Practice Area » Business & Commercial
Business & Commercial
This is a rapidly expanding area of Law. In this regard, Killarney has always been somewhat atypical of small rural towns. It has a high proportion of commercial companies and has more Grade A Hotels than anywhere else in Ireland with the exception of Dublin.
Drafting commercial documents is highly complex and requires specialist knowledge of the industry involved and the law applicable to it. These include Company Formations, Share Purchase Agreements, Joint Venture Agreements, Employment Contracts, Patent, Trade Mark and Copyright Agreements, Agency and Franchise Agreements, Transfer of Undertakings, etc.
Topics covered include:-
Company Formations and Share Purchase Agreements
There are three principal reasons for incorporating a Company to run your business:-
- Continuity.
The Company is a separate legal entity to the individual - therefore the debt of the individual will not impact adversely on the daily operations of the Company. The shareholding of the individual in the Company will form part of his Estate. - Limitation of liability.
The liability of the directors and shareholders of the Company is limited to the investment in the shares purchased by the shareholder at the outset - this is obviously on the basis that the shareholders/directors comply with Company Law with regard to filing accounts, etc. In the event of the demise of a Company, it will not adversely affect the personal assets of the shareholders. Banks often bypass this by insisting on Directors providing personal guarantees. - Favourable Tax System
The tax code applicable to Companies differs significantly from that in relation to individuals. Professional accountancy advice should always be taken prior to incorporating a Company. This, apart from anything else, should clarify whether the expense of incorporating the Company at the outset and more importantly by the annual auditing costs is justified. This also has regard to the potential turnover and tax treatment of the Company.
Shareholders should also investigate whether it is necessary to have Shareholders Agreement between the shareholders regarding the Company. The Agreement will determine the ongoing relationship of the shareholders during the currency of the Company. And more importantly the rights and obligations in the event of one of the shareholders seeking to dispose of his shareholding in the Company.
The process of incorporating a Company takes between 4 to 6 weeks, depending on any special requirements. Our firm has direct Internet access with the Companies' Registration Office to facilitate company searches.
Employment Contracts
Under the current Labour Law Legislation, employers are required to provide employees with the terms and conditions of their employment in writing. For the vast majority of employees, this is reasonably straightforward. However, employers should consider making a virtue out of necessity by reviewing all their staff. Particular reference should be placed on key employees - those that have particular skills or are in sensitive areas.
Frequently employers seek legal advice only after their key employee has left taking with him the skills and experience garnered while working for the employer. While the law in regard to restraining employees from working elsewhere is limited, there are some limitations that can be imposed on employees. If legal advice is not sought at the outset, then obviously no limitations can be imposed after the event.
Transfer of Undertakings
One area which is generally ignored by rural Solicitors, at their peril, is Transfer of Undertakings, even though it has been in place for over 20 years. This is a Council directive which was passed on the 14th of February, 1977.
In the preamble it says that :
......Whereas generic trends are bringing in their wake, changes in the structure of Undertakings through the transfer of Undertakings, businesses or part of businesses to other employers as a result of Legal Transfers......
- It is necessary to provide for the protection of employees in that event.
- There are differences between different member States.
- The purposes of the directive is to bring some harmony to the different member States.
- The directive applies to the Transfer of an Undertaking, business or part of a business to another employer as a result of a transfer or a merger.
Article 3 provides the following : Obligations and rights of the Transferor arising from an employment relationship shall transfer to the Transferee but the Transferor will continue to be liable in addition to the Transferee.
The Transferee must continue to observe the terms and conditions which, in any event, must continue for a period of not less than one year from the Transfer.
Article 4 : States that Transfers per se shall not entitle the Transferor or Transferee to dismiss the employee. If the Transfer involves a substantial change in the working conditions to the detriment of the employee, the employer shall be deemed to have terminated the Contract.
Article 5 : Deals with a business which preserves its autonomy, status and function and the rights of the employees must be preserved.
Article 6 : Requires that the Transferor and Transferee inform the employee of the following:
- Reason for the Transfer.
- The Legal, economic and social implications of the Transfer.
- Measures envisaged in relation to the employee.
This information must be furnished in good time before the Transfer is carried out. This is covered under pages 29 to 34 of the EC Labour Legislation in Ireland Book by Patricia Connell. Francis Meenan's book also deals with Transfer of Undertakings in Chapter 11, Transfer of a Business, page 139.
The E.C. Directive referred to in the previous paragraph was brought into Law in Ireland under the European Communities (Safe guarding of employees rights on Transfer of Undertaking Regulations, 1980 -SI No 306 of 1980).
In order to establish whether the Regulations apply, the most important question is ‘Is there a change in the identity of the employer and is there a Transfer of business as a going concern’ . If the answer is yes, then the Regulations apply.
Contracting out of services by an employer have been held to come within the ambit of the Regulations (Bannen -v- Employment Appears Tribunal and Drogheda Town Centre, 1993 IR 500).
The sale of a Company by a Receiver may come within the scope of the Regulations.
Once the Regulations apply, they provide that all rights and obligations of the selling Company arising from Contracts of Employment or employment relationships (including collective agreements ) existing at the date of the Transfer shall be transferred to the Purchaser.
There shall be no break in service or in continuity of service and all entitlements under the employee's Contract continue, this includes not only salary, but Statutory obligations such as service under redundancy minimum notice and Unfair Dismissal Legislation, the issue of Pensions is unclear.
The primary purpose of the Regulations is to prevent a Purchaser from dismissing employees, because of the transfer of business it does not exclude dismissals for economic, technical or organisational reasons. If redundancies take place after the Transfer, there should be no difficulty as long as there is no unfair selection. It is important in those circumstances that the staff of both businesses which have been merged, should be looked at together to consider the issue of selection for redundancy.
Redundancies prior to the proposed Transfer
The reality, of course, is that many redundancies that take place prior to a Transfer. The employee receives not only his Statutory entitlements, such as minimum notice, holidays and Statutory redundancy, but also an ex gratia lump sum. One of the provisions of receiving this sum would be that the employee would sign a full Discharge Form providing that they had received the sums in full and final satisfaction of all claims.
The Unfair Dismissal Amendment Act, 1993 provides that the transfer of a business does not break the continuity of service for the purpose of unfair dismissal and minimum notice, unless the employee receives and retains a redundancy payment from the Transferor at the time of the Transfer and by reason of the Transfer.
It means starting from afresh in those circumstances with the new employer.
If, following the transfer of employment, there is a change in working conditions, it would be possible for the employee to resign and claim constructive dismissal - reduction in salary, change in seniority, etc. However, this might be imprudent if done without advice and they may be well advised to have recourse to an internal grievance procedure before going to a Solicitor.
Under the Regulations, there is a general obligation on the Vendor and Purchaser to keep the employees informed. If employees feel that their employer has not complied with this, they can revert the matter to the Department of Enterprise and Employment for investigation who is authorised to ask for further information.
Glossary of Business & Commercial Terminology
Buying & Selling Property
Landlord & Tenant
Probate & Administration
Litigation
PIAB
Debt Collection
Family Law
Wills
Glossary