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Legal
Issues PDF
Business
Issues PDF
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Legal
Issues
The
following scenarios have recently been recorded by Humphries
Kirk who offer free legal advice to DBA members. If you are
a member and wish to take advantage of this service log into
the members only section here
to find out how.
Contracts
Q:
A designer produces a design for print graphic
artwork for a client and then retains that artwork as part
of its own business records. The client does not wish to re-engage
the services of the designer subsequently but asks for the
artwork to be delivered to it. Is the designer obliged to
do so?
A: It
will depend upon the scope of the contractual obligation originally
entered into between consultancy and the client. If the consultant
was not obliged to keep the material then generally it cannot
be obliged to deliver it up. However the designer also has
to consider whether the material itself belongs to the client.
This requires consideration as to the ownership of the physical
materials if they are still in that form and the ownership
of intellectual property rights. The starting point however
is to look to see what the deliverables were under the original
contract and see whether that element has been fully performed.
If it has then such additional material as is retained by
the designer is likely to fall outside of the contract. Notwithstanding
whether there is an obligation to deliver up or not the physical
material where intellectual property rights (copyright generally)
has been reserved to the designer then it is often appropriate
to enquire of the client why the material is required by it.
It will often be the case that the client is intending to
use it for a further print run or to have it adapted for future
use but that might fall out of any express or implied usage
licence.
Contracts
II
Q:
A client is unwilling to contract on the designer's
standards terms of business but rather tables its own contract.
This contract purports to transfer ownership of all “work”
arising during the project as well as all concepts and ideas
expressed thereby. Is this normal?
A: It is normal to the extent
that clients often ask for this but that tends to be driven
by the attitude that they must own all of the work produced
by the designer during the project and concern for the protection
of confidential information that might have been revealed
to the designer. The client would normally contract for a
solution to its particular brief and the fact that the path
to the solution produces a lot of other work is merely incidental.
The client has no legitimate claim for work that is not part
of the final selected design solution although the position
can be a little more complicated than that because such final
solution will often consist of elements from a number of different
proposals that were put to the client at an early stage. Furthermore
care needs to be taken to ensure that the designer does not
pass to its client work or features of work that might be
considered common place for work of that nature or which would
unduly fetter its creativity in the future.
The ownership of ideas and concepts can be rather complicated
but generally a client should have no call upon ideas and
concepts that are not embodied within the final design solution
and it is not unreasonable to ask a client to recognise the
confidentiality of other ideas and concepts that might have
been proposed at an earlier stage.
The best advice is to have good terms of business which address
these issues in a way that is fair and reasonable to both
the designer and the client. Many of the problems arise from
the client having one standard form of procurement contract
for all services and therefore tarring its designers, its
software suppliers, its marketing and advertising agencies
and the suppliers to it of stationery with the same brush!
Copyright/Design
Right
Q: Designers
often contract on terms of business which do not address the
issue of intellectual property. Is this a problem?
A: Yes and no! Whilst the author
of a copyright work will be its creator, copyright (quite
literally the right to copy the work) can be passed from the
author on to a third party. In fact where the author is an
individual employee then the first owner of the copyright
in the work produced by the employee will be the employer.
An agreement to transfer copyright needs to be in writing
and signed by the person making the transfer. This means that
copyright can be passed by an express statement in a letter.
You can also transfer copyright before it has arisen. It follows
therefore that if a designer does not deal with the issue
of copyright in its terms of business then that copyright
is likely to remain with the designer itself.
You must be careful however because there are arguments that
a certain interest in copyright can pass without the formality
of there being a written agreement and it is also argued by
clients that whilst the copyright may not have actually passed
over to it the designer was contractually bound to do so.
If the agreement is merely a contract to deliver copyright
as distinct from a contract that actually does transfer the
copyright then it does not have to be in writing, so whilst
the designer may get away with not dealing with copyright
most of the time it is not a good practice.
Furthermore there is another intellectual property right that
arises automatically in relation to the design of functional
items. It is called design right and it is the right to manufacture
goods and articles to those designs.
If a client commissions work and design right arises automatically
in that work then the design right will belong automatically
to the client that commissioned the work. Designers therefore
need to recognise what intellectual property rights arise
out of their work automatically (and this will depend upon
the nature of the work itself) and then address those intellectual
property rights in terms of business but in a way that is
fair and reasonable to both parties.
Trade Marks
Q:
Designers are often concerned as to how far they
need to go to “check out” the work that they present to their
clients. Whose responsibility is it to do this and what can
be done?
A: This will depend upon the
contract and it needs to be addressed expressly because clients
often presume that work produced and presented by a designer
can be used without restriction. This simply is not the case
because whilst a designer can be expected to produce original
work (i.e. work that it has not copied from another person)
it is unreasonable to expect it to produce novel work.
Each client will be an expert in its own market and business
sector and unless it is specifically agreed otherwise it should
be the client that checks out the work for use within that
sector. This will normally involve checking for appropriate
trade marks in each relevant country but other searches such
as registered design searches and patent searches may also
be necessary.
Simply getting a search done of the relevant work in the relevant
territory is the easy bit. Interpreting the results of the
search which are often not clear cut is far more difficult.
On the other hand a designer would not wish to table work
which clearly infringes say, a third party trade mark and
in many countries but particularly in the UK a simple “online”
search will often be helpful at an early stage.
Clients also need to be aware that the work does not infringe
common law rights and thereby give rise to claims for passing
off but again the responsibility for doing this should be
the clients in much the same way that it is the client that
should be responsible for providing the designer with all
of the relevant technical data and statutory or regulatory
controls that affect the work.
A designer can be expected to have experience working in a
particular sector and thereby have general knowledge of the
controls within that sector but such controls are constantly
changing through the intervention of trade associations, regulatory
authorities, UK statute and European law. This issue should
be addressed in the contract terms and the best place to start
is by having the position stated clearly in a designer's terms
of business.
Employment
Q:
Designers are often concerned as to the extent
to which they can control the material taken by an ex-employee
when he or she leaves the business.
A: Everything produced by an
employee as part of the performance of their contractual duties
will belong to the employer. Accordingly they have no automatic
right to take any work away and to copy work they have produced
for the purpose of their portfolio is likely to be an infringement
of the intellectual property rights in that work. Furthermore
employees are frequently unaware as to the extent to which
such work is controlled by contractual provisions of confidentiality.
However it is recognised in the design industry that an employee
would normally be able to show his or her portfolio of work
to prospective employers. The issue needs to be addressed
specifically in the contract of employment and then managed
through an effective “leaving procedure” so that the employer
knows what the employee is taking away and the employee understands
very clearly the extent to which he or she can use that work
in the future.
Business
Management Issues
The following
scenarios have recently been recorded by the DBA Business
Management Helpline. By reading them now they could save you
a lot of time and money.
Resignations
Q: An
employee tendered his verbal resignation following an heated
exchange between himself and his line manager. Is this now
binding as the employee wishes to retract it?
A:
During an argument, an employee may threaten to resign by
telling their manager that they no longer wish to work for
them. In this situation, the employer should be wary of leaping
to conclusions and dispatching a P45 in the next post. An
assumption that words and actions in the heat of the moment
are intended to be binding may lead to a claim of unfair dismissal
or constructive unfair dismissal at an employment tribunal.
It is therefore best to allow a “cooling down” period and
give the employee time to consider their actions. It would
be best to write to the employee and ask them to confirm their
decision in writing.
Sick Leave
Q:
An employee commenced work as normal at 09.00 a.m. but was
taken ill about an hour later. She was taken to hospital and
has now been off work for a week, and a question has arisen
regarding the status of the day she was taken ill. Should
this day be regarded as the first day of absence for statutory
sick pay calculation? She claims, because she was at work
for less than half a working day that this day should be the
first day of her period of incapacity for work. Can you please
clarify the situation?
A:
An employee is deemed to have been incapable of work for the
whole day if they arrive at work but do no work before they
become incapable of work. However, if an employee has done
even a minute's work, that day cannot be treated as a day
of incapacity for statutory sick pay purposes. Consequently
in the circumstances you describe your employee had presumably
done some work during the first hour and as a result this
day could not be treated as a day of incapacity.
Grievance
Proceedure
Q: Following
the outcome of a grievance made by an employee we have reason
to believe that his manager had been bullying him using physical
violence. The manager is still at work at the moment and we
are looking to discipline him. Should the Manager be suspended
and, if so, at what point does this happen?
A:
Physical violence is considered as gross misconduct
and in this case you need to suspend the manager on full pay
immediately. You will need to explain to the manager the reason
for the suspension, that it will be for as short a period
of time as possible and that he will be called back for an
interview. It is also important to tell him that the suspension
is not considered as disciplinary action, but that due to
the serious nature of the allegations it is important for
him to remain at home whilst the investigations are completed.
During the suspension you will need to complete your investigation,
which is likely to include interviewing and obtaining statements
from any witnesses who may have seen or heard the bullying
taking place as well as taking a full statement from the manager
in question. Following the investigation you should have a
clear view of the facts and if there is a case to be heard
a disciplinary hearing would then be arranged.
Early
Return from Maternity Leave
Q:
An employee on maternity leave says she intends to
return to work before the end of her additional maternity
leave. She has given us 2 weeks notice. We currently have
a temporary member of staff covering her position. Do we have
to agree to her early return?
A: The
employee is required to give you 28 days' notice of an early
return from maternity leave. If you have good reason why you
cannot arrange for her return on this shorter time scale then
it would be acceptable for you to insist on the full 28 days
notice before she returns. You should write to her at the
earliest opportunity and inform her of the situation and state
the revised date when she is to return to work.
Dismissal
of sick staff
Q:
We wish to dismiss an employee who has been on long
term sick for over a year with stress. This employee has the
benefit of permanent health insurance which carries on until
either the employee's retirement or until he is fit to return.
Can we dismiss him without concern?
A:
Clearly the employee, with over a year's service,
can claim unfair dismissal. In addition, there is a risk here
that the employee may (depending on his condition) be able
to bring a claim for Disability Discrimination, if there has
been a failure to properly consider alternative employment
and reasonable adjustments. Perhaps more important though
is the risk from a breach of contract claim. You should firstly
check the policy and see if early termination is a possibility.
If it is not and you terminate his employment whilst eligible
for permanent health insurance this employee may be able to
claim the full benefit that they would have received from
the scheme right the way to retirement age direct from the
Company. The damages could be very high and potentially very
damaging to the Company.
Employing
gap-year students
Q:
We have a young employee who is working for us for a year
prior to going to University. He is in his words “taking a
year out”. As in effect he is gaining work experience to further
his education do we have to pay the minimum wage?
A:
Any student who is taking what is referred to as
a “gap year” between school and university or other forms
of higher education and is employed by you has to be paid
the minimum wage, as does any student of 18 or over who takes
a holiday job. If, however, he were on a sandwich course at
university or a college and were working for you during a
placement was part of the course then he would dot have to
be paid the minimum wage for the period of the placement.
End
This information
has been supplied by the DBA Business Support Helpline which
provides DBA members with free telephone advice, information
and guidance in respect of TAX, VAT, PAYE, Payroll, NIC, Employment,
Health & Safety and Commercial Legal matters.
There
is NO CHARGE for the advice given and NO LIMIT to the amount
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