Check-in - June 2021
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Welcome to your quarterly newsletter from Bird & Bird's Hotels, Hospitality & Leisure team
We are delighted to share the June 2021 edition of Check-In, Bird & Bird's quarterly newsletter for hotel, hospitality & leisure businesses.
The newsletter focuses on hot topics and legal developments impacting on various aspects of the sector around the globe. In this edition we are pleased to include guest articles from Sandeep Mehta (Partner, J. Sagar Associates) on hotel investment in India and Christian Møller-Holst (CEO and Founder, Goodwings) on the post-pandemic future of travel.
We are also continuing our two regular features: HMA Bites, where Associate James Fowler explores a different aspect of hotel management agreements in each edition, and Employment Corner, where Partner Alison Dixon and Associate Stephanie Creed share a summary of the latest employment law updates for hotel, hospitality & leisure businesses.
Please get in touch if you would like to discuss any of the issues raised in these articles, or visit our webpage for more information about Bird & Bird's Hotels,
HMA Bites
Gross negligence and wilful misconduct: insight, tips and advice
Welcome to HMA Bites! In each edition of Check-In we will take a concise look at an issue relating to hotel management agreements ("HMAs") and provide insight, tips and advice based on our experience in practice. In this edition, we will be taking a look at the concepts of "gross negligence" and "wilful misconduct".
The terms "gross negligence" and "wilful misconduct" are frequently used in HMAs – most often in connection with matters of liability. For example:
- An Operator may seek to limit its liability to an Owner to only those losses which "arise as a result of the Operator's gross negligence or wilful misconduct".
- Where an Owner is expected to indemnify an Operator in respect of any losses suffered by the Operator in connection with the operation of the hotel, the Owner will usually seek to include a carve-out from its indemnity obligation where the relevant loss “arises as a result of the Operator’s breach”. However, an Operator may seek to reduce this carve-out to only those losses that "arise as a result of the Operator's gross negligence or wilful misconduct".
But what do these terms actually mean?
Employment Corner
The impact of the vaccine and rapid testing on returning to the workplaceOur UK employment team has put together an interesting article taking a look at the challenges around vaccinations, which will be of particular relevance to employers in the hotel, hospitality and leisure sector re-opening after lockdown. The UK's experiences may make interesting reading for multi-national employers, as some of the lessons learnt could be put into practice elsewhere around the world.
Harassment and how employers can really influence behaviour
Ethical issues remain high on the agenda for employers and consumers alike. Businesses in the hotel, hospitality and leisure sector have a particular challenge when it comes to harassment in the workplace due to the customer-facing roles of much of the workforce. The drive to address harassment at work has continued to gain momentum since the #MeToo paradigm shift in 2017. As part of our Ethical Workplace series, we have produced a report giving an international view on workplace harassment. The report, which includes video discussions, addresses the current international landscape, the issues, and what further proactive steps can be taken.
UK case law update
One recent case of particular interest is Allay (UK) Ltd v Gehlen UKEAT/0031/20/AT, which looks at an employer’s liability for harassment at work, and the need to ensure that anti-harassment policies and training are “refreshed” regularly.
New UK regulations confirming increases to National Minimum Wage rates and extending employer's record keeping obligations to six years
The National Minimum Wage (Amendment) Regulations 2021 (SI 2021/329) (the “Regulations”) came into force on 1 April 2021 and increase national minimum wage rates in accordance with the Low Pay Commission's annual recommendations. The increases are as follows:
- National Living Wage (23+) has increased 2.2%, from £8.72 to £8.91
- National Minimum Wage (21-22) has increased 2%, from £8.20 to £8.36
- National Minimum Wage (18-20) has increased 1.7% from £6.45 to £6.56
- National Minimum Wage (under 18) has increased 1.5% from £4.55 to £4.62
- Apprentice Rate has increased 3.6% from £4.15 to £4.30
Notably, the Regulations also extend the period for which an employer must keep records to establish that they are paying their workers at the applicable minimum wage rate from three years to six years. The Regulations also provide that this extension will apply to records made before 1 April 2021, where the employer was already required to keep the records immediately prior to that date. Hotel, hospitality and leisure businesses have featured high on HMRC’s list of minimum wage offenders; it will be important to take note of these changes and ensure they are correctly implemented.
Updated guidance on COVID-19 right to work checks in the UK
The UK government has updated its guidance on right to work checks in the UK. The temporary COVID-19 adjusted right to work checks will now end on 20 June 2021, and from 21 June 2021 employers will revert to face to face and physical document checks as set out in legislation and guidance. This is aligned with the easing of lockdown restrictions and social distancing measures, as set out in the government’s roadmap for England and those of the devolved administrations.
TUC survey suggests that only 45% of employers offer paid leave for worker vaccinations
The Trades Union Congress (“TUC”) has carried out a survey of over 1,000 employers, which shows that 45% of the respondents are offering workers paid leave for COVID-19 vaccination appointments. Some major companies have pledged full pay to thousands of staff who need to take time off for their vaccine appointments. However, they are in the minority: only 49% of large firms are doing so, alongside 43% of smaller businesses. The TUC has warned that the vaccine rollout may be adversely affected by firms’ refusal to provide paid leave, making workers reluctant to take time off to get their vaccination, and has suggested that all workers should be entitled to paid leave for both vaccination and recovery from side effects.
TUC calls for limits on the use of artificial intelligence in the workplace
The TUC recently published a report on the legal implications of Artificial Intelligence (“AI”) systems in the post-pandemic workplace. The report suggests that workers are at risk of being subjected to potentially discriminatory decisions made by algorithms used in the recruitment process. The report sets out the legal redress for workers when AI decision-making goes wrong, explores gaps in the law and makes recommendations for reform. General suggestions for legislation include an obligation on employers to provide meaningful information about the logic behind the AI used and greater regulation of “high risk” applications where using AI generates a high risk of harm to the interests of the worker.
Case Update
Court of Appeal rules on hotel’s liability under section 2 of the Occupiers’ Liability Act 1957 in circumstances where the guest had run an obvious riskThe English Court of Appeal in The White Lion Hotel (A Partnership) v Deborah Jayne James (On her own behalf and in her capacity as personal representative of the estate of her late husband Christopher James) [2021] EWCA Civ 31 has upheld a high court decision finding a hotel liable for the death of a guest who fell from an upstairs window. While the guest had run an obvious risk by sitting on the windowsill, and a reduction in damages for contributory negligence reflected this, acceptance of that risk did not outweigh other factors leading to the hotel’s liability.
Covid-19
Softening the cliff-edge: what next for COVID-19 related debt recovery in the UKSince COVID-19 restrictions on businesses were first imposed in March 2020, the UK Government has repeatedly extended their schemes to protect debtors from both insolvency and property enforcement action by their creditors. In April the Government launched a consultation on what should come next when those schemes are scheduled to expire on 30 June 2021.
With so many UK businesses, especially in hospitality and leisure, facing that cliff-edge when their protection from enforcement by their creditors falls away, the consultation was an excellent opportunity for those businesses to explain their concerns to the UK Government and to influence what protections may be put in place to support businesses from 1 July 2021.
Read more >
Industry Spotlight
Goodwings: we believe the future of travel is Net Zero
Thank you to Christian Møller-Holst (CEO and Founder, Goodwings) for contributing this article.
Goodwings is a Copenhagen based hotel booking site. We’re also a certified B corporation, a certification that constantly holds us accountable for our sustainability as a company. This made us rethink our strategy during the global travel lockdown. With the future of people and planet in mind, we have now relaunched with a hotel booking system that enables our business and leisure customers to travel Net Zero, easily and affordably.
Country Spotlight
Legal issues for investment in the hotel and hospitality sector in India
Thank you to Sandeep Mehta (Partner, J. Sagar Associates) for contributing this article.
The major legal issues for investment in the hotel and hospitality sector in India can be divided into six categories, which are explored in this article:
- Foreign investment
- Due diligence and brand protection
- Operating licences
- Hospitality Development and Promotion Board and other agencies
- COVID-19 Standard Operating Procedures for hotels, restaurants and entertainment parks
- Other issues
News & Events
Join our webinar on Hotel Franchising
On 16 June, Bird & Bird, AlixPartners, EP Business in Hospitality and HVS are teaming up again to present the next webinar in this series which will focus on hotel franchising.
We will provide an overview of hot topics and themes in the franchise world and ask whether franchising is the way forward for hotel owners, before speaking with a panel of industry experts to explore the pros and cons of hotel franchising.
We hope you can join us.
Did you miss our webinar on Hotel Finance?
In the latest webinar in our series with AlixPartners, EP Business in Hospitality and HVS, we were joined by industry experts to explore a number of key questions facing the hotel finance industry, including: Has COVID-19 accelerated the move away from traditional banks towards alternative lenders? Will mezzanine lenders bridge the gap as senior debt leverage decreases? Is the cost of debt inevitably going to rise? Are funding structures going to be more complicated in future?
Watch the webinar here if you missed it.
