Lease Assignments: Your Duty as a Landlord in the UK

22/02/2018

By Gelbergs LLP 

Are you a commercial property landlord who has granted a lease to a tenant over your property? Are you worried that one day your tenant’s business will struggle? Despite being bound by a lease, there are indeed many reasons why your tenant may look for a way out, writes Alaa Jafferali our Property Law expert. Some of the many reasons are as follows:

  1. Your  tenant requires bigger/smaller premises due to expansion/reduction
  2. The premises are surplus to your tenant’s requirements for some other reason (e.g. their business may be relocating)
  3. Retirement

Your tenant may wish to assign their Lease to someone who would be willing to acquire the property.

What is a Lease Assignment?

A lease assignment is a transfer by the original tenant (assignor) of his/her rights over a leased property to an incoming tenant (assignee).The majority of leases contain a clause which necessitates obtaining the landlord’s consent before beginning any assignment procedures.Now you must be thinking that this sounds time consuming and costly? Fear not! As the terms of the existing lease are not usually open to negotiation by the assignee and it is common practice that the incoming tenant pays the landlord’s legal fees.

What happens if you’re asked for consent?

In practice, your tenant will find someone who would be willing to take over the property and will instruct his/her solicitors about their intention to assign the lease. The incoming tenant will also instruct solicitors who will contact you asking for consent providing you with all the details of the proposed transaction. It is advisable to instruct your own solicitors at this stage who will request further information relating to the assignee which will include bank and trade references or accounts.

As a landlord, you have a duty to consider a request for consent to assign and must have reasonable grounds to refuse consent. In the past, courts have ruled against landlords that have taken far too long to provide an answer. If your tenant has made a written application for consent, section 1 of the Landlord & Tenant Act 1988 provides that such consent may not be unreasonably delayed and a landlord can be heavily penalised for failure to comply with this statutory obligation as presented in the case of Design Progression v Thurloe Properties (High Court) [2004] EWHC 324.

Your solicitors will draft a Licence to Assign and advise you if additional security from the assignee is deemed necessary, such as a rent deposit deed or a guarantor. If your tenant’s lease was granted on or after 1 January 1996 then it may well contain a clause which enables you to withhold consent to an assignment and may also contain conditions you can impose on any consent given. One common condition stated is that the outgoing tenant must enter into an Authorised Guarantee Agreement (AGA) with you on an assignment; this is usually annexed to the Licence to Assign. The AGA provisions usually give you a guarantee that the assignee shall pay the rents reserved by the lease and observe the tenant covenants of the lease. However, if the assignee fails to pay any rents or to observe the said covenants, then the tenant shall bear the burden.

Once all draft documentation has been agreed between the parties, your solicitors will send final versions to the assignor’s solicitors who will review them and forward them to the assignee’s solicitors for signing.

This is predominantly the easiest and fastest way for your tenant to pass their leasehold interest over to someone else. A lease assignment might be the best thing for your tenant if they are showing signs of struggle. The correct approach is to always get the right legal advice in time.

To ensure you are not breaching your statutory duties and if you wish to talk more about this topic, contact Graeme Taylor on 020 3227 0643 or email graeme@gelbergs.co.uk.

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This article is a guest contribution by Gelbergs LLP, and was originally published on the Gelbergs blog here. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About Gelbergs LLP

Gelbergs LLP is an Islington and Aldgate based law firm with highly qualified legal professionals and dedicated support staff that make up a passionate, approachable team, committed to providing excellent advice and services to their clients. We offer specialist advice in various areas of law including; Commercial Property, Company Commercial, Employment, Family & Litigation, Residential Property and Wills and Probate.

Love of LegalTech – Spain edition

by Chris Sykes, Head of New Business – UK at Zegal

I had the pleasure of living in Spain for three years, and I recently visited to teach a class at the International University of Andalusia (UNIA) in Malaga. It also gave me the chance to see old friends and some new ones from the world of legaltech.

I won’t go on about the great food or lovely people (or my attempts to revive my Spanish), but I will tell you about some of the exciting legal technology which is being developed in Spain, and the ‘movement’ around this technology.

Many will have seen the recent launch of the Master in Legal Tech at the Instituto de Empresa (IE) Law School and wondered why a Spanish institution is taking such a vital lead in this area, but it’s no surprise to me.  Spain is a well established location for legal innovation.   Top Iberian firm Cuatrecasas has now run two cohorts of its tech accelerator, Acelera, and leading entrepreneurs in this area, such as Jorge Morell Ramos of Términos y Condiciones and Astrid Baldissera of Starting Legal and Barcelona Legal Hackers (to name just a couple), have been supporting the development of this industry for some years now.

Related reading: Zegal co-founder Chris Sykes is featured in Spain’s Legaltechies

On my recent trip, I met Laura Fauqueur and Maria Jesus Gonzalez-Espejo, the founders of ‘Instituto de Innovacion Legal’, both leading actors in the Spanish legaltech industry.  They have just launched a platform called ConflictMapp, a system that helps those involved in some form of contentious issue (legal or otherwise) to triage what they need.  I was excited to see their new offices (in which I have kindly been offered a desk for my next trip) from where from where they are trying to reshape the legal industry through activities such as legal hackathons, training and workshops for law firms.  We discussed some of the challenges facing legaltech in Spain.

Many of the challenges are similar to those I’m familiar with in other jurisdictions.  How do you encourage lawyers or end-users to depart from existing norms and try something new?  How do you ensure the support of the legal industry (regulators, law firm partners) in helping to grow your idea?  How can legaltech improve access to justice and legal services generally? And finally, how do we educate young lawyers and law students to prepare them for an industry undergoing huge changes?

Similar conversations are taking place around the world. At the Legal Geek Conference held in London last October, I had the privilege of meeting fellow legal tech entrepreneurs and learning about how the UK regulators and legaltech businesses are working together. At the inaugural DragonCon, the leading legaltech conference organised by Zegal in Hong Kong last November, we discussed how technology can be a powerful tool in breaking down barriers to legal access.

With a growing ecosystem of tech-enabled lawyers and law firms, lawyers should feel empowered to embrace this wave of new technology. I’m excited to see how these lessons learnt can be shared across continents.

Related reading: 5 Takeaways from DragonCon

One thing that it was great to see in Spain was that legaltech is being driven by various actors and institutions, and from various regions in Spain. It’s this interregional and international collaboration that makes me look forward to the rest of 2018.  Anyway, it’s definitely a great time to be a ‘solicitech’ in Spain!

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A Little Savings Go A Long Way For Small Businesses

Every business has no shortage of business problems. However, the type of woes that small businesses face are relatively different from their larger counterparts.

For small businesses, the majority of these problems are due to revenue and cash flow. This is largely due to the diminutive nature of their business, making them unable to enjoy the same financial advantages as large companies.

The last thing that every small business owner will want is to be riddled with cash flow issues. It does not help a small business if the profits earned are unable to fund employees’ payroll or if the cash-on-hand is dipping into the negatives on the balance sheet.

Related reading: 4 tips for saving time on small business administration

Similar to personal savings, every small business should protect their liquidity by ensuring that they have sufficient buffers of cash. The way to go about is to save.

Here are some ways in which a small business can save without compromising on operations.

Purchase Secondhand Items

This applies to office furniture, vehicles or even equipment. The cost savings between purchasing new versus old can be substantial. Of course, only purchase what is necessary instead of simply buying everything that looks “good”.

Make Use Of Community Resources

This could come in the form of government funding or sponsorships. In Singapore, there are numerous fundings for start-ups and small businesses such as Startup SG Equity, managed by SPRING Singapore, as well as the Productivity and Innovation Credit (PIC), an initiative under the Inland Revenue Authority of Singapore which allows businesses to enjoy discounted tax deductions.

Be Savvy With Money

Maximise cash rebates and sign up for loyalty programs for routine office purchases. It could be using a particular corporate card to enjoy cash rebates on office supplies or an airline loyal program should there be business travels. Small rebates and savings will accumulate over time, increasing the business’ savings in the long run.

Setting aside savings to ensure sufficient liquid cash for the business requires concentrated and conscious efforts from the small business owner or Accounting team. Ideally, there should be a target savings amount that the business should work towards. Once the target savings amount is achieved, it should of course, be set to the next higher amount. With discipline and mindful efforts, this will certainly provide the business with sufficient extra cash in the long run.

Start managing your legal needs with Zegal today

This a guest post by RenQun Huang of Gpayroll. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About Gpayroll

Gpayroll is an easy to use, self-run online payroll service that will redefine and revolutionize the payroll industry. Its intuitive and automated system will help business owners focus on their core business without the hassle of managing payroll.

New Way Of Compensation With App-Based Online Payroll Services

15/02/2018

For companies within the retail and hospitality industries, high turnover rates and absenteeism are commonly faced issues. Due to the nature of the work, this results in employees working primarily on a part time or shift basis. Given the inconsistency of attendance of these employees, it makes it relatively difficult for employers to compensate them.

Employers might be sandwiched between the decision of paying employees for the hours which they have worked, or not compensating them at all if they did not meet a certain minimum number of hours. However, then comes the problem that some employees might feel that they deserve to be compensated even for that few hours on the job.

To curb the issue of absenteeism and high turnover rates, there are numerous technology startups that are actually providing companies within the retail and hospitality industries to compensate their workers daily through an online payroll app.

According to The Wall Street Journal, big names companies such as McDonald’s Corp. and Uber Technologies Inc are compensating their employees almost instantly through payday apps. The motivation behind introducing same-day pay options to employees is attract and retain workers. At the same time, this offers a low cost benefit from the companies’ cost point of view as well.

By compensating employees on a daily basis, this provides employees ready access to cash that they can use immediately or perhaps to cover unexpected expenses. Concurrently, it provides workers with a sense of affirmation that they will be paid for the hours they have worked.

While offering same-day pay options to employees might provide them with instant access to cash, there might be some hidden service fees incurred with this option.

For some vendors, services fees might be charged to the employers, with no cost to employees. In other instances, employees might have to bear the service fee instead. In some cases, this might cost employees as much as $3 out of their daily paycheck.

Employers who introduce this option to employees should be wary about these hidden costs. For low wage earners, $3 out of their daily paychecks can be a significant reduction in their pay over time. Additionally, employers have to clearly spell out these hidden costs to employees before introducing this same-day pay option to them.

Offering same-day pay option might not work for all companies. On one hand, it is a great tool to curb absenteeism and minimise attrition given that employees have the certainty in knowing that they will be paid at the end of the day. However, there might be various hidden costs involved that may eventually put a strain on both companies and employees’ paycheck.

Start managing your legal needs with Zegal today

This a guest post by RenQun Huang of Gpayroll. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About Gpayroll

Gpayroll is an easy to use, self-run online payroll service that will redefine and revolutionize the payroll industry. Its intuitive and automated system will help business owners focus on their core business without the hassle of managing payroll.

5 Tips for Handling Employee Complaints in Your Company

13/02/2018

While many businesses are focused on their customers, there is one important group of stakeholders that you should not neglect: your employees.

Employee relations might not always be tip-top and, from time to time, it is inevitable that grievances may arise. While it may be easy to overlook such sentiment among your employees, you should definitely pay attention to employee complaints as they alert you to potential problems in the way your business is run.

Here, we outline five tips for handling employee complaints in your company.  

1. Understand the types of grievances that could emerge in your workplace

The Grievance Handling Handbook by the Tripartite Alliance for Fair Employment Practices in Singapore defines a grievance in the workplace is any discontent or feeling of unfairness that pertains to work. A complaint is an expression of a grievance.

Work-related grievances generally fall into one of the following categories:

Relations of employers and employees: Grievances relating to difficulties one employee has with working with another employee;

  • Employment: Dissatisfaction with job descriptions, job duties, functions, or activities;
  • Non-employment: Acts of termination of employment that the former employee perceives to be unfairly or improperly managed to administered;
  • Terms of employment: Wages, allowances, rewards, or benefits;
  • Transfer of employment: Difficulties associated with working under a different employer;
  • Conditions of work: Safety and health conditions, discriminatory acts, or unfair treatment by the employer.

Work-related grievances may be general or individual. A general grievance is a grievance that affects a group of employees, such as a wage cut or a retrenchment exercise. On the other hand, an individual grievance affects one employee and requires a one-to-one approach. Examples include sexual harassment or perceived discrimination in a promotion exercise.

2. Set up a clear framework for handling complaints

A common problem that besets small businesses is the lack of a proper framework for handling complaints. It is important that you set up a formal mechanism for employees to report problems. The process by which an employee can lodge a complaint is known as a Grievance Procedure.

Generally, there should be two kinds of forms that allow your employees to start the Grievance Procedure:

  • Complaint Form: This document allows your employees to file complaints. It should collect essential information needed to complete a complaint and for management to adjudicate on the complaint;
  • General Appeals Form: This document allows your employees to appeal against a decision made by management related to any aspect of the employment relationship.

Once the committee in charge of the Grievance Procedure has made a decision, it should be set out clearly in a Grievance Resolution (or Settlement) Letter. This document should lay out the key terms of a resolution or settlement of a grievance reported by an employee.  

It is important that your Grievance Procedure provides a clear avenue for appeal against decisions. There may be different levels of appeal depending on the hierarchical structure of the organisation and the HR policy. The appeal process should be made accessible to your employees via a Grievance Appeals Form that provides one final opportunity for the employee to pursue a grievance and investigate the reasons why the resolution of a complaint may not have adequately addressed the grievance suffered.

3. Communicate your openness to dealing with complaints

While many organisations tell their employees that they have an open door policy and welcome employee feedback, it isn’t always clear what the avenues for employee complaints are. When you have a Grievance Procedure in place, make sure that this is clearly communicated to your employees.  This can be done through a grievance handling workshop for all executives, managers and supervisors, in which you walk your employees through the Grievance Procedure and impress upon your employees the need to take all complaints seriously. Employees should understand that it is their legitimate right to use the Grievance Procedure and that your company will follow up on all complaints filed within a reasonable time frame.

4. Ensure that the complaint is resolved in a timely manner

When you first receive a complaint, it is important that you act on it as soon as possible by requesting more details from the employee who complained. A delay in following up may reflect negatively on the sincerity and efficiency of your company in dealing with complaints.

It is also important to clearly state the period of time that the employee should expect to wait before action is taken at each stage of the process. Should no action be taken during the expected time period, your employee would then have the right to move to the next level of appeal. This would ensure that both your aggrieved employee and your company are on the same page and reassure your employee that steps are being taken within a reasonable time frame to resolve the complaint.  

5. Be transparent about the process

Depending on the type of complaint received, you may want to keep relevant staff members updated on the progress of the complaint while safeguarding the privacy of the individuals involved. Word may get around, especially in a small office. It is more ideal that information about the complaint is available from a formal source that is aware of the status of the process instead of allowing rumours to spread around the office.

If you will be informing the complainant’s supervisor that the complaint has been lodged, it is good practice to let the complaint know as well. This would allow the employee to raise any concerns and avoid a situation where an employee feels betrayed.

After the complaint has been resolved, it is also good practice to send around an update of the complaint and how it was resolved, with personal details removed. This also achieves your objective of signalling openness to receiving complaints and proactiveness in responding to grievances.

At the end of the day, a properly handled complaint has the potential to boost confidence in the company and your leadership. You would also have gained valuable information about your employee’s sentiments about their work and the workplace.

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Do you have insights from handling an employee complaint?

Share with us in the comments below!

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