Staff reject rota changes
AW writes: I draw up rotas monthly so that employees can plan ahead. However, this month, demand for our services has risen and the rotas need to change. Some employees are complaining they have already made arrangements based on the original rota. Can I go ahead and change the rota or am I obliged to grant the original days off?
It would help if you had a clause in employee contracts committing them to a degree of flexibility, writes Peter Done, managing director of Peninsula. Some contracts state the normal number of working hours employees are required to do in a week, and then add that the employer may change that number or pattern of work to meet the needs of the business.
However, even with this clause, you may still face difficulties with staff who have made arrangements. You must realise that your staff have childcare and other responsibilities that are not always easy to change. You should talk to them, letting them know that the needs of the business have forced this change and you require them to be flexible.
Obviously, if a member of staff has booked a holiday abroad then your chances of getting them to agree to work to the new rota are small. Once an employee has booked annual leave, you are not entitled to simply un-book it.
Other staff may also have arrangements that they don’t want to alter. You may need to offer an incentive to get employees to agree to the change. If you invoke the flexibility clause and reasonably ask an employee to cover hours under the new rota and they refuse, you may be able to invoke disciplinary action for failure to follow a reasonable management instruction. However, the effectiveness of this depends on many things, including how many times the flexibility clause has been used before.
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Investors lose EIS tax relief
WN writes: My company has just raised £350,000 to start trading. It took some time to satisfy the interests of the various investors. The result is that we have different classes of shares — each with different rights to income and voting. At the outset, we had indicated that investors might be able to get relief under the Enterprise Investment Scheme (EIS), and now one investor is complaining that he cannot. The company trade has not changed, so what is the problem?
The benefits of the EIS are significant, but they come at the expense of a number of rules, writes Jon Sutcliffe, partner at Kingston Smith LLP. The benefits are: 30% income tax relief on the investment; capital gains exemption; and deferral of capital gains where the proceeds are reinvested under the EIS.
The scheme is designed to encourage investment in ordinary shares, which are defined by HM Revenue & Customs (HMRC) as shares that carry full equity risks in a business.
Your problem is likely to be that the different rights attached to each share mean that the EIS rules do not consider some of the shares to be ordinary shares. There is no specific problem with shares having preferential voting rights. The issue is the different rights to income and capital on each class of share. HMRC rules do not allow EIS shares to have any preferential right to dividends, or to a company’s assets on its winding up.
Where share rights differ, it may be that some share classes will qualify for EIS and others won’t.
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Investments that qualify for EIS at the outset always risk losing their status at a later date, through no fault of the investor. This can happen when a company changes its capital structure. When this happens within the three-year period after investment, the benefits enjoyed under EIS are clawed back.
Kingston Smith LLP, the chartered accountant, and Peninsula, the employment-law firm, can advise owner-managers on their problems.
Send your questions to Business Doctor, The Sunday Times, 3 Thomas More Square, London E98 1ST, or fax to 020 7782 5765. Advice is given without legal responsibility.