With the first UK lockdown coming with little advanced warning, furlough and other Government financial support schemes were initiated quickly and not a lot of guidance was readily available on the finer details.

It was several months before the technicalities of holiday pay, and holiday accrual was properly understood, and even now, a great many smaller employers who have become reliant on ‘free’ advice from blogs and forums are still unaware of certain legal obligations and responsibilities.

There is a misconception that regulations and initiatives relating to Covid supersede all other contracts and this is not the case. Employment contracts, as well as Health and Safety responsibilities, remain a legal liability for the employer. This includes ensuring that your employee’s home workspace meets the same risk assessment standards as they would in the office; sending a member of staff to work from home, without a desk or suitable chair could result in legal claims made against them for injuries sustained as a result of unsafe working conditions.

Breach of contract during furlough could be the next legal boom

Claims for Breach of Contract during furlough periods might very well become the new ‘mis sold PPI’ over the coming years, as employers have failed to recognise the requirement to seek written agreement from their furloughed employee that they will be paid 80% of their salary, and not the 100% as agreed in their contract of employment. Failure to demonstrate mutual agreement to this change, exposes the employer to a claim for Breach of Contract with the employee seeking to recover the remaining 20% of their contracted salary.

Speaking to Victoria Hodkinson of TEN Legal Solicitors, she told us that their Employment department has received an unprecedented number of enquiries from employers over the last two months who have realised only now, that they breached their employees contracts as far as back as April and are seeking advice on how to resolve the situation before they are potentially faced with legal claims.

“We have been working on a lot of Compromise Agreements with employers. Historically, these were most frequently used by larger companies who were making multiple redundancies and wanted a ‘belt and braces’ approach to cover themselves if anything had been overlooked. But this year we are seeing more small employers – with only a handful of employees, looking to mitigate their risk of litigation if it was later discovered that they accidentally breached their contracts with their staff.

We have also seen a rise in enquiries where employers have had claims made against them because they have reduced an employees pay without the correct processes followed, as well as mis-handling of maternity and sickness, and a lot of enquiries where employees have not received the expected sum of holiday pay after they were made redundant. While employers can request that their staff take holiday while furloughed, they must top-up their pay to 100% for the days taken as holiday and many employers have failed to do this.

We don’t want to see a burst of claims against employers; running a business in the current climate is already extremely difficult and struggling businesses don’t need the burden of litigation added to their troubles. It would be preferable if those employers who may have left themselves exposed to claims were to seek legal advice sooner rather than later, and resolve the situation for what might cost a few hundred pounds instead of thousands”.

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Furlough exposes employers to potential breach of contract claims

Last week the UK Government u-turned on its recommendation for employees to return to the office and the official position is now that employee’s should work from home ‘if they can’.

It is difficult for many employers to justify bringing their staff into the office when they have already demonstrated earlier in the year that their role can be performed adequately at home, and with many employees keen to ditch the commute, it is likely that bosses will have to concede on the matter, whether they would prefer their team in the office or not.

But many organisations, particularly smaller ones, are failing to address the potential breach of GDPR regulations that arise as a direct result of an employee working from home. This could expose them to a data breach claim made against them, which could be costly as compensation paid for breaches can easily run into the thousands.

Andy Chesterman, Compliance Director at Privacy Helper, a company that specialises in helping companies comply with GDPR and data handling requirements told us that he had seen a lot of breaches and challenges for businesses while their teams have been working from home. Sometimes, putting processes in place to be compliant means hiring IT experts, and investing in servers or software and many firms are simply ignoring their obligations because it is expensive.

“Many firms are allowing employees to use their personal laptops at home to carry out their work, as they would normally use a fixed desktop in the office and cost of supplying each person with a new laptop is an expense they would prefer to avoid. Company property tends to have the latest security patches installed – and some company laptops will not allow external USB’s to be used. Consider this if using your own laptop or PC temporarily – does it satisfy your company IT policy?

If personal machines are used “temporarily”, is all personal data (emails, client data, etc) deleted from the personal machine after use, or does it get forgotten about? And if you are remotely dialling into the work server, are you using a VPN to secure your line? In usual circumstances, you’d log into the work server while in the office – a secure environment. Your home WIFI may be less secure, therefore, compromising the security of the data being accessed”.

There are however many other potential breaches that are often overlooked once an employee is in their own personal space. DRM Legal, a law firm handling claims on behalf of those who have had their data breached have seen an uplift in claims for compensations in 2020 as a direct result of lax processes while working from home.

Chris Saltrese, Senior Partner at DRM Legal shared with us some examples of recent enquiries his practice has received, such as an incident where a marriage counsellor was working out of their home office and private paperwork relating to another couple was not safely filed away and confidential details were visible. In this unusual case, the client actually knew the couple whose paperwork they had seen and had mentioned to them in passing conversation that they were using the same marriage counsellor!

Chris told us, “It is vitally important that files and paperwork containing personal data is locked away safely, where other family members and visitors cannot see those details. A number of GP’s, nurses, solicitors and social workers are now working full-time from home and have in their possession very sensitive data relating to someone’s medical or criminal history. It would not be unusual, particularly in small towns and villages, for spouses, teenage children or extended family members who visit the home to personally know the individual whom the file relates to. If that file is casually left on the dining table or out on view this could lead to a very serious data breach, and subsequent claim for compensation”

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Working from home leaves business owners exposed to data breach claims

This week the Government announced that the Coronavirus Job Retention Scheme would be extended until October, however from August while workers will continue to receive 80% of their salary, new rules will mean that employers share the cost.

It is yet to be revealed how the financial responsibilities will be proportioned; whether this will be 50/50 or the State shouldering the lion’s share but the amendments to the scheme, but of the key details that have been announced it is clear that workers will be allowed to return to work on a part-time basis.

At present, workers must either return to work without any (furlough) Government subsidy, or remain completely inactive in the organisation. This poses challenges for many business owners both in relation their own Director function and their staff. For many employers, who do not have enough work to fill a full time role, but do need some support from their staff it means choosing to manage without their workers or depriving them of 80% of their full-time pay, in exchange for what may only be 16-20 hours per week (maybe 40-50% pay)

The hidden benefit for Directors

Until now, Directors have been pretty hard done by. With most taking the majority of their pay via dividends – unearned income on paper, and therefore illegible for the Self Employed Grant, and unable to furlough themselves because the requirements of the scheme demand complete commercial inactivity, could this provide the opportunity for directors to claim a portion of their salary and continue working?

While the amendments to the scheme are presumably designed to reduce the burden on the tax payer, the Government may very well have overlooked the potential for new claims from directors, and the potential for fraud, with employers no longer fretting that their staff could be evidenced as working, but asking them to work full-time none the less and Director;  taking a ‘business as usual’ approach, while claiming part of their salary via the scheme.

The devil is in the detail

The details are yet to be announced, but one would assume that the Government have pre-empted a deluge of new claims and therefore one might expect the split to be 50/50 or even a higher responsibility on the employer.

However, it seems likely that this extension has been formulated with leisure and hospitality businesses in mind and with a view that the Government does not want to see a spike in Universal Credit claims. If so, it seems probable that the Government wedge of the bill will reach at least 50%.

With the furlough scheme currently costing the tax payer £100bn up to October, we would hope that it fulfils its brief and successfully prevents many jobs from being lost.

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Extended furlough – a big win for Directors?

The angry voices from small business owners are getting louder and it seems that the Chancellor has heard their calls loud and clear.

Yesterday, Rishi Sunak unveiled a new Bounce Back Loan Scheme that could provide SME’s with loan funding of up to £50,000, coupled with the promise that this cash could be accessed quickly and without the cumbersome application criteria for which the Conoravirus Business Interruption Loan Scheme has been so harshly criticised.

The loan scheme, which is open for applications from 9am on Monday 4th May has just two pages of forms to complete, is not based on business viability and the business owner can ‘self-certify’ their income (no evidence is being asked for submission) and most importantly, the Government is underwriting 100% of the loan. A business can borrow up to 25% of their turnover.

But is it enough to save small businesses from collapse?

Research published by The Small Business Academy, a UK small and start-up business support hub, reveals a much greater impact on the survival of small businesses than perhaps even the Chancellor had expected. Their study of 470 business owners with fewer than 50 employees revealed that a worrying 18.10% of those who participated in the survey are reliant on State benefits to survive and 24.58% of businesses said there’s a ‘Good chance they will have to close’

When asked about their current business revenues, 56.78% advised that they have ‘little to no revenue’ and a further 24.45% indicated a ‘substantial loss’ in revenue – equating to 81.36% of businesses who have lost most, or all of their business income.

A spokesperson from The Small Business Academy told Business Matters, “We are receiving a large volume of emails and calls from anxious business owners who have absolutely no income whatsoever. They are mostly sole directors of a small business, employing just a handful of people and working out of Co-working Spaces and serviced offices that do not qualify for the grant scheme.

If they ‘furlough’ themselves as a sole director they cannot perform any activities save for statutory responsibilities and this would mean they have no business to come back to when they can resume normal trade.

Many of our members have told us that there is an unfair disparity between them, and everyone else. Where the self-employed can receive 80% of their profits and continue working, and employees can receive 80% of their wage but get a second income by taking a job in Tesco, the only thing we are being offered is debt. Debt that we are aren’t even sure if we can repay”.

What do small business owners need?

It seems unlikely that the Chancellor is going to allow any wiggle-room to permit directors to claim their salary via the furlough scheme and continue trying to generate income, but further clarity is needed on the Bounce Back Loan Scheme.

It is currently unclear whether a Personal Guarantee will need to be provided, if not, this would not only be unfair for sole-trader applicants who would remain personally liable but would create the potential for applicants to secure funds before folding their business.

However, if a Personal Guarantee is required, how many business owners are prepared to be burdened with debt that they may be personally liable for, when there is no road map on offer as to when they can begin trading again?

The Government has made clear that lockdown measures will not be lifted until five tests have been satisfied, but without at least some provisional indication of when businesses can resume trading it is impossible for SME’s to plan their future, or know how much financial support they need to survive.

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Will the Bounce Back Loan Scheme be enough to save small business?

Are your digital assets secure?

Rarely a week goes by, where I don’t encounter a situation with a small business wishing to upgrade their website with a different developer to the one that carried out the initial work.

It is not uncommon, for businesses to get a very affordable website with a shoestring budget in the early stages of trading with a view to upgrading it further down the line. There are many companies and agencies, who offer ‘all inclusive’ pricing that includes the domain name and hosting for the website, and some also offering ‘Free social media set-up’ as part of the deal.

This can seem really quite appealing; for someone to take the headache out of having to register domains, create pages and learn the differentiation’s between hosting packages. But beware – this could come back to bite you in the ass a year or two down the line!

Who actually owns those digital assets?

You would be right to assume that you do, as you own the business to whom it relates. But how many of you actually have a contract in place to that effect? I suspect not many.

Most reputable agencies and freelancers would not hesitate in ensuring your digital assets were returned to you whenever an agreement was terminated, but all too often I have seen disputes over domain and social page ownership, that have resulted in the business simply having to start all over again from scratch. This is really quite heartbreaking when a website url has built up Domain Authority with Google over time, and are now back to square one.

I have also seen cases where an agency has been paid to set-up and manage a Facebook page, and when the contract has been terminated, the agency have refused to transfer ownership of that page to the business. Sometimes with established audiences and thousands of page likes exposed to risk.

Although Facebook can initiate an Ownership Dispute – this is something of a hassle, requiring legally Notarised Authorisation from a solicitor, proof of ID and a great many other fiddly pieces of information.

How can you protect your digital assets?

Although it may seem far simpler to let a third-party register your assets on your behalf, it is strongly advisable to always do this yourself and then permit access to anyone who needs this to carry out their work.

• Domain Names – these usually cost less than a tenner per year. They are super easy to register using sites such as 123 Reg or 34SP
• Hosting – although this is less of a risk, as you can buy hosting elsewhere if you were denied access, I have seen instances where a client has disputed an invoice from a web agency and the agency have simply pulled their hosting and taken their site offline. Which isn’t funny if you’re an E-commerce business! If your website is a vital tool of your trade, I would recommend retaining control of this yourself with a reputable hosting provider such as 34SP.
• Facebook Pages – you should always set these up yourselves, and if you do have a third-party do this for you, ensure that you have a contract in place that clearly and irrefutably defines ownership of that page. The days of giving agencies login information for your personal Facebook account in order for them to access your page are long gone – if a social media person or agency asks for login information, or says they need you to add them as a friend to gain access, run a mile! They have no idea what they are doing!
• Twitter and other social pages – be careful who you give your passwords to and use your common sense. It is uncommon but not impossible for a dispute to arise, and for that person to change your passwords and lock you out of your own profile!
• Google Ad Accounts – for the less tech savvy amongst us, it is natural to allow an agency to deal with this for you. If you go down this road, be clear at the start, in writing, who owns that Ad Account if the contract is terminated.

Don’t under estimate the value of your digital assets – they are a valuable part of your business. They are often the face of your business, your shop window and sometimes they’re irreplaceable, so take good care of them!

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What businesses really need to know about their digital assets

I am well-known as a supporter and adviser to small and start-up businesses, and so unsurprisingly I receive a great many incoming enquiries from businesses in this demographic looking for help and advice. 

In most cases the conversation goes the same way. 

They say they have just started a business and need customers – can I help? I then ask for their website address, because I want to get an insight into how they choose to showcase their venture and I am often told “I don’t have a website at the moment” When I ask why, the answer I get nearly always relates to budget. Or lack of. 

When you set off on your start-up journey this way, you are telling the world that you have such little faith in succeeding that you are already mitigating your losses for when you fail. You don’t want to spend too much, so you don’t have to lose too much, just in case.

New business owners tell me they want to invest in social media instead, because it is free. They feel that their time is less valuable than their money, so they don’t mind if that ends up being wasted. And yet, if only they understood that time is the one thing you can’t make more of. 

I say to those people ”What would you do differently if you knew you couldn’t fail?”  

If you want to start a business, and take it seriously there are costs involved and if you are not prepared to meet some of those costs, then it’s not a business but rather an activity that passes the time. It is a common misconception that by choosing an online or service based business, that you can start off with ‘no overheads’ – but this is untrue and misleading to others. At the very least you will need to market your business, pay for subscriptions, software such as Microsoft Office, build a website and a brand. 

If you are going into business thinking you can operate from a Hotmail email address, use a free website template, do your own marketing without any help and have zero business costs to get your business up off the ground, then ask yourself, if you have such little faith in it being a success then why are you starting a business in the first place?  

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Are you already preparing for failure?

Over the past few years, a great many business leaders have adopted a new approach to their work force by turning their back on traditional employees in favour of outsourced professionals. 

I go into a number of businesses with turnover into the millions, where the workplace consists of just two or three people. The marketing is outsourced, the HR is outsourced, the book keeping is outsourced…. even the admin, call answering and customer service function is being delivered by a third party freelancer or agency. 

So what’s prompting this trend?

Businesses tell me that over the past few years, National Minimum Wage has risen at a much faster pace than in previous years, and the Government has pledged to raise the NMW to £9 an hour by 2020

While few would object to giving the poorest workers in society a wage boost, the impact of minimum wage rising to the equivalent of a graduate salary, means that graduates must either receive a pay rise or leave university earning the same as someone who did not have a higher education – and that hardly makes £50,000 of student debt seem justified!

But if your graduate is now getting a higher salary, this comes as upset to the staff who graduated five years ago who are now earning less than the new graduate. So they need a raise too. And so the cycle continues up the workplace hierarchy, adding tens of thousands to the wage bill and eroding profits from the bottom line. 

Throw in the introduction of pensions (rising from 1% to 2%), Employer National Insurance at 13.8% (as wages grow, the tax bill grows too) and an ever increasing litigious culture around Health and Safety and Employment Rights; it is little wonder that hiring a freelancer makes a lot more sense. Both commercially, and practically. 

Outsourced professionals generally cost a lot less – a minimum wage employee earning £7.83 per hour, working 40 hours a week will cost the employer around £17,534 a year – of which 28 days (the equivalent of £1888 in wages) has to be paid but is not worked, for statutory holiday. A self employed freelancer of course, is not paid during holidays. 

There are other benefits too – a freelancer is fully accountable for their work, they are responsible for their own indemnities, supply their own materials from laptops, mobile phones to expensive software licences, they fund their own training, and they are easy to get rid of if they cannot deliver what they claim! 

Equally, the freelancer has much to gain too. The flexibility to work around children, to work remotely and to offset against tax, deductions that would have to come from their net pay as an employee – such as their car, mileage and a portion of home-office running costs. Many legitimately employ family members to consume their personal allowance and reduce their tax liability. 

With the ONS citing a growing trend for Self-Employment (3.3 million people in 2001 to 4.8 million in 2017 representing an uplift from 12% of the workforce to 15.1%) it might suggest that the national workforce is reacting to legislative changes to employment by side-stepping the cumbersome employer obligations through the use of self-employed outsourced professionals. 

As wages continue to increase, I expect outsourcing to keep growing. And so does the Government – why else would they be taking such a keen interest in IR35? 

Read more:
Are outsourced professionals becoming the business ‘norm’?

If you or the company you work for has ever said “We can get an Apprentice/Intern/Junior to do the marketing” then this article is for you.

Now before I upset all the talented, junior marketing employees who might be reading this – let me say that there are some circumstances where a junior is absolutely the right path. If you already have a great marketing department who can teach and nurture them, then a junior can be a valuable addition to your team and a great deal less costly than outsourcing the simpler tasks to a third party.

Junior marketing apprentices and interns are usually tech savvy, have been brought up with the world wide web at their fingertips for as long as they can remember and are tuned in to the latest trends. They can bring energy and innovation that might sometimes get lost in the drudgery of endless brochure design and corporate brand packs.

But more often than not, in my experience with business owners this is not normally the motivating factor for hiring a junior marketer. But rather, because the perceived value of the marketing function within the business is low. It’s that ‘fluffy thing’ that we think is easy, because all it consists of is posting on Facebook and putting together a newsletter and young people are really good at doing that, right?

Marketing is the process designed to prompt people to take actions that are meaningful to your business. It’s the step before the sale. This might be making an enquiry, downloading your brochure or visiting your exhibition stand – the marketing should be driving incoming leads to your business that you can then convert and close into cash sales, and it should be closely measured and analysed to assess which areas of your marketing efforts are generating the best return for your business.

Knowing how to do this, requires a fairly advanced level of commercial awareness that junior staff have not yet had the chance to acquire. They need to understand your margins and whether the cost of acquiring a sale stacks up for you commercially before you let them loose with a budget. Generating a marketing strategy and delivering a workable plan is a skill that takes many years to develop, you cannot expect someone fresh out of high school to take on ownership of this without any experience or guidance. The end result? An employer who is getting miffed that they are spending £600+ a month on wages but not seeing any uplift in sales, and a demoralised Junior who is well out of their depth with nobody to ask for help.

What can you do to support your Junior?

If you already have an apprentice looking after your marketing, invest in their skills. Send them to workshops, events and seminars or bring an expert in for half a day to show them how to commercialise their thinking.

Encourage them to sit on free webinars for a couple of hours a week to learn new skills.

What if you are thinking of hiring a Junior?

While it might seem like a ‘cheap’ option at £600-ish a month, the number of productive hours in the week will be significantly less than from someone with proven experience. For example I can set up an effective Facebook ad campaign in a couple of hours, which would take a junior two days, and I can be certain that the campaign will deliver results from day one. A junior would more than likely be experimenting with your budget for a month before they figure out what works.

If you don’t have the infrastructure in place to nurture an apprentice, I would recommend considering a freelancer instead for what it likely to be close to the same cost as a junior, but instead you’re getting someone whose experience level is worth £50-60k a year.

Okay, the freelancer might not be able to brew up and answer the phone, but what would you rather have? Dozens of qualified leads rolling into your inbox or someone on hand to pop the kettle on?

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PLEASE Stop handing your marketing to the junior!

Unless you’ve been living in a cave for the last few years, it won’t have escaped your attention that the retail sector is in big trouble.

Just this week we have seen the demise of Henri Lloyd, Poundworld and Fabb Sofa’s with a question mark hanging over Carpetright, House of Fraser and New Look after vastly declining profits trigger store closures.

The attribution of blame towards Amazon and greedy Landlords needs no further commentary from me, but tell me this – why isn’t everyone failing?

As a marketer and advertiser, I probably take more notice of business marketing than people normally do. I play this game when I am led in bed scrolling through my Facebook news feed on my phone – when I come to a sponsored ad, I cover the comments and try and guess how many likes/comments/shares it has had and then see if I am right. (Yes. I know, I need to get out more!)

The content is dull. So dull. “We sell kitchens. Contact us now” and a picture of a kitchen. Yawn.

Businesses need to be honest, authentic and engaging by finding their authorial voice. Publishing bulletin-type updates that simply tell people what products they offer is no longing cutting the mustard – they need to entertain, inform or give some value before getting any back.

JD Sport’s are a brand who are thriving in this challenging climate, with 12 new stores opened in 2017 – their brands can be found on Amazon and they are exposed to the same property tribulations as everyone else. They tapped into the value of influencers and celebrity culture pretty early on, collaborating with Rita Ora and Made in Chelsea’s Lucy Watson, successfully harnessing the power of Instagram by understanding the lifestyle goals of its target audience for that particular opportunity for growth – women’s athletic wear.

If you’re a business, or a marketing manager in charge of creating winning marketing strategies you need to start getting creative. In a world of same-y content and run of the mill copy you need to craft something that grabs attention.

Perception

Don’t just tell your audience, ‘We offer dental implants’ – tap into their perception of self and leverage the longing you know they have, to grin with confidence without feeling insecure. Use your experience to handle objections (cost/pain) and make a compelling offer that is hard to refuse.

You might be thinking, that’s okay for lifestyle products – but how do you make drain unblocking fun, engaging or sexy? If I was your marketing manager, I would stage a funny video – something like a fake body wrapped in a sheet down a well and film an unsuspecting employee lifting the manhole and discovering it. They freak out, everyone laughs, you caption the video with something along the lines of ‘whatever is causing it, we will find it’ and pump it through social media. You don’t need a big budget to be creative.

Fashion retailer

If you’re a fashion retailer and you are struggling with low footfall – give people a reason to come to you. It might be a free make-over or a celebrity appearance. As wedding season approaches, promote how-to videos of the perfect wedding guest outfit and push it out over social media. Use influencers. The slick online retailers are doing it well, but the established names on the high street continue to post mundane content with no call to action.

Video

Video is still widely under-utilised, and yet offers retailers and brands an opportunity to bring their personality alive and become more than just a faceless entity. Let a little light in on the magic inside. Connect with your audience on an emotional level – whether you make them laugh, teach them something new, or simply demonstrate that you are human. In the coming years, businesses who can master the art of authenticity in their marketing and engage on an emotional level with their audience will reap the rewards.

As the saying goes, people may not remember exactly what you did, or what you said, but they will always remember how you made them feel.

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Businesses need to start getting creative with their marketing