Legal update June 2019

Legal update June 2019

Below are noteworthy changes in law in the areas of Corporate and Commercial, Intellectual Property, IT, Employment Law, and Brexit, over the last month.

Corporate and Commercial

Requiring doorstep signature can be an aggressive commercial practice (ECJ) — The ECJ decided this month that requiring consumers to sign contracts on their doorsteps, while a courier waits, could be an aggressive commercial practice under the Unfair Commercial Practices Directive (UCPD). This is because it could amount to harassment, coercion or undue influence, significantly impairing the average consumer's freedom of choice or conduct concerning a product and making the average consumer take a transactional decision that they would not otherwise take. In this particular case telecommunications services were sold by consumers visiting a webpage to select a product, place an order and a contract was then delivered to them by a courier, who waited until a signature was provided. If the consumer refused to sign they would not receive the product. This practice was not on the exhaustive blacklist of prohibited commercial practices at Annex 1 to the UCPD, so the referring court would need to assess whether it was aggressive on the facts of each case. If a consumer could see the documents prior to a courier visit, then requiring a consumer to take a final transactional decision in the presence of a courier, without having been sent all the standard-form contracts beforehand, was not, of itself, an aggressive practice. Certain factors may make this practice aggressive though, such as if the courier insisted on a signature, or made the consumer feel uncomfortable in some way which may make their thoughts on the transaction change.

European Commission has published new guidelines on climate reporting as a supplement to its existing guidelines on non-financial reporting — Climate change has rarely been far from the news in recent months and businesses are keen to at least appear socially responsible. Earlier this month the European Commission published new guidelines on climate reporting as a supplement to its existing non-binding guidelines on non-financial reporting. They propose climate-related disclosures for each of the five reporting areas in the Non-Financial Reporting Directive (business model; policies and due diligence processes; outcomes; principal risks and their management; and key performance indicators). For each reporting area, the guidelines identify a limited number of recommended disclosures. Companies should consider using these to better understand their development, performance, position and impact of their activities. The guidelines are intended for companies that fall under the scope of the Non-Financial Reporting Directive (large listed companies, banks and insurance companies with more than 500 employees) but may also be useful for other companies if they want to disclose climate-related information.

Intellectual Property

Disclaimers and likelihood of confusion of trade marks — The ECJ held this month that the Trade Mark Directive prevents national legislation allowing disclaimers to exclude part of a complex trade mark from analysis of the relevant factors showing likelihood of confusion, or giving certain elements a permanent limited importance before that analysis is carried out, because the element was descriptive, or not distinctive.  Each sign’s assessment must be individual and based on the circumstances of the case and not based on general presumptions. National law could not have an effect on this because the mark’s descriptive character was excluded from registered trade mark protection on a national level. Therefore, just because there was a finding of a likelihood of confusion this did not lead to a descriptive element which formed part of a combination of elements from being protected. The Directive provided sufficient guarantees to ensure that signs descriptive of the relevant goods or services were not registered or were declared invalid. This also ensures that a registered national trade mark is protected against a likelihood of confusion using the same criteria, for consistency across the member states, as many member states do permit registration of signs as trade marks with disclaimers.

Information Technology

Guidance from the National Cyber Security Centre (NCSC) on cyber security for SMEs — The NCSC has published guidance for small to medium sized organisations so that they can plan recovery from a cyber incident. With a likely one in three chance that UK businesses will experience a cyber breach, according to the NCSC, practical advice on preparation, identifying what is happening, resolving the breach, reporting the incident and learning from the incident, is invaluable. This advice should allow for businesses to prioritise cyber security by identifying systems and assets which need protection, and to then put in place an incident plan which best protects those assets, before having to deal with an incident. The full guidance can be found here.

Employment Law

Regular voluntary overtime must be included when calculating Working Time Directive (WTD) holiday pay — The Court of Appeal has upheld the decision of the EAT that holiday pay under the WTD must include regular voluntary overtime. Tribunals will be required on the facts of each case to decide what counts as ‘regular’ for these purposes, but clearly the more frequently repeated over a longer period of time that overtime is, the more likely it would be considered to be ‘regular’ and required to be considered in WTD holiday pay calculations.

Recognition for employers that offer more job security for zero hour contract workers — One of the ways in which the Living Wage Foundation is trying to tackle job insecurity and uncertainty in working hours is by setting up a new Living Hours programme for FTSE100 companies. There are certain conditions for businesses signing up: they must pay the Living Wage, give at least four weeks' notice of working time, offer a guarantee of at least 16 hours of work per week and issue a contract that accurately reflects the number of hours worked, in exchange for Living Wage and Living Hours accreditation. Job security, so that individuals know when they are working and can organise shifts to fit with any other commitments they may have, is important so as not to put undue pressure on zero hour contract workers and is recognised under this new scheme as a priority.

The Women and Equalities Select Committee (WESC) report on non-disclosure agreements (NDAs) in discrimination and harassment cases — Confidentiality and non-disparagement clauses in settlement agreements are commonplace and the WESC has made no secret of the fact that it is opposed to these, particularly where they are used to avoid carrying out a full investigation into allegations of discrimination and harassment. The WESC has called for new laws governing where NDAs should not be allowed, as the employment tribunal system needs to ensure that all employees who have experienced discrimination or harassment have a meaningful route of redress. At the moment, the ‘substantial imbalance of power’ between employers and employees means employees feel that a settlement with the strictly drafted confidentiality conditions is their only option, leading to emotional and psychological difficulties and difficulties in moving on and finding new employment. The WESC has proposed that NDAs should not prevent legitimate discussion of allegations of unlawful discrimination or harassment, and confidentiality and non-disparagement clauses to be used in settlement agreements should be written in plain English specifically stating what information can and cannot be shared and with whom. The WESC has also suggested that corporate governance requirements should be strengthened to require employers to protect workers from discrimination and harassment, and to have named senior managers at board level to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in those cases. These were in addition to suggestions previously made that there should be a mandatory duty on employers to protect workers from harassment and victimisation in the workplace and urgent improvements to the remedies that can be awarded by employment tribunals and the costs regime, in this area. NDAs are certainly something to carefully consider and seek legal advice upon if enforceability might be an issue.

Brexit

With the Conservative party leadership contest now well underway and the candidates having different ideas in respect of leaving the EU, the House of Commons (HoC) made another attempt to counter a potential no-deal policy. On 12 June 2019, the HoC rejected an opposition day motion that would have meant the HoC could decide whether to legislate to prevent the new Prime Minister from proroguing Parliament, or from pursuing a no-deal policy without Parliament's consent. The European Commission adopted a fifth Communication taking stock of preparations for a no-deal Brexit, which although not what they would hope is achieved, is still a very real prospect. The European Commission is not planning any new measures before 31 October 2019.

The House of Commons Foreign Affairs Committee published a report this month criticising the government's current lack of preparedness for the situation, post-Brexit.

*Please note that this update does not constitute formal legal advice and should not be relied upon as such. Always ask a solicitor if you are unsure of how the law relates to your business*


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