Legal Surgery – Top mistakes being made right now! Chris Gibbons and Adam Morallee

COVID 19 has hit businesses like a TONNE OF BRICKS and with so much “advice” out there about what you should and shouldn’t do, it’s no wonder businesses are stuck in limbo!

LUCKILY Adam Moralle has joined Chris Gibbons to help guide businesses away from the top mistakes that they are currently making!

Watch below to make sure your business doesn’t fall into a panic filled abyss!

Furlough Confusion

Furlough is designating employees on your tax system as furloughed and therefore not allowed to work. The Government will pay (as a grant) 80% up to £2500 per employee that you furlough. 

 

The confusion is some businesses think they only have to pay their employers 80% OR have to make up the difference. This is wrong.

The 80% from the government is NOT a substitute for your wages instead of the full wage you’ll normally receive. Companies are still legally required to pay you your contracted amount for you to keep working. You, as an employee, do not have to accept the offer of furlough, however the alternative may be going through the company’s redundancy procedure.

The options of what could happen are:

1) You offer / your business offers your furlough which is 80% of your contracted wages – this is instead of redundancy, you will not be working during this time.

2) You / your business keeps wages at 100%, (they can still accept 80% from the government but you must receive/ must pay the full contracted amount) and you carry on working.

3) You decide not to take furlough and go through the company’s redundancy process.  

It is an arrangement between an employee and employer. Whatever deal is decided, it is a change to the terms and conditions of employment, this must be agreed and in writing.

Remember: If you are furloughed / have furloughed your employee, you must not work, this is classed as tax fraud. HOWEVER, they can still participate in training and training courses.

(If you have recently left your job, and were on the payroll on the 28th Feb 2020, it would be worth going back to your company and asking to be reemployed, potentially on furlough.)

Can directors furlough themselves? 

Yes providing they were on the payroll (PAYE) on the 28th Feb 2020. It will be 80% of what they were being paid at that time. A director on furlough also cannot do any work, apart from the bare minimum of duties that are legally required.

Many directors take their wages through dividends and therefore cannot be furloughed based on this.

Self employed – to claim the self-employed grants that the government have made available, you must have filed a tax return for 2018/2019, and must have had less than £50,000 from trading profits, not from dividend income to be eligible.

 

The punishment for falsely claiming furlough or finding a “loophole” to try and claim furlough or grants it is very tough. Ensure you are only claiming what you legally should be. Always seek advice from experts like Adam and his team at Brandsmith if you are unsure.

Force Majeure

This will be a section in most contracts / agreements and must be included in writing for it to take any effect.
Force Majeure is, in effect, a big event out of your control. Normally you are excused from breaching your agreement due to the force majeure.

It’s a defence to not perform an obligation if it’s the event that is preventing you from performing your obligation.

 

This does not mean you don’t have to make payment.

If you made an order, or have had a service you have to make a payment, the banks are still open so there is still the facility to do this.

When can you not pay something?

If you haven’t been provided with what you are paying for.

Frustration – if the event is stopping the contract from actually happening, both parties can walk away from it.

*Remember – all parties and businesses have been affected by this, try and negotiate to come to a happy compromise for all as all parties are affected by this.*

 

Commercial Tenancy Payments

Lots of commercial landlords are giving payment holiday breaks to their tenants, if not, those tenants companies may go under and therefore the landlord won’t have any tenants.

However this is not a legal requirement and landlords still have bills to pay.

A suggestion is to agree to delay the payment until it’s more achievable or come to an arrangement that could benefit both parties.

 

Directors loan pre COVID with a personal guarantee 

There is a new government scheme that allows certain business loans without a personal guarantee, however this does not apply to all business loans as banks still require some form of guarantee for larger loans and the government is, in effect only guaranteeing 80% of the loan.

Any loan with a personal guarantee taken out before COVID 19 will not come under this scheme and the personal guarantee put in place still stands.

 

IP information 

Non patentable products, when trading globally: Design rights registration is costly and would need to be done for every country which is unfeasible for some businesses, how would you suggest we proceed?

Some European patents and trademarks will offer some worldwide protection, but as a rule you would need to do this for each country.

Options:

Applying for Patents, Design Rights, Trademarks or using rights that arise naturally.

– Registered Patents ( if possible)

– UK Design Right Registration

– European Design Right Registration

– Unregistered EU Design Rights

-Trademarks – UK and/or European Registration

(IP rights that arise naturally and you don’t have to register for, for example Community Unregistered Design Right. These last for 3 years from the date of your first sale.)

Someone would have to make more than a small tweak to class it as a new “design”. They would have had to have created something with a different overall impression, if they haven’t, you are covered and can sue under the Community Unregistered Design Rights.

Recommend always registering your trademark. Using searchabrand.com you can see if the trademarks and domains etc are available!

For a startup, register a trademark and depending on how novel the design is potentially register for design rights but you do have community design rights available
.

Patents are really expensive, but if you’re aiming big, having a registered right can add value to your business.

For startups and new businesses it is especially worth talking to Adam and his team at brandsmith.co.uk !