In simple terms liquidated damages are an agreed amount of damages or a specified formula for agreeing damages in a contract, so as to offer an opportunity, on the face of it, for speedy recovery and non-reliance on the quite technical common law damages cases.

What are the clauses commonly used for ?

Most commonly these clauses are used in construction contracts and Hire Purchase agreements. they are also quite commonly inserted, in our experience into confidentiality agreements, where the party with highly confidential information provided to the other wants there to be a biog penalty as a deterrent against breach. However, using such a clause as a penalty or deterrent is unlikely to be legally effective (see below).

What factors determine whether a liquidated damages clause is effective or not ?

In line with established case law, the courts will take into account the following factors in deciding legitimacy of a liquidated damages clause :-

• intentions at the point the contract was concluded
• is the clause based on a genuine estimate of likely losses or intended as a penalty clause ?
• is the amount stated higher than the amount payable if the party in breach had complied
• in the contract circumstances, was a pre-estimate of loss possible ?

Ways to avoid a liquidated damages clause being within the court’s remit

The most used method of avoiding the court being able to intervene and strike out a liquidated damages clause is make the entire contract sum payable at the beginning of the contract but to defer it, as long as there is compliance. If there isn’t, the sum due for the whole contract period becomes payable and this is a very common type of clause in a hire contract.

In another case showing that, after a very slow start to any enforcement, the  Information Commissioner’s Office (ICO) is now showing it has some teeth, and there are some perhaps rather unlikely recipients of fines (although perhaps not when judging criteria of likely breach and size of organization). The ICO has fined Surrey County Council the amount of £120,000.00 for a number of instances of  mishandling of personal data. The most serious of the breaches involved distribution of very sensitive and confidential data about physical and mental health conditions held by the Social Care Department at surrey Council by email to a number of recipients by mistake, grouped by email. The recipients included all types of local businesses, including taxi companies and such like, altogether very embarrassing and distressing for the subjects of the leaked data.

For advice on data protection, confidential information or commercial law, please click on the links to solicitors.

• Sends a clear signal about company expectations for employee use of social media by having a separate social media policy.
• Reminds employees that social media use at work is not necessarily private and that the employer can discipline employees for conduct that breaches employee policies or the contract of employment
• Makes clear that online conduct harmful to the company can amount to misconduct or in some cases gross misconduct.
• Include appropriate restrictions covering:
  • employee use of company intellectual property assets and confidential and privileged information;
  • protection of third-party confidentiality and privacy;
  • prohibition on harassment or bullying of other employees;
  • prohibition on discrimination; and
  • prohibition on negative comments about the company, its employees, business contacts or competitors.
• Preserves a good business relationships and promotes a strong corporate image by:
  • Evidencing that your business is fully aware of technological impact, opportunities but also risks
  • Awareness of the importance of anti-defamation measures
  • Avoiding use of solicitors and in particular litigation solicitors !

It is important that employees and employers understand their employment law rights and obligations when using software and social network sites such as Facebook. Facebook, and the internet generally, are now widely used as a means of communication which  has led increasingly to increasing employment law related issues and cases of dismissal and consequent issues of fair or unfair dismissal. It is important that both parties understand their rights in relation to such a dismissal.

Recent cases highlight the importance, and usefulness, of employers having a properly drafted internet use policy including a policy on use of social media. For employees, the lesson is not to use Facebook or similar media as a way of venting frustration about work.

Unfair Dismissal

Employment Rights Act 1996

(1)In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show—

(a)the reason (or, if more than one, the principal reason) for the dismissal, and

(b)that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2)A reason falls within this subsection if it—

(a)relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b)relates to the conduct of the employee,

(c)is that the employee was redundant, or

(d)is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

As well as establish a fair reason an employer must also follow a fair procedure. An employer must be able to establish that, at the time of dismissal:

• It believed the employee to be guilty of misconduct.
• It had reasonable grounds for believing that the employee was guilty of that misconduct.
• It had carried out as much investigation as was reasonable in the circumstances.

Generally speaking an employee has a right to freedom of expression under article 10 of the European Convention of Human Rights (ECHR), as incorporated under the Human Rights Act 1998. This is however subject to general principles such as protecting the reputation of others and preventing the disclosure of confidential information.

In the case of Preece v JD Wetherspoons the tribunal considered whether a manager of a pub had been fairly dismissed after posting negative comments about customers on her Facebook page and whether her right to freedom of expression had been infringed.

Preece v JD Wetherspoons

This case follows Gosden v Lifeline Project Ltd, where an employee was fairly dismissed for sending an offensive e-mail from his home computer to his colleague’s home computer

Miss Preece was employed as a shift manager by JD Wetherspoons plc. The company’s policy, which she was aware of, about the posting of comments on websites such as Facebook stated that employees should not write or contribute to a blog, where the content lowers the reputation of the company or its customers. In these circumstances the company reserved the right to take disciplinary action where this occurred.

Miss Preece and a colleague, Mr. Ainsworth, were subjected to an unpleasant incident in which they were threatened by a group of people, particularly two customers. Miss Preece acted quite properly and asked to the customers to leave. In the early evening, Mr. Ainsworth took four abusive phone calls from someone he believed to be the customers daughter.

Around 6.30pm, Miss Preece began a Facebook discussion with colleagues about the events of the day, naming the customers and saying, among other things, that she hoped Sandra would break a hip. Miss Preece was on duty during this discussion.

Two weeks later the company received a complaint about the Facebook discussion. The company began a disciplinary investigation. Miss Preece admitted that her actions were in breach of company policy. She argued that her privacy settings meant that her Facebook messages would have been seen only by between a maximum of 40 to 50 close friends, rather than all her friends.

Miss Preece was invited to a disciplinary hearing and was subsequently dismissed for gross misconduct. The pub considered that writing inappropriate comments on Facebook about customers breached the Policy and amounted to gross misconduct. Miss Preece’s conduct had lowered the reputation of Wetherspoons and resulted in a fundamental breakdown of trust and confidence between them. Miss Preece’s internal appeal was unsuccessful and she brought a claim for unfair dismissal.

The tribunal dismissed the claim. The Facebook activities were in the public domain, regardless of the employees belief about the privacy of her communications and its actions were justified in view of the risk of damage to the employers reputation. It also found that her Facebook entries did not reflect her upset and anger at the situation, because the discussion took place over a lengthy period of time, well after matters had calmed down.

The Employer had a genuine belief about the nature of the employees conduct and had reasonable grounds to sustain that belief, having conducted a reasonable investigation.The sanction of dismissal fell within the range of reasonable responses available. Whilst the customers behaviour was abusive towards the employee the facebook entries took place over a lengthy period of time so could not be put down to a knee jerk reaction. The fact that the employee was using facebook during work time was taken into account but that is not to say that a similar decision would not have been reached had she been using it after work.

Despite the employee’s belief about the privacy of her communications, her activities were in the public domain. While she had a right to freedom of expression under Article 10 ECHR, the action taken by the employer was justified under Article 10(2) because of the damage it could cause to the employers reputation.

It seems that in the circumstances a written warning may have been an appropriate disciplinary measure but the Tribunal were unwilling to find that dismissal was not also a reasonable response for an employer to take.

An employer has many statutory duties of care towards their employees, particularly in respect of the employees’ health and safety whilst at work. As a starting point, the employees should be made aware of all health and safety procedures, for example the fire exit routes and assembly points should be made known to all employees and this knowledge reinforced with clearly marked signs. Any hazardous substances should be kept in a restricted and locked area with access to only specified personnel; any such hazardous substances should be clearly marked with universally recognised symbols. Inflammable materials should be treated with equal caution. It is not sufficient for an employer to simply seal off an area that is potentially hazardous; they must ensure that anyone who might inadvertently wander into such an area for some unforeseen reason will be made aware of the potential health risk to them.

The employer is also responsible for ensuring that the correct attire is worn in relation to health and safety issues. On a building site, for example, it is the employer’s responsibility to ensure that all employees and visitors to the building site wear a hard hat at all times. Signs should also be clearly displayed to the effect that hard hats are required to be worn. Any employee failing to follow this rule is guilty of gross misconduct and could face dismissal as a result. In a factory where there are potential machine oil and grease spillages, the employer is primarily responsible for ensuring that safety boots or shoes are worn. Even an office manager visiting such a shop floor area is required to wear safety footwear in the interest of their own safety, but it remains the employer’s responsibility to enforce it. Again, any defiance of this policy is a dismissible offence, although the decision to dismiss or not remains entirely at the employer’s discretion.

The employer is responsible for ensuring that all machinery and equipment is properly maintained. When the machinery or equipment is being operated it is the employer’s responsibility to ensure that only employees with the correct degree of technical knowledge operate the machinery and that all machine guards and cut off devices are in place before the machine is used. Because of the potential for personal injury to the operator and / or fellow employees, some employers now use random drugs and alcohol testing machines to ensure that operators are sober when operating machinery, as drugs and alcohol tend to impair clarity and speed of judgement.

An employee who is in the position of representing their employer and / or in direct contact with the public should be suitably skilled in their role where a duty of care is perceived. It is, however, the employer that is primarily responsible for taking all steps to ensure that such suitable qualifications are held by their employees and it is to the employer that any subsequent plaintiff will look if any loss or damage is sustained through the employee’s negligence. For example, a hospital should ensure that the certificates and credentials of its nursing, consulting and operating staff are authentic. Educational establishments and employing entities that come into contact with persons under the age of sixteen are now responsible for ensuring that all employees are criminal records (CRB) checked before they are allowed to come into contact with or view records relating to persons under sixteen. This CRB check requirement also extends into the areas of vulnerable adult contact, for example the mentally impaired.

For work conducted in an office, it is the employer’s responsibility to ensure that sufficient breaks are given away from computers. Efforts should also be made to reduce the potential for repetitive strain or other common office injuries. It is not just physical injuries that an employer can be held responsible for, they are also responsible for taking all practical and reasonable allowances when they become aware that an employee is suffering from a stress related condition. If the stress is related to work, then the employer is responsible for alleviating the problem to the extent that this is practicable.

It was set up in October 1999 with funding from the Government’s Science Enterprise Challenge fund. WRCE had the twin objectives of (1) increasing the enterprise content of undergraduate and post graduate courses and (2) of increasing the rate of technology transfer and in particular, the rate of spin out of new companies.

Academic enterprise is often closely related to legal issues and those wishing to start a new business may find assistance from solicitors in Leicester or Manchester solicitors.

Like the WRCE, may law firms are not just looking at the academic competency of graduates but also their entrepreneurial competency because whether seeking a business solicitor in Liverpool or commercial solicitor in Birmingham core competency is essential in business.

Whilst the WRCE now has a separate website we wholeheartedly support it’s founding and ongoing principles which hold as true now as ever, and this website fully endorses the nexus between investment in undergraduates and the wider application to business.

Business skills are vital for solicitors, whether solicitors in Newcastle, solicitors in South London or solicitors in West London.

Just like the WRCE suggests, there is more to business skills than academic learning and again, this principle hold true for lawyers, who, in addition to academic skills need to understand their business clients problems and issues.

We have found that solicitors in London, whether solicitors in East London, solicitors Ealing, solicitors Croydon and
solicitors in Greenwich fully understand that good legal advice is good business advice.

Please click here for another law firm which seems to understand the concepts described above.