Commercial/Employment UPDATE

Issue No.10 July 2005

Personal liability for Company cheques

Directors should be aware of section 394(4) of the Companies Act 1985.  This provides that if a director or other officer of a company signs or authorises a cheque in which the company’s name is not mentioned in legible characters then he will be personally liable on it.  In the recent case of Florentino v Farnesi [2005] EWHC 160 (Ch), the directors of a company, Portofino Collections (London) Limited, signed cheques which omitted the word “Limited”.  This was a sufficient breach of section 394(4) of the Companies Act 1985 to make the directors personally liable.

Age Discrimination - 2006

The Government is committed to introduce legislation prohibiting age discrimination in the workplace in October 2006.  A consultation process is currently underway and draft Age Regulations will be submitted before Parliament early next year (the “Age Regulations”).

The Age Regulations will focus on the following:

Recruitment, selection and promotion

The Age Regulations will provide that decisions about recruitment, selection and promotion should not normally be based on age (whether directly or indirectly). 

Employment benefits

The Age Regulations will prohibit different treatment on grounds of age in employment benefits, although they are likely to contain provisions that allow the use of length of service as a criterion for pay and non-pay benefits.

Retirement

The Age Regulations will contain a national default retirement age of 65.  This means that it will not constitute age discrimination if employers retire employees at or above the age of 65.  Lower retirement ages will only be possible if the employer can objectively justify them.  A new statutory procedure will have to be followed on any compulsory retirement (whether such retirement is before or after the employee is 65)- the so-called “duty to consider” procedure.

Unfair Dismissal and Redundancy

The current upper age limit for unfair dismissal and redundancy rights will be removed.  Compulsory retirement will therefore amount to unfair dismissal, even if the employee is 65 years old or more, unless the employer has followed the “duty to consider” procedure.

Employers should act in good time to ensure that they are ready when the Age Regulations come into force.  In particular, they should check:

• recruitment and application procedures.  For example, job advertisements should not provide age specific terms such as “youthful”, “go getting”, “mature”etc.  Also, those who conduct interviews and make decisions should be aware of the effect of the Age Regulations.  They should keep notes of interviews and recruitment decisions to use as evidence that decisions were made for reasons other than the age of the applicant (and, for that matter, his or her race, sex, sexuality or religion).
• employment rules and procedures, including the employment contracts you use and the staff handbook and employment benefits (salary and otherwise) you provide.
• retirement procedures.

Employers should be aware that if a Court or Tribunal upholds a claim for age discrimination, it will be able to award financial compensation (including damages for injury to feelings).  There is no limit on the amount of compensation.

Note:

Please note that this newsletter is not intended to be a comprehensive statement of the law and should be used for guidance purposes only. If you require specific legal advice please contact Mark Machray or Edward Bond or by telephone 020 7493 2903.