1. Legal Issues for Hubs Music Mark Conference 2018
Introductions
Aim of

2. What will we cover? Employment-related issues
Contracts and partnership agreements
Spinning out
Gift aid
Business rates
Covering some of the key themes we advise music services and issues which attendees have highlighted.

3. Employment Status (1) Employee Worker ‘Consultant’
Self-employed (running own independent business)
Why status matters
Status is determined by the reality of the working relationship
Note HMRC recognises only two categories for personal tax purposes

4. Employment Status (2) s.230 Employment Rights Act 1996
s.230(1): Employee – an individual who has entered into or works under … a contract of employment
s.230(3): Worker – an individual who has entered into or works under
a contract of employment
any other contract…whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual
Note: s.83(2) Equality Act 2010: “employment means employment under a contract of employment … or a contract personally to do work”)
Also note ‘consultant’ is not a legally defined term

5. Employment Status (3)
Employee – employment contract, personal service, no substitution, mutuality of obligation, high degree of control, other terms not inconsistent with employment
Worker – contract, personal service, substitution allowed? (mutuality?)
Self-employed and running own independent business – ?? - contract desirable

6. Employment Status (4)
Employee – written contract, unfair dismissal, SSP, paid holiday, minimum wage, protection against discrimination, ‘family friendly’ rights, minimum notice, redundancy payment
Worker - paid holiday, minimum wage, protection against discrimination (not: written contract, unfair dismissal, SSP or family rights, minimum notice, redundancy payment)
Self-employed (own business) – possibly protection against discrimination  
Employee
Worker
Self-employed
Written contract √
Unfair Dismissal
Minimum wage
Paid annual leave
Discrimination protection ??
‘Family Friendly’
Minimum notice
SSP
Redundancy Pay

7. Content of contracts
Employees – ss.1 and 3 Employment Rights Act 1996 – minimum information
Otherwise, what makes the relationship work the way you want/need it to?
See also subsequent slides

8. Some potential tax issues
Specialist area
IR35
Personal service companies
Employment intermediaries

9. Intellectual Property Issues
Specialist area
Many types of IPR
Employees – rebuttable presumption in favour of employer ownership of IPR created
Otherwise rebuttable presumption in favour of individual
Specify intention in written contract

10. Changing Terms and Conditions of Employment
What is the ‘sole or principal reason’ for making the change?
If unrelated to a TUPE transfer ‘normal’ principles apply – consultation, consent, consider dismissal/re-engagement
If there has been (or will be) a TUPE transfer:
If because of a TUPE transfer and not an ‘ETO reason entailing a change in the workforce’ – Change void
If because of a TUPE transfer, but for an ‘ETO reason entailing a change in the workforce and the employee consents – Change valid
Different ‘rules’ apply to terms incorporated from a collective agreement – valid if 1 year/not less favourable

11. Holiday Pay Highly complex area
Do not conflate the right to take leave with the amount to be paid when on leave – separate concepts
Working Time Regulations 1998 and contractual leave
WTR – 4 weeks under Regulation 13
WTR – 1.6 weeks under Regulation 13A
Purely contractual if over and above WTR requirements
Different rules apply depending on the type of leave

12. Contracts and Partnership Agreements
Collaboration agreement
Partnership agreement
Hub
Partner
Partner
Hub/
Service
Membership of charity
Sponsorship
Branding/
materials
Directorship
Governance?
Shared aims?
Payments/
support

13. Transfer of assets (and liabilities)
Acting for Council
Acting for new entity
Transfer of assets (and liabilities)
Enter into on-going funding relationship?
Preparatory advice
Finalise legal entity
Now
Due Diligence
Local authority
New entity
Local authority
Music service
Transfer Agreement 3
Funding Agreement

14. The spinning out journey
Legal Structures
Governance
Feasibility Study
Business and Financial Planning
Procurement
Tax
State Aid
Property advice
Due Diligence
Pensions
Establishing Legal Entity
Employment advice
Preparation of transfer documentation 5
TUPE Consultation
Transfer
Negotiating Documentation
Post Transfer Support

15. Spinning out: Asset transfer
In return for Council transferring the assets and liabilities associated with the music service to Newco….
….Newco gives the Council an indemnity to meet any liabilities which are related to the transferring assets, after the transfer date. 24

16. Gift Aid and Membership
“Can I claim Gift Aid on membership fees for ensembles and orchestras?”

17. Is the property “wholly or mainly” used for charitable purposes?
Business Rates Relief
Is the property “wholly or mainly” used for charitable purposes?

18. CONTACT Erica Crump e.crump@bwbllp.com 020 7551 7757
Augustus Della-Porta
Louise McCartney
These slides are for general information purposes only. They are not intended and should not be used as a substitute for specific legal advice. Specific legal advice should be taken before acting on any of the topics covered.