bmadmin

Kate Matthews, partner at Boddy Matthews Solicitors, explains how to resolve disputes on a step-by-step basis.

Owning a franchise can be a fruitful business relationship where success for franchisor and franchisee is interdependent. Clear and effective communication is a key factor for that success.

It is therefore all the more important to swiftly address concerns arising during the course of this relationship, however big or small, to avoid potentially long lasting adverse damage to the relationship or at worst its ultimate early termination.

A well drafted and ethical Franchise Agreement, as promoted by the British Franchise Association (the bfa), and the European Code of Ethics for Franchising will contain a clear (Alternative) Dispute Resolution (ADR) clause. This clause will set out how to resolve disputes on a step by step basis.

How to choose? Which ADR step is best? What should I know?

Step 1: Communicate
Lack of communication may often be the root of a problem. Whilst some disputes cannot be avoided, many could be resolved through clear, open and effective communication. A cost effective solution may simply be to open that dialogue with your franchisor and together negotiate and work towards a resolution. This is often the first ADR step.

Step 2: Mediate
Mediation is a private, confidential and flexible form of ADR, facilitating the parties in reaching an agreement where possible. If the parties have agreed to mediate, discussions are carried out on a without prejudice basis. Therefore it is not binding unless the parties, with the help of a neutral third party Mediator, reach an agreement which is then recorded in writing and signed by all parties. A Mediation can include all aspects of the relationship and is not limited to the legal issues. A facilitative Mediation can with agreement become an evaluative Mediation if the parties so choose, where the Mediator can provide a solution which the
parties agree to honour. The franchise relationship can be preserved and it is cost effective. The BFA operate a mediation scheme.

Step 3: Arbitrate
Arbitration is more formal than mediation and an alternative to litigation. The parties agree to resolve their disputes through Arbitration not Court. Whilst it tends to follows a similar structure to Court proceedings, depending on the Arbitration rules applicable, it is a private process, confidential and binding. The parties choose and pay for the process and the arbitrator/s and their expertise. Arbitration is usually less expensive than litigation.

Step 4: Litigate
Litigation/Court proceedings is often the last resort. The parties follow Court Rules. An independent impartial Judge will make a binding judgment. Court fees apply but not for the Judge or venue.

So where does that leave me? Top tips!

• Avoid communication breakdown
• Seek an informal solution
• Negotiate
• Check the ADR clause and steps
• Check the governing law and jurisdiction
• Seek a solution using ADR

For further information and advice, please contact info@boddymatthews.com.

The recent case of a London estate agent who won damages in excess of £180,000 after her flexible work request was rejected, is of vital importance to both employers and employees. The case serves as a salutary reminder of why it is important to deal with flexible work requests cautiously, thoroughly and with an open mind.

Sometimes, less is more

In brief, the employee, a senior and successful sales manager in a small estate agency business, requested to come back from maternity leave on a 4-day week basis and to leave work at 5pm instead of 6pm on her working days. After considering a formal flexible work request, the employer rejected the request, relying on a number of permissible statutory grounds, including the burden of additional costs; detrimental effect on ability to meet customer demand; inability to reorganise work among existing staff; inability to recruit additional staff; and planned structural change.

The employee disagreed with her employer’s approach, raised an unsuccessful grievance and subsequently, resigned her positioned. She brought a large number of employment tribunal claims, including for direct maternity and pregnancy discrimination, indirect sex discrimination and unfair dismissal.

In a lengthy and informative judgment, the employment tribunal rejected all of the employee’s claims bar one, namely the claim for indirect sex discrimination.

Importantly, the tribunal recognised that some of the employee’s complaints (which related to how she has been treated while pregnant and on maternity leave) may retrospectively read hostility into fairly innocent events. However, the tribunal was not side-tracked by this. Reviewing a large body of evidence and claims, it has done a very good job of “separating the baby from the bath water”.

Flexible work requests and sex discrimination

It is notable that while the flexible work request was at the centre of the employee’s complaints, she did not bring a claim under the flexible work request legislation. This is because such claims rarely succeed and are of limited value. Instead, the complaint and question for the tribunal was whether the rejection and its rejection amounted to indirect sex discrimination and, if so, whether the employer could rely on grounds for rejecting the complaint so as to justify any such discrimination. On the facts, the tribunal held that it could not.

While the tribunal lent some sympathy to the employer, it doubted the validity of the grounds on which the employer sought to rely. The tribunal felt that the employer’s grounds were not rooted in evidence and were the result of reluctance to change existing arrangements, rather than solid facts. Also, and crucial to the tribunal’s decision, was its finding that “notwithstanding an encouraging shift in societal attitudes, it is still the case that mothers are more likely to carry primary [childcare] responsibility than fathers”. With this in mind, and on the basis that the employer was unable to provide satisfactory evidence that the grounds for rejecting the employee’s complaint were genuine, the tribunal found for the employee.

Money, money, money

Awarding the employee £184,961.32 by way of compensation, the tribunal took into account the employee’s “sustained search for work”, as well as the impact of the Covid-19 pandemic on her efforts and actual losses. The employee was compensated for losses spanning over some 20 months (of which 18 months preceded the hearing) and include pay in lieu of Furlough pay the employee was likely to have been paid had she remained at work.

There are no real winners in this case. The employer has to pay significant damages on top of legal fees and the loss of a valued and successful member of staff. The employee lost her livelihood and a career she enjoyed and excelled in. It is possible that if the parties had the chance to go back in time, they would have approached things differently. For those receiving flexible work request in future, we can only reiterate the advice to deal with such request cautiously, thoroughly and with an open mind.