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employment regulations

Takingcare of the caretaker

When consideringpurchasingthe freehold to your building you may also need to consider whether there are any employment law issues to be dealt with. Mark ChiCk and Steven eCkett explain

who provide services solely to the building, such as acaretaker or cleaner,whoworks on either afullorparttimebasis.These peopleare normallyemployedbyeitherthe managing agentorthe freeholder directly and often the cost of theiremployment and their accommodation ismetbythe servicecharge. If thebuilding is transferred to anew owner


(aswillbethe caseifthe freehold is purchased under the provisions of the Leasehold Reform Housingand UrbanDevelopmentAct 1993 or theLandlord andTenantAct 1987)thenthe employment of such staff will automatically transfer to the newowner of the building in accordance with theprovisionsofthe Transfer of Undertakings (ProtectionofEmployment Regulations) 2006 (TUPE). TheTUPEprovisionsrequire that all

transferring staff continue to beemployed on termsand conditions ofemploymentwhichare no less favourable than those onwhichthey are currently engaged. It is therefore vital that a thoroughdue diligence exercise isundertaken relating to any staff and their historical terms andconditions ofemployment. Remember that if anystaffemploymentis

terminated on thepurchaseofthe freehold or thechangeofownership of thebuilding (or as aconsequence of this)thenthatdismissal is likelytobeautomatically deemed to be “unfair” andmay expose thenew freeholder to

case study

Bishop&Sewell llP recently assisted theflatownersofa largeblock of flatsinRichmond to purchase theirfreehold from theirformerlandlord as part ofanegotiatedtransaction. Theflatownerswereassisted by Leasehold Solutionswho were theirappointed project managersandwhohelped managethe discussions with thefreeholderand ensured proper co-ordinationand communicationthroughout. Aswell as nearly 100flats, thepropertyhas aresident


caretakerwithhisownflaton thesite. It soon becameclear that if thedealwentthrough theTUPEprovisionswould applyand thecaretaker’s employmentwould transfer to theflatowners’ newly incorporated freehold company. Theflatowners’ legalteam

wasled byMark Chick,who explainsmore; “One of thekey challengesthatarose in this transactionwas dealingwith thesuccessfultransferofthe employmentofthe resident caretaker. Fromthemoment

that thedealwas agreed,the residents’committee (who were extremelywell organised) were keen to seethatthe caretaker’semploymentrights were properly protectedon transfer. “Inpractical termsoneof the

biggest challengeswasmaking sure that everyoneunderstood that theday to day ‘lines of command’ regardingthe caretaker’s activitieswouldnot change. In fact,asthemanaging agentswere beingretained, someof theseissueswere

easier.Theonly changebeing that thelegal responsibilityfor beingtheemployerwould shift to thenewcompany.” Bishop&SewellLLPhasa

strongemploymentteamand so,assoonasthe caretaker issue arose,employment specialistStevenEckettwas able to step in to advise the boardonareviewofthe current termsand conditions andto provide advice as to thebest waytoensurethatthe relevant consultationwas carried out properly.

Issue 16 Flat Living

BloCkSofflatSoftenhave employeeswho either work directly in the building (such as aresidentporterorcaretaker)or

the risk of anemployment tribunal claim. Oftenthe freehold collective will set up a

newcompany andthe companywillbethe employer.Theymay requirespecificadvice on the basis that the person is likely to be theironlyemployeeand oftencareful liaison with themanagingagent is necessary to ensure asmoothtransferofanyemployment arrangements. Youshouldnot forget that theappropriate

consultation regimeunderTUPEcan take sometimewhereafreeholdpurchaseis initiated. Oftenthisiscombined with strict timelimits forcompletion, particularly under the1993Act orwhereapropertyisbeing sold followinganoffernoticeunder theprovisions of theLandlord andTenantAct 1987.There is thereforescope forsomesignificantconflict with therequiredtimescalesfor theTUPE consultation regimein asituationwherethe flatownerscarryingout theenfranchisement need to actpromptly to protect theirposition. If youare thinking of buying your freehold

in asituationwherethese sortsofissues are likelytoarise,flat owners should instruct an expertwho can deal not only with the purchaseofthe freehold butalsowith employment lawand its implications.●

Mark chick andSteven eckett Bishop&SewellLLP 59-60RussellSquare LondonWC1B4HP Tel 0207631 4141 email

Existing staffare protected

by theTUPE Regulations

MarkChickisasolicitor specialising in Landlord andTenantmatters and is head of the Landlord and Tenant Teamat Bishop&SewellLLP, a firm of solicitors based in Central London. Heis also a director and committee member ofALEP(the Association of LeaseholdEnfranchisement Professionals) and regularlywrites andspeaks on thisarea.

Steveneckett isasolicitor specialisinginemploymentmatters at Bishop&SewellLLPandregularly comments onemploymentlaw issues.

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