 4 visa expires and the student, while still in the UK, appeals against the decision within the requisite time limit (i.e. 10 days from the date when leave was refused), the student’s leave to remain is automatically extended until the appeal is decided. The student may therefore work for the university during this period, subject to a limit of 20 hours per week during term time.

There appears to be no restriction on the type of work that an overseas student can engage in any of the above circumstances and consequently, the university can employ them in an academic or non-academic capacity.

Geraldine Swanton
Senior Associate, Education Team
T: 0870 763 1455
E: geraldine.swanton@sghmartineau.com

© Martineau 2009

Signing legal documents - back to smoke-filled rooms? | back to top

It is the call which every commercial lawyer dreads and which always comes in on the evening of the Friday before Christmas: the transaction which fell through in the summer is back on with a vengeance and the world will come to an end if it is not completed by 31 December. There have been fundamental changes to the terms of the deal and the agreement which you had drafted in May is going to have to be substantially re-written.

“Oh, by the way, I am off skiing tonight until the first week in January. Can you scan over to me a copy of the signature page from the last draft of the agreement and then I’ll sign it and scan it back to you, so that you can add it to the final version? That should be ok, shouldn’t it?”.

With the advent of fax and email, it has become a reasonably common practice for signature pages to be signed in advance and then attached to the final form of the document in question, once it is ready for completion, in order to overcome lack of availability of signatories or the general practical difficulties of getting all signatories together in the same room.

Considerable doubt has, however, been cast on this practice as a result of the recent High Court decision in the case of R (on the application of Mercury Tax Group Ltd & Another) v HMRC & Others [2008 EWHC 2721 (Admin)], which involved a tax planning scheme which required various documents to be executed in the correct order. The scheme was challenged by HM Revenue & Customs and one of their arguments was that the necessary documents had not been validly executed because incomplete drafts of them had been signed and the signature pages had subsequently been transferred to the final versions of those documents.

Part of the problem seems to have been that there had been some significant changes between the draft which had been signed and the final versions, and there was no evidence to suggest that the signatories had ratified or authorised the changes made to the documents. However, it seems clear that, even if there had been such authority, the documents would not have been legally effective.

This was, primarily, because the documents were being executed as deeds and the law relating to the execution of deeds requires that the signature and witnessing must form part of the same physical document which constitutes the deed. The court took the view that that could not have been the case if the final form of the document was not actually in existence at the point when signature took place.

Not surprisingly, this decision has caused widespread concern and there has been a tendency to revert to physical signing meetings in order to complete a transaction which might previously have been completed less formally. This can be frustrating for all involved, because of the time spent in travelling to (and being present at) meetings and the additional fees involved when lawyers have to travel to a meeting.

On the other hand, any lawyer who has been involved in such signing and completions will know that they are often an accident waiting to happen, as it can be extremely time-consuming to match the various signatures to the various documents (particularly when a party’s computer system somehow contrives to put a new “footer” on a document received from a third party), and with revised drafts being circulated every few minutes in the run up to their being finalised, it is often found that one party has printed off and signed a late draft, rather than the final version of the agreement.

The Law Society has produced some helpful guidance to deal with “virtual” signings and completion and this puts forward a range of possible ways for enabling signings and completions to take place in this way.

Where documents are to be executed as deeds, any practice of signing blank signature pages and attaching them to a final version, even with the full knowledge of the signatories, must be strongly resisted.

The Law Society’s guidance advises that, before signing/completion, the practical arrangements should be agreed between the lawyers and that final execution documents should then be faxed or emailed to all absent parties, who then print and sign the signature page only.

Each such party should then return a single fax or email which has attached to it the final version of the document and a faxed (or as the case may be) PDF copy of the signed signature page.

Where the document is not a deed, the formalities need not be as strict; after all, it is possible to conclude a contract with the operators of a multi-storey car park by putting your money into a machine and collecting a ticket, and there has never been any suggestion that a formal written contract is required.

A party who faxes or emails a signature page to the other parties should, however, make it clear that he is giving authority to attach it to the final version of the agreement.

Parties to an agreement and their lawyers would be well advised to make sure that they comply with the guidelines and, if they do, there is no reason for “virtual” signings or completions to become a thing of the past.

Nevertheless, where there are deeds involved, by far the safest course is to obtain a signed power of attorney from any absent party, which enables somebody who is present to sign the document on his behalf.

One further word of warning: parties and their lawyers must resist the temptation to amend documents to avoid embarrassment where a mistake is noticed on a signed document. It is tempting just to replace the incorrect page, but particularly with deeds, those who do so clearly run the risk of invalidating the entire document.

Andrew Stilton
Partner, Corporate Group
T: 0870 763 1556
E: andrew.stilton@sghmartineau.com

© Martineau 2009

• Finance, Technology and IP

Will you be sunk by student pirates? | back to top

A survey by the Oxford Internet Institute in 2007 found that students are the “most active users of online entertainment and social networking sites” in the UK. Whilst most students may use their internet access for legitimate purposes, many use campus networks to run peer-to-peer file sharing applications which allow the illegal distribution, copying and storage of copyright materials such as music, films, computer games and other software.

Many universities provide internet access to their students and staff with few restrictions. If your networks are used for illegal file sharing, does this mean that you may be liable for copyright infringement? The short answer is that you could be liable, but if you operate your internet system in the right way you may be able to take advantage of some defences available under EU law.

Under the E-Commerce (EC Directive) Regulations 2002 a university offering internet services to staff and students is classed as a service provider and can be held liable for content hosted on its servers. However, as the law currently stands you should only be liable if you have actual knowledge of illegal content on your servers and you fail to remove it.

For several years rights holders and other interested parties have lobbied the government to make service providers responsible for controlling illegal file sharing on their networks. To date the government has resisted changing the law, with representatives of service providers likening the burden of monitoring all traffic through their networks to asking the Royal Mail to read every letter which passes through their sorting offices.

Whilst it may be the individual doing the copying who faces criminal or civil prosecution for copyright infringement (as has happened to students on college networks in the US), rather than the service provider who simply hosts the content, it is the university which would be subject to investigation and associated reputational damage if it is not seen to be acting responsibly.

Although under the E-Commerce Regulations there is no obligation on a service provider to monitor the data on their networks (or to actively seek out illegal activity - unless it is brought to their attention), more and more universities in the UK are developing plans to counter peer-to-peer activity by monitoring their residential and academic networks.

But monitoring your networks could expose your university to other risks. It will place an additional obligation on you to act quickly to remove potentially infringing content (especially if you are doing more than basic traffic or bandwidth monitoring). If you do choose to monitor your networks (and even if you don’t), provided you have a robust notice and takedown policy for complaints and a comprehensive network access policy a court is unlikely to expect you to examine every file on your servers to check if it was legitimately downloaded.

Des Burley
Partner, Intellectual Property & Technology Team
T: 0870 763 1107
E: des.burley@sghmartineau.com

© Martineau 2009

A new dimension to protecting rights on Facebook | back to top

Facebook recently announced that it would be allowing its users to register a personalised Uniform Resource Locator ( URL) in relation to their account after the main Facebook domain name such as: www.facebook.com/universityname. This new “Vanity URL” program could raise significant issues for universities.

Facebook now allows account holders to register one URL, on a first come first served basis, at no cost. Generic words are not available for registration, but there are few other restrictions on the name which can be chosen by Facebook members. The URL attached to the account can never be changed or voluntarily transferred, and on deletion of an account the URL does not become free to use by other members.

Because registration is on a first come first served basis, Facebook initially put in place some safeguards. These included a pre-registration process, which allowed interested parties to list their trade marks and bar others from registering them as URLs before registration began. Facebook also restricted registration initially to personal accounts registered prior to the announcement of the Vanity URL program on 3pm on 9 June; and Facebook pages (public profiles for companies, organisations, or public figures) registered with at least 1,000 fans prior to 31 May.

The aim of these initial safeguards was to prevent cyber squatters from opening accounts just to take advantage of the Facebook Vanity URL program. But these measures have now been dropped by Facebook. Now all members with personal accounts, or Facebook pages with over 100 fans, are able to nominate a Vanity URL. Because the registration process is now available to a huge number of Facebook users without any pre-registration clearance by Facebook, those universities which have not notified Facebook of their trade marks (or indeed had no registered trade mark rights to notify) could be open to attack by cyber squatters.

Cyber squatters aim to register domain names or URLs on the internet which are identical or similar to the names or trade marks of others, to take advantage of their goodwill or to cause detriment to the other party. This issue is not unique to Facebook, with domain name cyber squatting having been an issue for some time now. These types of personalised URLs have also been available on the internet for some time. For instance, it is possible to register these on some blogs and networking sites (such as MySpace and Twitter).

However, the popularity of the Facebook Vanity URL system has been extraordinary. For instance, over 200,000 usernames were registered by Facebook users in the first 3 minutes of the Vanity URL program having been opened.

Universities should therefore be closely monitoring the use of their institutional name on Facebook and should, where possible, secure their own Facebook page attached to a relevant Vanity URL. But all is not lost if someone does manage to register a Facebook Vanity URL which is similar or identical to your university name, as Facebook now have a simplified intellectual property infringement service which can be used to report any problems which may arise and to seek a resolution.

Joanne Flack
Solicitor, Intellectual Property & Technology Team
T: 0870 763 1613
E: joanne.flack@sghmartineau.com

© Martineau 2009

• Estates

Competitive Dialogue Procedure: How universities can dialogue competitively but correctly | back to top

In the June bulletin we looked at how the Competitive Dialogue Procedure (CDP) could be used with success in regeneration schemes. To universities and others, the CDP may sound like a euphemism for an argument. In this article we show you how to manage the procurement process so it doesn’t end in one (i.e. a legal challenge).

When can the CDP be used?

It is important to remember that the CDP can only be used for “particularly complex contracts”, where the university or a public authority is not able to objectively define the legal and/or financial make up of a project and/or the technical means of satisfying their needs or objectives. In the context of complex regeneration schemes, the CDP could be used where there are a number of different design, financial, contractual, phasing, planning and technical solutions which could bring about the economic, social and environmental regeneration of an area. In the current economic climate there may be merit in exploring various contractual structures which allow the partners to share risk and reward in order to get the development off the ground, and the CDP may allow the university to do this. For example, the CDP may allow the university to explore with bidders whether a traditional development agreement, a joint venture arrangement, the establishment of a company limited by shares in which the public sector partner has a majority share, or a limited liability partnership is the best means of achieving its objectives. However, there are some stringent and technical requirements as to when the CDP can and cannot be used, and legal advice should always be sought on whether the CDP is available in the particular circumstances.

The focus of this article is on the Competitive Dialogue Phase. However, it is important to have a broad understanding of the process as a whole. Before the dialogue commences, in common with other procedures there will usually be a pre-qualification selection stage (commonly known as a “PQQ Stage”) during which the university can eliminate bidders if they fail to meet minimum standards of economic or financial standing, technical or professional ability or are otherwise ineligible. Under the rules, at least three bidders must be invited to dialogue after pre-qualification.

The Competitive Dialogue Phase

It is the Dialogue itself which gives the university the flexibility to explore and develop potential solutions in detail. Its aim is to identify and define the means best suited to satisfy the university’s needs. The Dialogue can cover “all aspects of the contract”. Dialogue sessions could, in the regeneration context, cover bidders’ design proposals, planning strategy, environmental and technical issues, financial proposals, and contractual and legal structures including the allocation of risk and reward. For a successful Dialogue, the following principles should be adhered to:

At all times the university must bear in mind the EU principles of transparency, equality of treatment and non-discrimination. All bidders must be treated in the same way and allowed equal time to dialogue the issues. The priority in which they are allocated meetings should be rotated to ensure that no one bidder is favoured over another.
There should be no “cherry picking” of the best ideas from each bidder’s proposal without the consent of all bidders. In practice, this can be a real issue because the university will naturally want to use the best ideas. However, bidders are generally reluctant to agree to disclosure. The Dialogue should be managed carefully to ensure that there is no-cross fertilisation of ideas which could lead to a legal challenge after selection when an aggrieved bidder realises that one of its ideas has been used. Although more costly and time demanding, this means individual meetings must be held with bidders rather than joint meetings.
The Invitation to Dialogue request (ITD) should include details of the award criteria by which bids will be evaluated against and their weightings. If any sub-criteria are to be used it is important that they are also disclosed to bidders prior to submission of final tenders. Generally speaking, the criteria should not be changed during the Dialogue process because that is open to challenge on the basis that any adjustment favours one bidder over another.

Two of the central criticisms of the CDP are that the costs which bidders have to expend at risk are excessive and that it can take far too long to conclude the Dialogue. In practice, there is a real risk that if the process is not managed carefully then bidders will pull out. This should be avoided if possible because there needs to be a sufficient number of bidders left to submit final tenders to allow for genuine competition. If not, the process may have to be re-run.

It is therefore important to identify and narrow the issues in advance and throughout the Dialogue as efficiently as possible to minimise the bidders’ costs. Where possible, meetings should be timetabled in advance and the agenda circulated. However, flexibility should be allowed during the Dialogue to discuss issues and solutions that were not originally envisaged. In order to reduce the bidders’ costs, as much information should be provided by the university at an early stage: for example, copies of legal title investigations and site surveys commissioned by the university which identify key issues.

For example, OGC guidance on the Building Schools for the Future (BSF) Programme proposes that as many issues as possible should be dealt with before the CDP process is initiated, and urges public authorities to engage early with partners to identify their needs. This is itself a process that needs to be managed very carefully to ensure that there is fair and equal treatment without any undue prejudice. For example, if there are general discussions with the development sector (including) potential bidders which are designed at identifying the university’s needs, will a developer not involved be prejudiced?

To reduce the risk and cost which bidders are exposed to, it is recommended that the university consider reducing the number of bidders during the Dialogue stage i.e. in addition to the initial reduction carried out at the PQQ selection stage. To do this, the university must reserve this right in the OJEU Contract Notice. In practice, this reduction could be facilitated by asking bidders to submit their outline solutions. These outline solutions could be assessed against the university’s evaluation criteria, with only the best being selected to continue with the Dialogue. Bidders could then be asked to submit detailed priced technical solutions. Further Dialogue sessions are likely to follow this stage to explore the solutions and resolve outstanding issues. However, it is important to remember that the number of bidders invited to submit final tenders must be sufficient to allow for genuine competition.

Call for Final Tenders

The Dialogue should continue until the university has identified the solution(s) which meet its needs, including key contractual terms. To facilitate this, the university may request fully developed and priced draft bids before concluding the Dialogue.

Bids must be assessed in accordance with the evaluation criteria previously disclosed to bidders and selected on the basis of the Most Economically Advantageous Tender (MEAT). It is important to note that the selection of evaluation criteria can be a very technical area where professional advice might be needed.

A common practical point is that where the development of a public authority’s own land forms part of the project, there will usually be some internal tension between the public authority’s regeneration department’s desire to prioritise quality and social, economic and environmental aspects of a bid over financial return and the public authority’s property department’s desire to prioritise the return to achieve best value/ consideration. In practice, a balance needs to be struck but a decision made prior to commencing the CDP as to which will ultimately take priority and in what proportion. So as to prevent delay, it is vital that issues such as this are fully considered by the public authority in advance of the Dialogue in the context of its value for money, best consideration and well-being obligations and powers. Universities do not have quite the same statutory duties and obligations but university councils or governors will be concerned to ensure that they satisfy their own regulatory and charity obligations and those of the relevant funding council to ensure that optimum value is obtained, balanced against the wider regeneration drivers for any development.

Post Selection Fine Tuning

Once a final tender is selected, under the CDP there can be no post-tender negotiation. There must be no changes to the basic features of the tender if they are likely to distort competition or have a discriminatory effect. Hence the danger of closing the Dialogue too early. The only thing that the parties are permitted to do is “clarify, specify or fine tune” the tender. In practice, this means it is important for a university to get its funders on board as early as possible to minimise the risk of challenge. If, for example, a funder requires alterations to the terms which materially alter the financial return, that could be open to challenge by an aggrieved bidder. This may not always be possible given funders’ reluctance to be committed at an early stage.

For example, the OGC’s guidance on the BSF programme suggests that matters such as the detailed design, detailed site surveys, investigation of legal title, lenders’ requirements, due diligence, detailed planning applications, finance and the performance mechanism of a project may be left to the post-selection stage. It suggests that RIBA Stage D designs are sought for final tenders, with Stage E designs being worked up for the contract itself.

There is clearly some tension between this guidance and the European Commission’s own view which is much more restrictive. These elements could involve an element of negotiation which could prejudice a third party and be open to legal challenge. The decision of what to defer to post-selection should therefore be handled with extreme care and legal advice should be sought. The university can minimise these risks by commissioning its own legal title investigations and site surveys before the process commences and disclosing these to bidders.

However, attempting to resolve all issues prior to closing the Dialogue could be seen as too burdensome a risk for bidders and scare them off. If asking the bidders to finalise the detail is unduly burdensome it may be legitimate in limited circumstances to defer that to after selection provided the detail remains within the parameters of the bidder’s final tender.

Conclusion

Since 2008 there has been a significant increase in legal challenges by aggrieved bidders to procurement processes. It is possible that one reason for this is because there are fewer opportunities in the market place, with those coming second less likely to move on after having invested so much money and time at risk. Bidders are also generally more aware of their rights. Equally, now is the very time when universities and other public authorities should be urged to use their regeneration powers to bring forward development and stimulate the economy. Universities should (where appropriate) be urged to take advantage of the flexibility of the CDP to allow them to enter into a meaningful dialogue with the private sector and draw upon its knowledge and expertise. Provided sufficient time and effort is spent upfront in planning and managing the process carefully there is no reason why a CDP should not be a success. However, universities must appreciate that the rules governing the use of the CDP are quite stringent and technical and legal advice should be sought at the outset of the process. If this is not done, there remains a real risk of a legal challenge which could force the university to re-run the entire process again. As a result bidders may lose confidence in the university, which could jeopardise the project as a whole.

Paul Mountain
Partner, Construction Team
T: 0870 763 1344
E: paul.mountain@sghmartineau.com

James Dilley
Partner, Competition & Procurement Team
T: 0870 763 1208
E: james.dilley@sghmartineau.com

© Martineau 2009

Banking on your cheques? | back to top

Tenants of commercial premises let by universities are not immune from current economic conditions; many are struggling just as much to meet their liabilities as their high street counterparts. A recent case provides a useful reminder and guidance for universities on the implications of banking cheques received from defaulting tenants.

In Osibanjo -v- Seahive Investments Limited [2008 EWCA Civ 1282] the landlord (Seahive) instigated bankruptcy procedures against its tenant (a solicitor - Osibanjo) by serving a statutory demand and then subsequently presenting a bankruptcy petition in respect of rent arrears of about £3,500. The bankruptcy hearing was initially listed to take place in February 2006 but it was postponed and not heard until November of that year.

In the meantime, in June 2006 the landlord learnt that the tenant was in breach of a number of its other lease obligations, including carrying out unauthorised alterations to the premises, unauthorised change of use, breaching its alienation covenants and also its keep open clause.

Prior to the bankruptcy hearing, the tenant tendered a cheque for £10,000. This cheque was made up of approximately £3,500 to discharge the bankruptcy proceedings and the balance was tendered in settlement of the further arrears of rent which had by then accrued. On advice from its solicitors the landlord banked the cheque, retained £3,500 to discharge the bankruptcy proceedings but returned the balance to the tenant in order seek to preserve the landlord’s right to forfeit the lease for breach of covenant. (Accepting the sum tendered in respect of the further arrears would almost certainly have waived the landlord’s right to forfeit).

It was not until April the following year that the landlord actually elected to forfeit the lease by serving possession proceedings on the tenant.

The main question for the court in the possession proceedings was whether the banking of the cheque for £10,000 - and in particular that element of the cheque which was tendered in satisfaction of the further rent arrears (as opposed to the £3,500 to discharge the bankruptcy proceedings) - waived the landlord’s right to forfeit. In other words, was the landlord’s action in banking the cheque an unequivocal act which recognised the continued existence of the lease (the main ingredient in the doctrine of waiver)?

Both the County Court and the Court of Appeal found in favour of the landlord and held that the banking of the cheque did not waive the landlord’s right to forfeit. The court held that the landlord had to bank the whole of the cheque in order to be able to separate the bankruptcy proceedings monies from the other rental monies. Accordingly, the landlord was entitled to a possession order.

In uncertain times when universities will be seeking to make overall cost savings, maximising rental income from commercial premises should be a matter of some priority. However, universities should nevertheless remain vigilant about accepting monies from whoever is occupying their property. An inadvertent acceptance of monies tendered as rent can in some circumstances still lead to a landlord’s remedies being restricted or to the occupier acquiring proprietary rights.

Martin Edwards
Partner, Real Estate Disputes Team
T: 0800 763 1340
E: martin.edwards@sghmartineau.com

© Martineau 2009

• Human Resources

Statutory payments to increase from 1 October 2009 | back to top

The government has recently confirmed that the weekly limit used to calculate statutory redundancy pay will increase from £350 to £380 from 1 October 2009. It has also stated that there will be no change in the maximum (either upwards or downwards) in February 2010, as there would normally be. (The weekly maximum is adjusted each February in line with the retail prices index.) It will therefore remain at £380 until February 2011.

Calculating statutory redundancy pay

When an employee with two or more years' service is made redundant s/he is currently entitled to a statutory redundancy payment calculated according to the following formula:

Week's pay (currently capped at £350) x number of complete years of service (up to a maximum of 20) x age factor (0.5/1/1.5).

Following the increase, the maximum statutory redundancy award will be £11,400 instead of £10,500.

Increases in other payments

However, universities should bear in mind that it is not just statutory redundancy pay that will increase. The weekly limit also applies when calculating a wide range of other types of payment, including the basic and additional awards for unfair dismissal and compensation for failing to comply with flexible working procedures.

These payments will increase as follows:

the maximum basic award for unfair dismissal will be £11,400 instead of £10,500;

the maximum additional award for unfair dismissal (for example, where an employer does not comply with an order to reinstate an employee) will increase from £18,200 to £19,760; and

the maximum award under flexible working legislation will be £3,040 rather than £2,800.

Comment

The government’s rationale for the increase is to “help those being made redundant without placing too heavy a burden on employers”. Nevertheless, employers are likely to be concerned by the increase. At a time when many are actively trying to reduce costs, an increase in the amount payable when making redundancies is likely to be particularly unwelcome.

In better economic circumstances the suspension of the annual indexation exercise in February 2010 would most likely favour employers. However, the government’s own forecasts suggest that the retail prices index in September 2009 will be minus 4 per cent which would, but for the suspension, result in a decrease in the statutory maximum. So it is employers and not employees who will lose out as a result of there being no adjustment in February.

On the plus side, employers can take some comfort from the fact that the government has the power to increase the statutory maximum on only one occasion. So the amount will not be subject to further change other than following the normal indexation exercise which will start again in February 2011.

Jane Byford
Partner and Head of Employment and Pensions Group
T: 0870 763 1378
E: jane.byford@sghmartineau.com

© Martineau 2009

Employment Appeal Tribunal clarifies constructive dismissal test after Professor resigns over re-marking exercise | back to top

In Bournemouth University Higher Education Corporation v Buckland [UKEAT/0492/08], the Employment Appeal Tribunal (EAT) has held that a “range of reasonable responses” test is not relevant when assessing whether an employee has been constructively dismissed.

Background

Professor Buckland, a Professor of Archaeology at Bournemouth University, resigned after his marks on student examination papers were replaced by those of a second marker following apparent discrepancies with the University’s marking plan. The re-marking had taken place without explicit consultation with Professor Buckland.

Following a complaint by Professor Buckland about the way in which his marks had been set aside, the University conducted an inquiry into the re-marking incident. The subsequent report concluded that Professor Buckland should have been consulted over the re-marking process. However, Professor Buckland was not satisfied with the level of criticism of those involved contained within that report. He resigned and brought a claim for constructive dismissal.

In order to establish that there has been a constructive dismissal, an employee must show that: (i) the employer has committed a serious breach of the contract of employment (known as a repudiatory breach); (ii) the employee left because of that breach; and (iii) the employee has not waived the breach.

The decisions

The initial Employment Tribunal upheld Professor Buckland’s claim, concluding that the University had fundamentally breached an implied term of Professor Buckland’s contract of employment, namely the implied term of trust and confidence. It concluded that, in overturning Professor Buckland’s marks without consulting him, the University had acted in a way calculated to destroy the relationship of trust and confidence between the parties and that the subsequent inquiry had not remedied this breach. The University appealed against the decision.

On appeal, the EAT considered the following questions:

Whether a “range of reasonable responses” test has any place in the question of whether an employee has been constructively dismissed? In other words, whether it is necessary, when trying to establish there has been a fundamental breach, for an employee to show that the actions of the employer fell outside the range of reasonable responses that a reasonable employer could adopt?
Whether, on the facts of this case, any fundamental breach of the implied term of trust and confidence had been remedied by the University’s investigation and subsequent report? If so, Professor Buckland’s resignation would not have been constructive dismissal because the University would not have been in breach at the time of his resignation.

In delivering its judgment the EAT agreed with Professor Buckland’s argument that the “range of reasonable responses” test is not relevant to the assessment of whether there has been a constructive dismissal. When deciding whether or not there has been a constructive dismissal, the key question is whether there has been a breach of contract. In relation to the implied term of mutual trust and confidence, the employee needs to show that the employer, without good reason, conducted itself in a way that was calculated (or likely) to destroy trust and confidence between the parties. On the facts, the EAT held that the Tribunal was entitled to conclude that the University had fundamentally breached Professor Buckland’s contract of employment.

However, the University won its appeal on the grounds that the Tribunal had been wrong to find that the University had not remedied its breach. The Tribunal had found that, although the main body of the report was the “clearest vindication” of Professor Buckland, the report had failed to exonerate him of any misdemeanour in the terms he was entitled to expect, and that the University needed “to do something very clear to rectify that breach if indeed it were possible to do that”.

In contrast, the EAT considered that the remedying of the breach must be judged objectively and not, as the Tribunal had done, subjectively. The EAT was satisfied that the report (which unequivocally criticised the re-marking without Professor Buckland’s knowledge) upheld his complaint and therefore remedied the breach. As a result, when Professor Buckland resigned, the University was no longer in breach of contract and therefore there could be no constructive dismissal.

Comment

Employers should take comfort in the fact that attempts to remedy a repudiatory breach of contract must be judged objectively. As such, employees are not able to rely on the fact that attempts to remedy such a breach have failed to meet their full satisfaction - a relief for employers when dealing with particularly hard-to-please employees.

It is, however, understood that Professor Buckland has sought permission to appeal the judgment to the Court of Appeal, so this may not be the end of the story.

David Browne
Solicitor, Employment and Pensions Group
T: 0870 763 1690
E: david.browne@sghmartineau.com

© Martineau 2009

Equal Pay - comparators working at different establishments | back to top

Equal pay comparators are usually found where male and female staff work in the same place (technically known as the ‘establishment’). But special rules apply where the potential comparators do not work in the same establishment. In the case of Dumfries and Galloway Council v Mrs E North and others [UK EATS/0047/08] the Employment Appeal Tribunal (EAT) has given some helpful guidance on this issue.

Background

244 women employed at the schools of Dumfries and Galloway Council brought equal pay claims. They sought to compare themselves with male manual workers (including road workers, refuse collectors and a leisure attendant) employed under a different collective agreement and working at different establishments.

The law

If a woman and a man work in different establishments of the same employer, for the woman to be able to compare herself to the man, the woman must show either that:

common terms and conditions are observed generally as between the establishments, for example, under the same collective agreement; or
the male comparator would, if employed at her establishment, be employed on terms and conditions which are ‘broadly similar’ to those under which his class of employee in fact works at his establishment.

The decision

The EAT held that, where a woman seeks to use a male comparator who is not employed at her establishment, she must show a real possibility of him being employed at her establishment, doing the same job (or broadly similar job) as the one he currently carries out at the other establishment.

Even if it had been possible for the comparators to be employed at the claimants' establishments, which the EAT concluded it was not, the tribunal had given no consideration to the differences in the contractual basis of their employment which showed that they were not employed on broadly similar terms and conditions. Some of the differences which the EAT highlighted included the fact that the female claimants had to satisfy the 'Disclosure Scotland' check procedures to ensure they were suitable to work with children, and were subject to the day-to-day control of the headmaster.

Comment

This decision will come as a welcome relief to employers as it ensures that a an employee can only use a comparator who is employed in a different establishment if: (i) there is a real (not hypothetical) possibility of him being employed at her establishment in the same job (or one that is broadly similar) to that which he carries out at his establishment; and (ii) if he was employed at her establishment, he would be employed on broadly similar terms and conditions to hers.

The first condition is reassuring if an employer has set up or is planning to set up a subsidiary to carry out a completely different or specialised function to the main purpose of the organisation (for example, business development or hospitality), and where the staff in the main organisation could not possibly work there (or the other way round). However, it would still need to be shown that the subsidiary is considered to be a separate ‘establishment’ (though this may be likely if it has a reasonable degree of autonomy on matters such as finance, budgets, strategy and management decision-making). In any event, even if there is a real possibility of the comparator working at the claimant’s establishment, this would need to be on ‘broadly similar terms and conditions’. This will be decided on a case-by-case basis: terms governed by a contractually incorporated collective agreement are likely to be sufficient, though there should still be significant differences to ensure the terms were not ‘broadly similar’.

This ruling can help universities which are considering setting up subsidiary companies to carry out commercial activities to overcome equal pay claims between staff employed by the main institution and the subsidiary.

Ben Thornber
Partner, Employment & Pensions Group
T: 0870 763 1662
E: ben.thornber@sghmartineau.com

© Martineau 2009

© Martineau

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