IGA News

Legal Update - February 2016

Legal Update - February 2016

28 January 2016

MILS Case Study: Repairer’s Responsibility

“I have repaired a vehicle using technical specifications from a specialist technical reference service/manufacturer. Unfortunately the torque settings were wrong. We caught it but who would have been liable for any damage”

It is best to see legal liability as a bit like pass the parcel. It is much easier to pass the liability to the person next to you. As a business you are required to carry out any work with a reasonable level of care and skill. Where you fail to do so you are liable to your customer for any losses sustained and can be made to redo any faulty work to put it right.

You may be able to argue that you have followed reasonable care and skill by following reference material, but the short answer is that it is more likely than not that you would be held liable to your customer, particularly where that customer is a consumer.

Is that it?

No. Where you can show that the reason for any liability is that the information provided was incorrect, it is likely that you would be able to recover any losses from the technical reference service.

The outcome is a little more difficult to predict as this will be a business to business contract and slightly different rules apply. It may be that the contract includes a disclaimer of some sort to try and avoid liability if they are wrong. The court will have to decide if it applies and whether it is capable of being enforced.

In conclusion

As the repairing garage, you remain liable for your work to your customer. If in doubt double check any information and don’t forget to carefully document all conversations and to evidence all telephone calls, emails and letters for future reference. Also, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

Paul Carroll, Solicitor, Motor Industry Legal Services

MILS Case Study: Recruitment and Discrimination

“We are recruiting for a new technician. I have been through the applicants and there are two strong candidates. The most qualified candidate however has said in his application form that he suffered from depression in the past, but claimed it doesn’t affect his work at the moment. I don’t want to take the risk if he proves to be unreliable so I was going to choose the other candidate. I presume that is okay?”

The simple answer is no. The employer in this situation should be aware that discrimination law is very different from unfair dismissal law. The right protection from discrimination applies to job applicants, so the employer can be liable before they have even met the candidate, essentially from when the application arrives through the employer’s door.

The risk in the situation above is that the job applicant could prove that the depression was a “disability” under the Equality Act 2010. To prove this they have to show that the condition has a substantial long term adverse effect on day-to-day activities. The effect of any medical condition on work is not the essential ingredient in determining the issue.

A further problem for employers is that, as a general rule, whether or not someone is disabled for the purposes of the Equality Act is assessed as if they were not taking medication for the condition. With someone with serious depression it follows that a Tribunal does not ask whether or not, when taking any medication or treatment, there is a substantial adverse effect on day-to-day activities, but rather how they would be coping with their medical condition if they were not taking such medication? The result is that a far greater proportion of the population in the UK can argue they are technically disabled in employment law than might be expected.

If the employer rejects the candidate above then the candidate can submit a claim to an Employment Tribunal. To defend such a claim the employer essentially has to show that the decision not to offer the job was not influenced by the disability (provided always the employee can prove they are disabled within the meaning of the Act).

Employers when recruiting should make job offers “blind” to medical information, albeit offers should be made subject to the satisfactory completion of a medical questionnaire. If it later transpires on further investigation that a medical condition is particularly serious and reasonable adjustments cannot be made to the terms of the job to accommodate that condition, then the employer can subsequently withdraw the offer and can raise a potential defence in the Tribunal.

In the situation above the claim may be difficult to defend if there is one very clear strong candidate then the job applicant may be able to prove to a Tribunal that the depression was the real reason the employer acted as it did. Of course in many situations it is more arguable and the fact that someone has a disability should not unduly scare an employer into offering the job if there are more able candidates. Treating all candidates fairly and openly is therefore important, as is laying a good paper trail in recruitment to demonstrate the relative candidate’s strengths and weaknesses, so that the employer can prove that the reason they didn’t offer a job to someone who has a disability has nothing to do with the disability. Although not common, beware that this area of the law is sometimes abused and vexatious litigants can try to bring claims to force employers to pay out, simply by making applications.

Andrew Macmillan, Solicitor, Motor Industry Legal Services

MILS Case Study – Parts Warranties

“I fitted a battery for a customer with a 12 month warranty. The customer came back 8 months later complaining that the battery wasn’t working properly. The customer refused to bring the car back and went ahead and got a replacement battery fitted by BMW. He is now threatening me with legal action if I do not reimburse him the full amount of the battery plus labour costs. What can I do?”

1 – Establish the facts

The first priority should always be to establish the facts of the case. Where you are contacted by a customer, whether you agree with them or not, you need to get as much detail as possible so that the matter can be investigated properly. Ideally the customer should be asked to put their complaint in writing and include any evidence they have.

The more accurate the facts, the better your decision will be.

2 – Is it a warranty claim or a breach of contract?

Where the consumer is claiming under any warranty provided they must comply with the terms of the warranty in order to claim. There is no requirement to warranty any work or any parts. As such a warranty can legitimately require the consumer to return the vehicle or goods to you and place reasonable conditions on the costs covered. If they have not complied with the terms of the warranty there will be no claim under it.

However, when you sell goods or services to consumers you cannot exclude their statutory rights. Any warranty is given in addition to these. Given the recent changes brought in by the Consumer Rights Act 2015 consumer customers may be more aware of their rights. As such, if the parts when supplied were not as described or fit for their purpose etc, then a consumer can sue for up to 6 years, provided they can prove the parts were faulty when you supplied them.

If, after 6 months from the time of sale the customer cannot prove that the goods or services were faulty at time of sale a consumer can only claim under any warranty provided and must comply with the terms of the warranty in order to claim.

Conclusions

As always, what is appropriate will depend on the facts. Don’t forget to carefully document all conversations and to evidence all telephone calls, emails and letters for future reference.

As this is over 8 months old, anything could have happened to the battery. It would be for the consumer to either comply with the warranty terms or prove the battery was not fit for purpose or of satisfactory quality. Investigate their complaint and ensure the costs have been incurred. Write back pointing out it is a return to base warranty and that he is asked to bring it back to you first and deny liability. As he has not complied with the terms of the warranty you have no option but to reject the claim.

Be prepared for potential legal proceedings so consider whether to offer a gesture of goodwill to avoid any dispute.

Lastly, as this advice is general in nature it will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

Paul Carroll, Solicitor, Motor Industry Legal Services

Bonus during Maternity Leave

“Do we have to pay bonus to an employee who is on maternity leave?”

If the bonus payment represents retroactive payments for work already done then yes it would need to be paid to an employee on maternity leave. To withhold it could lead to arguments of discrimination.

Where the bonus represents payment relating to work which an employee needs to be at work at for it to continue, then there is a better argument in law that it can be paid on a pro-rata basis and therefore the period of time on maternity leave can be excluded. This however excludes the two week compulsory maternity leave period therefore bonus for that two week period would still need to be paid.

This decision stems from case law because there is conflict between the position under the Equality Act and the position under the Maternity and Parental Leave etc Regulations, where on one hand it would not be discriminatory because the payment would be linked to remuneration which does not continue during maternity leave, to the other hand where payment not made due to an employee being on maternity leave could represent less favourable treatment. To prevent any doubt therefore it is worthwhile employers specifying where pro rata payments are made for bonus schemes.

Another point to note is whether there is any contractual right to the payment whereby the terms of the bonus scheme itself expressly states that payment will continue during maternity leave. If there is such wording there would be a legal entitlement to pay it to avoid being in breach of contract.

It may also depend upon the circumstances of the case and therefore it is recommended you contact our legal telephone helpline should the situation arise.

Andrew Macmillan, Solicitor, Motor Industry Legal Services

Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.