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MILS LEGAl UPDATES: PARTS WARRANTIES & HOLIDAY PAYBack

MILs

Parts Warranties

“I fitted a battery for a customer with a 3 year warranty. The customer came back after 2½ years with complaints that the battery wasn’t working properly. The customer refused to bring the car back and went ahead and got a replacement battery fitted by BMW. He is now threatening me with legal action if I do not reimburse him the full amount of the battery plus labour costs. What can I do?”

1 – Establish the facts

The first priority should always be to establish the facts of the case. Where you are contacted by a customer, whether you agree with them or not, you need to get as much detail as possible so that the matter can be investigated properly. Ideally the customer should be asked to put their complaint in writing and include any evidence they have.

The more accurate the facts, the better your decision will be.

2 – Is it a warranty claim or a breach of contract?

When you sell goods or services to consumers you cannot exclude their statutory rights. As such, if the parts when supplied were not as described or fit for their purpose etc, then even 2½ years later the consumer will be entitled to compensation. Furthermore, whilst a judge will not be happy if the consumer goes elsewhere, there is no legal requirement for them to come back to you first. As such, in this case, if the battery was faulty when you sold it then you would be liable for the reasonable costs of rectifying the fault.

If they cannot prove that the goods or services were faulty at time of sale a consumer can only claim under any warranty provided. There is no requirement to warranty any work or any parts. As such a warranty can legitimately require the consumer to return the vehicle to you and place reasonable conditions on the costs covered.

Conclusions

As always, what is appropriate will depend on the facts. Don’t forget to carefully document all conversations and to evidence all telephone calls, emails and letters for future reference.

As this is over 2½ years old, anything could have happened to the battery. It would be for the consumer to prove the battery any breach of contract, and you are a little safer if you take a hard line. Investigate their complaint and ensure the costs have been incurred. Write back pointing out it is a return to base warranty and that he is asked to bring it back to you first and deny liability. As he has not complied with the terms of the warranty you have no option but to reject the claim.

Be prepared for potential legal proceedings so consider whether to offer a gesture of goodwill to avoid any dispute.

Lastly, as this advice is general in nature it will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

 

Holiday Pay – The Lock Decision

The Employment Tribunal in Leicester has handed down its long awaited decision in Lock v British Gas.

Mr Lock was a Salesman on a basic salary with variable commission paid in arrears. Mr Lock’s commission depended not on the time worked, but the outcome of that work, i.e. the sales achieved. Mr Lock could not earn commission whilst on leave and therefore, would lose income by taking it. As members are aware from previous articles, Mr Lock brought a claim for his “lost” holiday pay after taking leave in December 2011 to January 2012.

Following the ECJ’s decision last year, which we have reported on previously, the Employment Tribunal has held that Mr Lock’s holiday pay should include an element for his commission. This is important news in the Motor Industry as pay in sales inevitably includes a large element of commission pay.

This was largely expected and will impact on future holiday pay entitlement, though any potential back claims will soon be reduced by the two year cap on backdated claims which takes effect on 1st July 2015.

However, there are still some unresolved issues following the decision in Lock. These include:-

  • What is the reference period for calculating holiday pay? It was hoped that the Leicester Tribunal might clarify whether, for example, a 12 week, or 12 month period was appropriate. It did not do so, so that issue has been deferred for determination at a later date.
  • Prior to 1st July 2015, are there any limits to how far back a series of deductions can stretch?
  • What types of variable pay are intrinsically linked to the tasks performed under the Contract of Employment?

It is to be hoped that these and other unresolved issues may be addressed in future cases. We will of course report back to members on future developments in more detail, as and when they arise.

Paul Carroll, Solicitor, Motor Industry Legal Services

Posted by Sue Robinson on 03/04/2015