The festive period brings plenty of cheer but company owners should beware the legal headaches, warns Chaman Salhan, chief executive of law firm 2ndOpinionNow
With the Christmas party season almost over, companies should beware being straddled with legal hangovers. Research has shown that office festive celebrations and the end-of-year shutdown can lead to a litany of legal issues for businesses to tackle as the new year dawns. Here are five examples:
1 Regulatory issues
At this time of year, human mistakes that would not normally occur can be costly. Consider the case of a restaurant that was so busy it failed to maintain food hygiene standards. This slip caused the restaurant to be shut down at its busiest time of year. Loyal customers went to competitors and many did not return. The competition made sure everyone knew of the restaurant’s misfortune, which reduced revenue, and huge fines had to be paid. In another case, a company that breached fire safety regulations through human error tried to claim on its insurance policy after its offices had burnt down. The owners were told the violation meant that the contract was void and the business collapsed.
2 Corporate divorce
If a business has failed to meet its yearly targets, and as a consequence shareholders/ directors have received lower dividends/bonuses than expected, underlying tensions may brim to the surface. The problem may be made worse by the imminent due date for payment of corporation tax and self-employed income tax. Underperforming directors can easily feel the scorn and wrath of their so-called friends. The number of businesses where owners fall out over the festive period is astonishing. The bonus issue is not limited to owners, though – it’s common for staff to feel they have been poorly rewarded for their work or, worse, think they have been discriminated against because of their gender, race, disability or age. The long festive break often allows such sentiments to fester and can infect an organisation in the new year.
3 Criminal acts
These can vary from an employee caught drink driving to someone becoming involved in a fracas on a night out. One drink too many, an inappropriate comment, or just being in the wrong place at the wrong time, can result in an individual breaking the law. Alternatively, the company could be targeted for cyber attack, with confidential data stolen. Such instances may incur the wrath of the information commissioner with substantial fines being paid. The festive season is regarded by criminal gangs as the best time to act as they know business leaders will be away or distracted. Take the case of a haulage firm that had two of its five drivers banned from driving. The ability to fulfil orders accrued for January became impossible. Customers lost confidence, which led to a loss of lucrative contracts, and profits fell by 20 per cent.
4 Office party problems
CEOs often tell me that sexual harassment, or worse, wouldn’t happen in their company. I then tell them about the case of a barristers’ chambers where a senior clerk was convicted of raping a barrister during the office Christmas party, and then both people sued the chambers. The CEOs quickly realise the damage that such an incident would have on their business and its reputation. They also appreciate the opportunity cost involved in resolving such incidents, so can attach a financial value to it.
5 Matrimonial worries
More couples separate over the festive period than at any other time. If personal issues distract senior managers, they are unable to focus on their work and productivity falls. A CEO who had been working away from home returned to discover her husband was having an affair. The issues concerning the financial separation and contact with the children affected her performance and damaged the business.
There will be some company owners who will enter the new year with a legal headache. If you are unfortunate enough to be one of them, you can rely upon our unique barrister/corporate retainer legal service to guide you through a myriad of complex legal issues associated with it. Enjoy the celebrations but beware the legal hangover.
Could you benefit from this type of lawyer/client relationship? Find out more at 2ndopinionnow.co.uk
020 7936 3177
Chaman Salhan is a member of IoD Central London
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