On first consideration, gardening leave seems a strange concept – forcing an employee to remain at home and do no work, often over an extended period of time (the employee’s notice period). However, there are often good reasons for a employer to take this action, particularly :-

• given that client, suppliers, employees and confidential data are the lifeblood of most businesses
• if the employee is in a senior position and may be useful to a competitor
• an employee in a senior sales role, where there needs to be time for the employer to protect it’s interests in cementing customer relationships with new sales staff

Key legal considerations for gardening leave

• there is no common law right for an employer to keep an employee away from the workplace and without work, so contract provision is essential
• a clause simply stating that the employee can be required to remain at home and not given work rarely suffices – clauses which deal with the underlying reasons for the employer reaching that decision are generally also vital, including non-competition, non-poaching and so on
• the contract clause must be proportionate – as with other employment law clauses, unlike business to business contracts, where the courts will rarely interfere with clauses agreed by parties, with employment contracts, the court or tribunal will assess whether the clause, in terms of extent, is reasonable and justifiable, balancing the legitimate rights of an employer to protect the business as against considerations of restraint of trade.

All your data stored on there?

Have you ever used these machines to gain access to your Bank ?

It should come as no surprise that criminals are also aware that on a balance of probabilities, you access websites where Bank details and passwords are regularly given.

Short of criminals physically stealing your cherished new technology, one would hope that you have passwords protecting your data, however, the criminals also know that.

How then, does the criminal get into your emails ?

Software has been created, which is programmed to worm it’s way into your system via the Internet. It is bad software; Designed to do evil, and is better known as ‘malware’. It is bad software created to steal essential information for the purposes of either stealing your identity, or gaining unauthorised access to your Accounts and other personal essential information which perhaps you thought were safeguarded.

Recently, I received a message from a genuine old School friend of mine, with an attachment which said words to the effect, ‘just looking at an old photo of you and could not stop laughing’.

Now be honest, who would not out of curiosity have opened such an attachment ?

Far more subtle than this, of course, have been innocuous invitations from seemingly innocent people wishing to make contact on LinkedIn. Ask yourself, do you know these people ?

Less subtle, are scantily dressed young females seeking to make contact on LinkedIn. Ask yourself, what attracts them to you in business or otherwise? Hubris aside, do they really want to make contact with you, or is there something more sinister behind the message? Looks can be deceiving. Do they have a website, or attachment attached? Are you curious? Don’t be.

Specifically, the current Worldwide threat is known as ZenuS, or Zeus malware.

All that needs doing, is to click on a new contact or open an attachment, and the malware becomes embedded in your browser, and sets about stealing passwords, dates of birth, personal information.

The end result is that the criminal can transfer funds out of your accounts, or steal your identity.

How do you prevent malware from taking over ? Here are some tips:

1. Ensure your firewall is up to date, and your anti-virus software is current;

2. Do not have one universal password for everything you have access to;

3. Change your passwords regularly;

4. Do not state your full name with middle names;

5. Do not state your entire date of birth. Leave something out like the year, or the month, or jumble some if the data around;

6. Do not leave your computers on day and night;

7. Change log in passwords regularly;

8. Do not open or accept invitations from people you do not know, however attractive or curious you are;

9. If you are not expecting to hear from someone in a long time, think if it really is them contacting you with attachments? When did you last speak or have contact with them? Perhaps contact them from another communication source to check?

David Rosen, is a Solicitor-Advocate, Partner and head of litigation at Darlingtons, London, EC4, a Certified Fraud Examiner, and a visiting associate Professor of Law at Brunel University.

When it comes to the Bribery Act, most, including us, would agree that the moral rationale behind this legislation is correct. Bribery is bad for society and bad for business, and both society and business are struggling big time at the moment.

In legal terms, the Bribery Act makes sense – it pulls together a lot of disparate and outdated strands of case law and legislation in the UK into one manageable and understandable piece of legislation.

However, where we have some disquiet is the political basis of the Act.

Put frankly, the Act, if the US experience is anything to go by, will end up being applied in reality for doling out some very very big fines to a few companies a year, a form of window dressing if you like. The other aspect which is troubling, which may or may not end up as part of the Uk system, is the inducement for whistleblowing which is happening with the US anti-corruption legislation.

Is it moral for rewards to be paid to whistleblowers ? Some would say yes, since there can be very big risks in whistleblowing but as against that, corporations may start looking for the “enemy within”, the mole that will be actively seeking some kind of wrongdoing so as to obtain financial reward for purely financial rather than altruistic or moral reasons. The whistleblower might also be a business partner or supplier, will this threat impact on trust in business dealings ? How might this affect overall morale in big corporations ?

Reports in various publications this week suggest that foreign whistleblowers from the UK and China account for nearly 30% of foreign based whistleblowing.

Under the Dodd Frank Act the SEC rewards whistleblowers who voluntarily provide original information which results in successful enforcement and fines of more than $1,000,000.  It is not surprising that a reward of between 10-30% of these huge fines is very tempting. A further implication is likely to be that UK prosecuting authorities and regulators may end up launching a parallel UK investigation for any company that also has a UK presence.

Opinions ?

Gross Misconduct is serious misconduct conducted by the employee. Gross misconduct is misconduct so serious as to justify summary dismissal of an employee (summary dismissal is an immediate dismissal of an employee without notice). Whether a particular act constitutes gross misconduct or not depends on the particular circumstances of the employer and the work the employee is carrying out. Common acts of gross misconduct include theft, fraud, physical violence, serious negligence or serious breach of health and safety regulations.

Is the employer is entitled to dismiss the employee immediately for Gross Misconduct ?

The employer will have to be careful if he decides to dismiss the employee immediately for gross misconduct as the employee can take the employer to Employment Tribunal to challenge any dismissal. The employer will have to show in the tribunal that it acted with a “range of reasonable responses” and it was therefore fair and reasonable to dismiss the employee immediately in the circumstances.

When deciding whether the dismissal was fair the Employment Tribunal will consider the following factors:

• Was there a genuine belief by the Employer that the employee was guilty ?

• Following on from the Employers investigation was it reasonable for the Employer to hold this belief ?

• Was the Employer’s investigation of the alleged offence properly investigated ?

• Was the Employee provided with all the information obtained through the investigation ?

• Did the employee have a fair opportunity put forward their case ?

• Was the employee allowed to be accompanied by a work colleague or trade union representative ?

• Was the disciplinary hearing chaired by someone who was impartial ?

• Was the employee given time to prepare for the disciplinary hearing ?

• Were there any mitigating circumstances that could have been taken into account to explain the employees actions, eg. provocation, ignorance, family or health problems ?

• Were any alternatives to dismissal considered ?

• Was the employee advised of the right of appeal and given an opportunity to appeal against the dismissal decision ?

• Have you followed the procedures laid down in any contract of employment staff and disciplinary hand book ?

• Was your decision one within a range of responses that a reasonable employer might make ?

In summary, if you are an employer and believe that an employee has committed an act of gross misconduct you should check the terms of any written employment contract with the employee and ensure you stay in line with that, you should also carry out a proper investigation, arrange a disciplinary hearing, give the employee (with the option of being accompanied by a colleague or friend) the opportunity to put his (or her) case, and to impartially decide the outcome, to properly communicate this, give the employee the ability to appeal. If you do not follow these principles you could find you are still liable for unfair dismissal even though your underlying decision was fair.

Ben Jones, solicitor at Darlingtons Solicitors, specialises in employment law. Thanks to Ben for this post.

For many people buying shares in a Private Limited Company, they want to make sure that their rights will be protected in some way. Whilst the Companies Articles of Association (‘Articles’) and the Companies Act 2006 go some way towards this, the most effective way of controlling and safeguarding shareholders rights is through a shareholder agreement.

A shareholders’ agreement can be used for various purposes, including certain voting rights at meetings, protecting minority shareholders from exploitation and setting out simple distribution of power.

Whilst some of the shareholders’ agreement will merely be setting out what is already stated in the Companies Articles, the added benefit to a shareholders’ agreement is that it is private in nature and is not open to public examination like the Articles are.

The most common clauses found in a shareholders’ agreements include:

Positive Obligations:-

This is where the parties bind themselves to positively exercise their rights as shareholders to make sure that they put into effect their agreed aims, objectives and intentions of how the business should be run, developed and even funded.

• Rights of Veto:-

This is where the parties set out which important decisions need the agreement of a specific percentage of shareholders, or even unanimity. This is commonly done to provide minority shareholders the ability to veto certain major decisions such as the issuing of further share capital or changing the Companies Articles.

Any decisions can be included in such a clause, whether or not it would usually be decided by the shareholders or even by the directors.

• Issue and Transfer of Shares:-

Most shareholder agreements will want to specify the procedure to be taken on the issuing and transfer of shares.

The problems arising here are that the agreement must balance the need to protect the shareholders shares from being diluted with the need for the company to be able to raise more funds by issuing more of its shares.

Even when dealing with a transfer of shares it is necessary to balance the issues of giving the current shareholders a market to sell their shares in, against the concerns of the remaining shareholders as to the suitability of the new proposed shareholders. Even the possibility of a current shareholder purchasing the shares and building up too large a holding must be taken into account.

• Rights to Appoint Directors:-

Some shareholder agreements will want to protect the rights of an outside investor by providing that they can appoint a director to the Company board in order that they can protect their investments.

Usually this is in the form of a non-executive director who does not have an active day to day role in the Company’s business, but who will oversee what decisions are being made and will report back to the investor, especially if the Company is not performing as expected.

Others may want to take a more hands on approach and appoint a more active board member. This can depend on their level of investment.

• Dispute Resolution:-

Although it is hoped that there will be no disagreements, almost all shareholders’ agreements contain procedures to be followed should it not be possible to resolve the disagreement between the parties themselves.

This is usually in the form of a third party mediator, or may even be a buy-out mechanism whereby one party will buy out the shares of the other at a set price, since the Company would not be able to continue with its course of business with an impasse between the parties. The terms of a buy-out are complicated and need to be carefully drafted since it must be made clear who will sell to whom and how the price will be determined.

In order to stop parties selling at an unrealistic price, shareholders’ agreements usually provide that if the buyer does not accept the price the seller put forward, the seller must now become the buyer at the price he originally stated. This would encourage him to set a reasonable price at the outset for fear of him having to purchase the shares at too high a price should the other party not agree.

If the disagreement is extremely serious the provision may even call for the parties to agree to wind up the Company.

Whatever the provision to be put into a shareholders’ agreement great care must be taken in its drafting to ensure that the rights and interests of the shareholders are protected as they had wanted.

It is therefore important when drafting or signing such agreements that you seek legal advice on its contents before agreeing to anything.

Many thanks to Darlingtons Solicitors for contributing this article.