The ACA has arrangements with leading law firm Hewitsons of Cambridge for the provision of legal help and support to members, who may wish to use the helpline for:
- Contractual Matters
- The terms of appointment
- Risk management
- Intellectual property and ownership of design
- Fee recovery
- Threats of a claim
As part of their ACA subscription, members are entitled to telephone access a member of the law firm’s advice team during office hours, an initial appraisal of the current position, advice on when to notify their professional indemnity insurers and 15 minutes free legal advice from a lawyer who is an expert in professional indemnity and construction law.
Hewitsons have a regular column in the ACA newsletter
Hewitsons LLP Legal Advice Team
Hewitsons LLP solicitors (www.hewitsons.com) has a long standing association with the ACA, including collaboration on the drafting of the ACA SFA Forms of Appointment. ACA members are eligible for an initial telephone consultation on legal issues without charge.
Call 01223 461155 and ask to speak to either Stephanie Robinson (firstname.lastname@example.org) who administers the legal help line at Hewitsons, or partner, Colin Jones (email@example.com), either of whom will be able to direct your call to an appropriate lawyer.
Categories of advice covered by the helpline include:
- Terms of appointment
- Recovery of fees
- Protection of intellectual property rights
- Planning, including planning agreements, challenges, enquiries, judicial review
- Environmental law
- Regulatory law matters
- Procurement law
- Employment law
Or email your query to ACALegalAdvice@hewitsons.com
The service is free for the first 20 minutes of telephone advice. Beyond that it will be your choice if you wish to agree a fee to obtain further advice.
Drawing your architect business to a close – Laurence Evans, Corporate Team. January 2015
Regardless of how successful your practice has been, there may come a point when it is time to consider drawing it to a close. This is a very brief run through of some of the issues to bear in mind when doing so.
If you run your practice as a sole trader, then winding up your business should be fairly straightforward. Nevertheless, clearly you need to pick a date to formally cease trading and inform your clients and suppliers. You will also need to tie up any financial loose ends, such as cancelling your tax and VAT registration with HMRC (whilst dealing with any VAT and/or capital allowance issues) and settling any debts with creditors. Your practice may have other outstanding obligations that need to be dealt with, for example, in relation to any property occupied or employees hired. These issues are ones which will apply to all types of professional practices regardless of business structure. In addition, it will be important to ensure that you have adequate on-going insurance cover as professional negligence claims may arise some years after the closure of the business, for which you will remain personally liable. Run-off cover is therefore necessary for an appropriate period.
If you are operating your practice as a partnership, it may end up being dissolved in a number of situations, including where a fixed term partnership has run its course. Hopefully there will be a partnership agreement in place setting out what rights an individual partner has on retirement, or what happens if all partners are agreed on ceasing to trade. If there is no agreement between the partners, then you will be relying on the default position as set out in the Partnership Act 1890. This is likely to have unwanted consequences so that, for example, if one of a number of partners decides they wish to exit, this will cause an automatic dissolution of the partnership. Furthermore, without any agreement to the contrary, on a winding up of a partnership all assets brought into it by the partners, or later acquired with partnership money, are deemed to be partnership property and owned equally between the partners
(notwithstanding each partner’s individual contribution). If there is no partnership agreement the partners should endeavour to draw up a deed of retirement or dissolution agreement, as appropriate. This will assist in clarifying
issues such as the distribution of assets between the partners, the split of any undrawn profits, and any ongoing liabilities for any debts incurred by the practice. Again run-off insurance cover is critical and the partners will need to make provision for the insurance premium costs.
Limited Liability Partnership (“LLP”) and company limited by shares
Unlike a general partnership, both an LLP and a company limited by shares have a legal personality separate from their members. Therefore neither structure will dissolve automatically: you need to take positive steps to bring their corporate existence to an end. There are two main ways of ending a solvent LLP or company: striking off by the Registrar of Companies House and voluntary liquidation. Whether either route is available or suitable will depend on
the circumstances, and before starting either process you should make sure you understand the potential consequences. For example, under the more straightforward striking off procedure, unpaid creditors can apply to court to have an LLP or company restored to the Register in order that outstanding debts can be paid. You should also be aware of procedural steps involved, as these can be complex and involve strict deadlines.
Of course one reason for ending your business may be that it is in financial difficulties. It is important to be aware of the risks you face if you continue to practice while insolvent. If you run your practice as a sole trader or through a partnership, then your personal exposure to creditors is potentially unlimited. In the case of companies and LLPs, fraudulent or wrongful trading or breach of a fiduciary duty to a company can also result in the members/ directors becoming personally liable for a proportion of the LLP or company’s debts. In certain circumstances it can even lead to criminal liability or a directors’ disqualification order. If you suspect that your business may be approaching
insolvency, you should inform your fellow directors or members and seek the advice of an insolvency practitioner as soon as possible.
This article is intended to provide general guidance only, as there is a whole raft of issues to consider when winding up any business. Long-term planning is usually key, and we would always advise all of our business clients to seek financial and legal advice at an early stage in the process.
For more information contact Laurence on 01223 461155 or by email: firstname.lastname@example.org
Standard Contracts – Gemma Hill. August 2014
Architects’ Contracts of Employment, What are they? Why are they important and what should they cover ?
A successful Architects’ practice requires managers to have a sound knowledge of how to go about engaging members of the business. As highlighted in this article, a contract of employment is an important tool for an employer in protecting their business, providing clarity as to an employee’s role and their entitlements which all in turn helps to avoid workplace disputes.
What is a contract of employment?
A contract of employment is an agreement between an employer and employee which governs the employment relationship. Even if no formal written contract of employment exists, terms of employment are likely to be implied by the custom and practice arrangements between the parties. However, a formal written contract should always be put in place to set out the terms relating to the employment relationship for
the reasons given below.
Why the need for a written contract of employment?
The Employment Rights Act 1996 requires that all employees be provided with a written statement setting out certain terms of employment. Failure to provide a written statement of terms, or providing an inaccurate or incomplete statement, could render an employer liable to make a payment to an employee of 4 weeks’ pay. The requirement is only that the employee should be provided with details about their basic terms but best advice is to look to
put in place contracts that are reasonably comprehensive and which provide for certainty as to the respective parties’ obligations.
A comprehensive employment contract is also important if you want to include provisions for essential protection of the interests of a business. If there are no express provisions within a contract, an Architects’ firm will only have limited protection in respect of its confidential information and no ability to restrict an ex-employee’s ability, for example, to poach its customers following termination of employment. Further, by putting a detailed contract in
place, the firm can include provisions in respect of management of intellectual property, for example to clarify who has rights in respect of any designs produced by members of the firm. A well drafted contract of employment is, therefore, an essential tool in protecting a business.
What should be included?
Certain information must be provided to an employee by law and as a minimum this means:
• the names of the parties;
• the date when the employment began;
• details relating to pay;
• details relating to hours of work;
• terms relating to entitlement to holidays;
• any terms relating to sickness and sick pay;
• details relating to notice;
• the title of the job or a brief description of the work involved;
• where the employment is not intended to be permanent, the period for which it is expected to continue or the date when it is to end;
• details in respect of the employee’s usual place of work;
• whether the employee is required to work overseas and, if so, the terms that will apply whilst working overseas;
• any disciplinary and grievance rules or procedures applying to the employee or where such details are to be found;
• to whom and in what manner the employee may apply if dissatisfied with any disciplinary decision or if they wish to raise a grievance;
• any terms relating to pensions.
The contract may also include the following:
• Confidentiality clause – There is a limited implied duty of confidentiality which protects an employer’s “trade secrets” following the termination of employment. Therefore, if an employer wants to ensure that confidential information that does not amount to a trade secret cannot be misused by an ex-employee following the termination of their employment, it needs to include a confidentiality clause within the contract of employment.
• Restrictive covenants – An employer may want to place restrictions upon its employees’ ability after they have left the business to act in competition, deal with or solicit the firm’s clients. In order to be enforceable, these types of covenants need to be drafted carefully. However, if an employer has legitimate business interests to protect, restrictive covenants are a useful way to ensure the protection of those interests.
• Payment in Lieu of Notice and/or Garden Leave clause – Where notice is given, an employer may not want the employee to remain working in the business during their notice period. A garden leave clause enables an employer to require an employee not to attend work during their notice period. The employee remains employed and so is still bound by the terms of their contract but the current employer can require the employee to stay away from its premises and not carry out any work. On the other hand, a payment in lieu of notice clause allows an employer to terminate the employee’s employment immediately and simply make a payment to the employee in lieu of their notice.
• Intellectual Property (IP) – Given the creative nature of their role, Architect employees are likely to create IP rights in the course of their employment with the firm. As the employer, the firm may be the first owner of such rights in relation to material created during the employee’s employment (other than rights to certain patent inventions). However, there may be circumstances where there is doubt over whether the rights were created during the course of
employment. Here a detailed IP clause will assist in resolving any disputes in relation to the ownership of IP rights.
The content of a contract of employment will depend on the circumstances of each case, in particular the employee’s role. However, regardless of seniority, a contract of employment should be put in place in respect of all employees of an Architects’ firm in order to avoid difficulties in the future.
This article is intended to provide only general guidance. It is by no means exhaustive and should not be treated as a substitute for full independent legal advice.
Contact Gemma on: