Accountancy firm Johnston Carmichael has expanded its presence in Scotland with a six‑figure investment in new premises and staff in Aberdeen.

The Scottish firm has invested more than £700,000 between its two Aberdeen sites, bringing the firm’s property footprint in the city to approximately 15,000 sq ft.

Offices at Carden Place will be home to Johnston Carmichael Wealth and the personal tax team, focusing on high net worth individuals, while the newly reconfigured Albyn Place premises will accommodate the corporate teams.

The firm says the investment reflects its ‘confidence in the city’s economic growth, across all sectors’.

Johnston Carmichael has also hired Mark Watson as a director in the tax team. He previously spent seven years with PwC in Guernsey.

Niall Farquharson, joint managing partner, said: ‘The investment in our infrastructure has been made to provide our staff with a modern, fit for purpose working environment which stimulates good working practices with the aim of ultimately providing our clients with the highest and most comprehensive levels of service.

The investment reflects Carmichael Johnson's ‘confidence in the city’s economic growth, across all sectors’

‘The past 12 months has seen a significant number of new clients which is particularly pleasing.’

The firm is ranked 18th in the annual Accountancy Top 75 survey with fee income of £33.4m in 2013, up 12.7% year on year. It has 53 partners and 500 staff.

LLPs set up professional body to represent interests

A group of accounting firms and limited liability partnerships (LLPs) have set up a multi-disciplinary partnership body, the Professional Practices Alliance (PPA), to provide professional services firms with specialist advice on LLP status and restructuring advice.

Members of the new LLP group include chartered accountants, Buzzacott, and law firms Maurice Turnor Gardner, CM Murray and Hierons.

PPA member, Clare Murray, partner at CM Murray LLP, said the group was set up to break down professional silos and provide advice to professional services firms, on structuring practices, tax and accounting issues and partnership law.

‘Professional services firms often feel that their specialist advisers are working in silos, without a full awareness of the wider tax, accounting, legal or financing implications of the advice being given to the firm,’ she said.

‘The Professional Practices Alliance provides firms with access to joined up, collaborative advice on partnership law, tax, accounting, structuring, financing and regulation, from specialists who are each market leaders in their own field.’

At its recent launch event, the Alliance debated whether the LLP structure is fit for purpose or has ceased to be attractive to professional services firms.

It would be helpful if legislature could provide a bit more stability for LLP structures, particularly when it comes to tax rates

Cliff Cooper, partner, Buzzacott LLP

This follows direct challenges to LLPs with the change in the tax treatment of salaried members and the recent Supreme Court ruling (Winkelhof) that LLP members are workers for certain statutory employment rights. This has created uncertainty around the LLP structure.

Richard Turnor, partner at Maurice Turnor Gardner, who chaired the debate, said: ‘LLP members benefit from limited liability and can have a role in management. They can also adopt sophisticated corporate governance arrangements like global corporates.’

In assessing alternatives to an LLP structure, members said that although limited companies appear to offer greater certainty, they may not suit a firm that operates, however inefficiently, as a democracy. Succession challenges should not be underestimated.

Richard Hierons, partner at Hierons, said: ‘LLPs will remain attractive. Boutique firms may offer a “partnership” model but most larger professional firms need a “management” model. The transition from partnership to corporate management will continue for some years. It will be challenging for many firms and may be more important to future success than choosing the right vehicle.’

On the tax status of LLP members, Cliff Cooper, partner at Buzzacott, said: ‘The flexibility of LLPs can’t easily be matched by other structures or incorporation, particularly for larger firms, but it would be helpful if legislature could provide a bit more stability for LLP structures, particularly when it comes to tax rates.

Case report:breaching the contract of employment

If an employer fundamentally breaches the contract of employment, employees are entitled to resign as a consequence and claim they have been constructively dismissed.

However, one of the fundamental principles of claiming constructive dismissal is that an employee should not leave it so long between the employer’s breach of contract and the resignation that it is deemed the breach has been waived.

Resigning after the point that the contract has been affirmed will mean that employees have no claim as they have just resigned rather than having been constructively dismissed. But how long does the employee have?

This was the key issue in the recent case of Chindove v William Morrisons Supermarket plc UKEAT/0201/13/BA.

Mr Chindove allowed six weeks to pass between the act he relied upon as the employer’s breach of contract and his resignation. Morrisons argued that this was so long that he had to be taken to have waived the breach, so defeating his own constructive dismissal claim.

The Employment Appeal Tribunal held that there is no set period of time after which the employee will be deemed to have waived the contract. All the circumstances have to be taken into account, particularly whether the employee has conducted themselves in such a way that affirmation of the contract can be implied.

It followed in this case that, as Chindove had been off sick for most or all of the six week period, the delay alone could not really be held against him. 

Comment: In relation to general guidance it was suggested that an important factor could be whether the employee has complained or not, and whether their personal circumstances could explain the delay.

If the employee’s family is dependent on their job as their only income, if they have been in it for many years and if it would be difficult to find other employment, it would be reasonable to expect that considerable thought be put into the decision of whether to quit or not before communicating the decision to the employer. There could, therefore, be a delay without waiving the breach.

Case report: working your notice in Tizhen Li

In cases where any breach of an employment contract is in dispute, employees who resign without giving the required contractual notice are at risk of themselves being in breach of contract.

The consequences were shown in the case of Tizhen Li v (1) First Marine Solutions Ltd (2) Dan Moutrey UKEATS/0045/13/BI.

Miss Li was the principal engineer responsible for an important overseas business project. Her contract of employment provided that she would need to give one month’s notice of resignation. It was also stated: ‘If an employee leaves, without working the appropriate notice, the company will deduct a sum equal in value to the salary payable for the shortfall in the period of notice.’

Li resigned but failed to attend work during her notice period. In response the employer deducted £5,000 – her full month’s salary – from the other monies due to her (not including her notice pay).

Li claimed that the employer had no right to take these monies as the clause was a penalty and unenforceable. She lost.

If a clause is intended to create a liability on the employee to make a payment, the wording should perhaps refer to the amount as being a ‘genuine pre-estimate of loss’

It was held that the employer was entitled to withhold the money as this was a genuine pre-estimate of loss. It had to be taken into account that she occupied a key role in an important contract. Her sudden departure meant a replacement had to be engaged urgently and that was going to incur expenditure.

Comment: The judge observed that a better construction of the clause might be to set out that entitlement to payment for the notice period would be conditional upon the employee actually working the notice.

This would have meant that no deduction would have been made from other monies due to the employee. Given these comments, if a clause is intended to create a liability on the employee to make a payment, the wording should perhaps refer to the amount as being a ‘genuine pre-estimate of loss’.

Case report: excessive notice affirms contract

Once notice of resignation has been given, could it still be possible for an employee to affirm their employment contract? this was the issue highlighted in the case of Cockram V Air Products plc UKEAT/0038/14/LA.

Mr Cockram had complained about his manager’s conduct but the subsequent investigation concluded that there was no substance to his grievance. In response Cockram resigned.

When his employment eventually came to an end, his claim of constructive unfair dismissal was thrown out.

His resignation letter made clear that he was resigning in response to what he considered was a breach of trust and confidence, but rather than giving three months’ notice as his contract required, he gave seven months’ notice.

When his employment eventually came to an end, his claim of constructive unfair dismissal was thrown out.

It was held that in giving notice well in excess of that required by his contract of employment Cockram was offering additional performance of his contract to that which was required. His actions had affirmed the contract even though it was after notice had been given.

Comment: Resignation in response to a fundamental breach of contract will allow the employee to resign on notice or with immediate effect. Cockram had been caught out by giving too much notice.

The decision shows that, in these unusual circumstances, post-dismissal affirmation is a real risk for the employee. If he had given just the contractual period of notice or even less, there would have been no question of affirmation.

Legal updates by Sophie Brookes and Christopher Davies of Gateley www.gateleyuk.com