Miller Hendry Hotspots Publication - February 2007

Electronic Communications

Important changes to company law regarding electronic communications have been brought in as a result of the Companies Act 2006.

Since 1st January 2007, essential company details must be posted on all e-communications and websites of companies. These details include the full registered name, place of registration, registered number and registered office address of the company. Enforcement action could be taken for failure to comply with the new law.

Other changes affecting electronic communications came into force on 20th January this year, ahead of the main body of the 2006 Act. Under the old law, companies were permitted to send their annual accounts, directors’ reports, auditors’ reports and notices of meeting electronically as long as the recipient had agreed to it.

The new Act provides that shareholders will be able to communicate with companies electronically and companies will now be able to send shareholders annual reports or accounts in electronic format unless they specifically request otherwise.

Basically, both the shareholder and the company must agree to send and receive the information this way, or be deemed to have agreed in terms of the 2006 Act. This should mean that companies can more easily use both e-mails and their websites to communicate with shareholders. The main benefit of this for companies is the amount of money they will save as a result of using less paper.

UK companies listed on a regulated market who propose to use electronic means to communicate with shareholders should bear in mind that they must also adhere to the procedural requirements contained in the Disclosure and Transparency Rules.

Dismissal for Illness caused by work

The Employment Appeal Tribunal recently confirmed that the fact an employee’s illness is work-related will not automatically render a dismissal for incapacity unfair.

This factor is relevant in assessing the reasonableness of the decision to dismiss and, in such cases, it may be necessary for the employer to “go the extra mile” in looking for alternative employment or waiting longer before dismissing.

However, in the case in question, an employee who had no prospect of ever returning to work was found to have been unfairly dismissed. Employers in these circumstances could also be liable for a personal injury claim.

Working Time and Rest Breaks

The European Court of Justice (the “ECJ”) has ruled that Department of Trade and Industry guidance on rest breaks breaches EU law in stating that “employers must make sure that workers can take their rest, but are not required to make sure they do take their rest”.

Most workers have an entitlement to a 20 minute break every 6 hours, 11 consecutive hours every 24 hours and 24 hours every 7 days or 48 hours every 14 days. The ECJ stated that Member States were obliged to guarantee that these requirements were observed, but conceded that employers are not required to force workers to take their rest breaks. As a result, the DTI’s guidance has been shortened to read “employers must make sure that workers can take their rest”.

It therefore seems clear that it is not enough simply to allow workers to take rest breaks if they expressly ask for them and to ensure work commitments are not incompatible with the breaks.

The Advocate-General’s preliminary opinion suggested that employers should take steps to create an atmosphere in which the rest periods are observed by scheduling the breaks as part of working time and ensure that there is no pressure applied to forego breaks.
------------------------------------------------------------------------------------------------------------------------