There is no set formula in terms of what an employer ought to offer an employee by way of a severance payment under a settlement agreement. It will very much depend on:
In terms of guiding principles, employers need to bear in mind that they are effectively compensating the employee for their forbearance in not filing a claim with the Employment Tribunal, arising out of their employment and the termination thereof and therefore the likely value of any such claim(s). Any ex gratia sum offered should reflect this.
The employer ought to take specialist tax advice in relation to the taxable status of the payments being made under the settlement agreement. An ex gratia payment, genuinely representing compensation for loss of employment, can be made of up to £30,000 without deductions for PAYE.
Depending on what is contained in the employee's contract of employment, the settlement agreement will also make provision for the following categories of contractual payment:
We recommend obtaining professional legal advice first before putting forward a settlement offer, given the potential pitfalls involved.
Further, we recommend the settlement agreement itself is drafted by a specialist employment lawyer in order to get the terms right.
The amount your legal advisor will charge to draft a settlement agreement varies and depends on the precise circumstances and the terms being sought under the agreement itself, including for example dealing with issues such as confidentiality, intellectual property rights and post-termination restrictions.
The settlement agreement typically provides that any ex gratia amount is to be paid between 14 to 28 days of the agreement itself being signed.
In terms of contractual payments such as salary, accrued untaken holiday, contractual bonuses or commission, the agreement tends to provide that such payments will be made in the next payroll run on the usual payroll date.
An employee needs to obtain independent legal advice on a settlement agreement if it is to be legally binding.
Since it is in the employer's interests for the employee to sign the settlement agreement, in the overwhelming majority of cases, employers agree to make a contribution of between £250 to £500 plus VAT towards the employee's legal fees in needing to obtain independent advice as to the terms and effect of the settlement agreement.
It is not recommended to offer a higher cost contribution than this since, by doing so, the employer may effectively be paying the employee's additional legal fees for their independent advisor to negotiate an improved settlement on their behalf.
An employee may decide to turn down a settlement agreement if they consider the amount on offer insufficient, based on the advice they have been provided and based on the fact that the employer is not prepared to increase this.
An employee may also elect not to sign a settlement agreement, based on the advice of their adviser, as to its terms and effect, for example if they consider its terms to be too onerous.
As explained in Settlement Agreements Part 1, if an employee refuses to sign the settlement agreement then there is a risk that they may rely on it and the conversations surrounding it as evidence in bringing a grievance, resigning and claiming constructive dismissal, discrimination and bringing any employment proceedings.
The ACAS guidance sets out a number of key advantages and disadvantages for employers that are considering offering an employee a settlement agreement.
A settlement agreement can:
A settlement agreement can:
Copyright © 2016 Julian Cox, head of employment at iLaw.
Settlement agreements can be an effective way to manage the termination of an employment contract but they have to be handled with care, says Julian Cox, head of employment at iLaw. In the first of his two blogs, Julian sets out what you need to know about settlement agreements
Spring coincides with the start of the new financial year for many businesses. It is often a time when employers review the performance of their business over the previous year and plan for the future. Depending on how the business has performed, some tough decisions may be required surrounding staffing levels, leaving some employees finding themselves in the unfortunate position of having to look for employment elsewhere.
Employees benefit from a raft of legal protection under the statutory framework of UK employment law. As a result, employers are often required to go through prescriptive disciplinary, capability or redundancy procedures if they are to avoid unwanted claims in the Employment Tribunal and legal costs associated with defending these proceedings. This takes up valuable management time. It is worth bearing in mind that a single case of unfair dismissal could cost your business up to £94,000 and there is no cap on compensation in discrimination cases.
Set against the landscape of current UK employment law, a settlement agreement is a useful instrument offering employers a quick and clean method of terminating an employee's employment without having to undertake potentially protracted disciplinary, capability or redundancy procedures.
However, for the unwary employer there are still some pitfalls that need to be avoided. Here's what's involved:
A settlement agreement, or compromise agreement as they were previously known, is a legally binding, confidential agreement between an employer and an employee. The employer offers the employee a sum of money (a severance payment) and, in return, the employee agrees to waive any legal claim he or she may have against his/her employer, whether arising out of the period of employment or the termination thereof.
In addition to the employee waiving any legal claim he or she may have against the employer, a settlement agreement can also provide additional protection for employers including the introduction or reaffirmation of:
Settlement agreements also give employers the additional comfort of knowing that the terms offered, and in particular the precise value of the financial settlement reached, will remain entirely confidential. This is particularly important where employers have other employees with grievances or employees that are looking to make a potential claim.
Settlement agreements are used by employers in various situations; for example when they are faced with a group of employees that they want to make redundant and:
Settlement agreements are also used when employers are faced with an underperforming employee and a performance improvement programme would otherwise need to be put in place and the employee given a proper opportunity to improve (which could take up to four to five months) before notice of termination can be given.
A settlement agreement is not simply a magic wand that employers can wave to make a problem that involves an employee disappear. Indeed there are certain employment situations where offering an employee a settlement agreement can be dangerous, exposing the unwary employer to unanticipated liability.
Where an employer offers an employee a settlement agreement out of the blue, without previously raising concerns regarding their conduct or performance, there is a risk that employers may try to claim that such discussions and any supporting documents supplied are "off the record" or "without prejudice".
However, they are not entitled to treat them as having such legally protected status. Such documents would include both paper and electronic written correspondence, attendance notes of meetings and the settlement agreement itself.
Consequently, if the employee refuses to accept the settlement agreement, the employee may argue that, as a result of it being offered, the underlying relationship of mutual trust and confidence between employer and employee has irretrievably broken down.
The employee may therefore seek to rely on the settlement agreement, surrounding discussions and correspondence as supporting evidence as part of a formal grievance against the employer.
Further, if the grievance is ultimately not resolved to their satisfaction, they may use this evidence as part of a claim for constructive dismissal and/or discrimination in the Employment Tribunal.
It is also important to be aware that settlement agreements only guarantee conversations are legally "protected" in narrowly defined circumstances; where, arising out of the facts of the situation, the employee may have a claim of unfair dismissal claim against the employer.
If the employee has a "protected characteristic" (e.g. sex, pregnancy, race, disability or age) and is complaining of less favourable treatment or harassment, there is the risk of them bringing a claim of discrimination. In such circumstances, the settlement agreement and the correspondence and conversations surrounding it will not be afforded such legal protection. So, for example, if you offered a settlement agreement to a pregnant employee, then the agreement and surrounding negotiations are unlikely to enjoy legal protection.
Similarly, where an employee is a whistle-blower, they may have an automatic unfair dismissal claim and then the settlement agreement and any correspondence and conversations surrounding it, will not be afforded the veil of protection and may be used in evidence as part of a tribunal claim, should the employee decide to reject the settlement on offer.
ACAS has published its own guidance on settlement agreements. It sets out examples of "inappropriate behaviour" on the part of employers that would result in the settlement agreement and any correspondence and conversations surrounding it not being legally protected.
Because of the potential pitfalls involved in offering a settlement agreement, we recommend that appropriate legal advice is obtained before doing so.
The annual workplace Christmas party is traditionally a way for colleagues to celebrate their successes over the past year and let their hair down in the build up to the holidays.
Although some businesses put on a lavish event, often it's just a meal with a few drinks. The majority of these work "dos" are appreciated by employees and go without a hitch, but occasionally problems do arise and employers can be held vicariously liable, because the party will generally be considered to be an extension of the workplace. Avoid a litigious start to the new year by guarding against some of the main issues.
Some of the most clichéd Christmas party shenanigans, such as asking a colleague for a kiss under the mistletoe or distributing photocopies of one's posterior, can potentially lead to sex discrimination or sexual harassment claims under the Equality Act 2010.
Sexual jokes, remarks, so-called "banter" or simply mild flirtation may cause offence or discomfort and employers should ensure that party attendees are aware of the boundaries. Suggestive "selfies" or risqué photos taken at a party and circulated on social media by colleagues can also lead to headaches that continue beyond the hangover. Even a sexually suggestive "Secret Santa" gift can lead to legal problems.
Case in point: Livesey v. Parker Merchanting Ltd .
Although mass consumerism has diluted its origins for many, Christmas is still a Christian religious festival and some of the traditions may potentially cause offence to people who follow other religions, atheists and agnostics.
Under the Equality Act 2010, employers must ensure that staff who hold different religious or philosophical beliefs do not suffer discrimination at a work Christmas party. This might mean providing non-alcoholic drinks (eg for teetotalers or Muslims), halal or kosher meat, vegetarian or vegan meal options. If the event is being framed specifically as a Christmas party, attendance should not be mandatory (ie to avoid causing offence to anyone who does not celebrate Christmas).
Case in point: Elgedawy v Hanover Park Commercial Ltd.
These are the other protected characteristics, on grounds of which it's unlawful to discriminate under the Equality Act 2010, and employers should take reasonable steps to ensure that staff are not affected by "banter" or inappropriate humour relating to any of these characteristics. Furthermore, if any employees with disabilities are attending, disabled access should be provided at the venue. And if partners are invited, "plus one" invitations should not make assumptions about gender.
Case in point: Nixon v Ross Coates Solicitors & Anor .
Whether the work Christmas party is held on or off-site, the employer will generally still be responsible for the health and safety of their attending employees under the Health and Safety at Work etc Act 1974. As alcohol is often involved, the likelihood of slips and trips can increase, and there is even the possibility of high spirits taking a change of direction and ending up in a fight. Employers should also consider how their staff members will get home safely. Another health and safety concern relates to food, and employees with certain food allergies should be catered for.
Case in point - Westlake v ZSL London Zoo.
Mobile phone cameras and social media can bring further festive gloom for employers, who need to ensure they abide by the Data Protection Act 1998. In particular, care must be taken if photos of attendees are posted on social media sites or distributed to colleagues, especially if there are inappropriate or compromising. Also, comments posted to social media feeds by employees whose virtual tongues have been loosened by alcohol may cause post-celebratory issues.
Case in point: Game Retail Ltd v Laws .
In an era of social media where we increasingly share every detail of our lives online, the amount of misinformation that appears on a candidate's CV is extraordinary. From bumping up a poor degree to exaggerating about essential qualifications, it appears that some individuals often play fast and loose with the facts.
For start-ups that are recruiting staff, there's a real danger of employing a fraudulent candidate; and the risks include having to pay for the cost of recruiting another candidate or even legal action.
The solution is to create a culture within your business that values in-depth candidate checking.
In 2014, 63% of all the confirmed employment frauds reported to Cifas, the UK's fraud prevention service, was due to individuals lying about their education, former employment or qualifications.
While most employers and recruitment professionals are aware of the need to verify a candidate’s CV, checking often goes beyond simple verification of academic performance. Many job roles require checks of criminal records, credit history and CRB status.
With staff shortages, many companies are looking to recruit quickly and good candidates can often pick and choose between roles; many start-ups are under pressure to skimp on these vital checks in order to get new staff on board quickly.
The issue is compounded by the fact that once an individual has any kind of employment track record, the temptation is to assume that the previous employer has undertaken the necessary checks.
We often hear of high-profile individuals that have managed to build decade-long careers despite a basic lack of credentials - such former Yahoo boss Scott Thompson who had to step down in 2012 when it emerged that he had falsely claimed to have a computer science degree.
As start-ups struggle to address this, there have been growing calls for the reintroduction of regulation that was abolished 20 years ago. While most employers and recruitment specialists adhere to both the Employment Agencies Act and the Conduct of Employment Agencies and Employment Businesses Regulations, a lack of licensing enables bad practice to persist.
The checking process also needs to be embedded within end-to-end recruitment activity. So rather than a simple "yes" or "no" check-box which provides too much temptation to take shortcuts, companies need a simple way of uploading checks and associated documentation to their database or CRM system.
This way, anyone running the recruitment process in a company can look at a candidate’s information, academic credentials and credit check; even CRB documents will be immediately visible.
Robust checking can add a couple of days to your recruitment process. However, it is only by creating the right culture within your start-up – one that values accuracy and depth of candidate review over speed at any cost - that employers can confidently meet evolving employment targets.
By combining this culture with a recruitment process that enforces compliance and enables essential verification documentation to be easily retained and shared, we can all take steps to eradicate CV fraud.
Copyright © 2015 Toby Conibear, European business director at Bond International Software.
As of 1 October 2015, the annual round of National Minimum Wage (NMW) increases came into effect, with the rate for anyone aged 21 and over going up to £6.70 from £6.50. The most significant increase was to the apprentice rate, which was hiked up from £2.73 to £3.30.
But many workers on the minimum wage will not have to wait another year to see further increases. Employees aged 25 years or over will benefit from the new “National Living Wage” (NLW) which is set to be introduced from April 2016 and will override the NMW rates for anyone in this age bracket. Employers will need to pay a minimum of £7.20 per hour to any of their staff who are 25 and over from April. The Low Pay Commission will recommend future rises to the NLW, with the expectation that it will reach £9 per hour by 2020.
NLW is not replacing NMW and the latter will continue to apply to any employees under the age of 25. However, many retailers have pre-emptively raised the pay packets of their lowest earners to the NLW or higher, irrespective of age. Costa are reportedly paying £7.40 to their trained baristas (£8.20 in London) and Aldi has vowed to introduce a new £8.40 minimum rate for its employees from February 2016.
It should be noted that the NLW, which employers will be required to pay by law from April 2016, is distinct from the living wage set by the Living Wage Foundation. The rate set by the foundation - described as “an independent calculation that reflects the real cost of living” - currently stands at £8.25 (and £9.40 in London).
Sick days are estimated to cost UK businesses £29bn per year and our staff take up to four times the amount of sick leave compared to our global competitors. New businesses (like any other) can't risk having staff who are integral to their success costing them money through unauthorised absences. The problem should be nipped in the bud early on.
Even if your start-up only has a few employees, you should have a formal policy on staff absences. Setting up an absence reporting procedure and consequences for unauthorised absences makes your position clear from the get-go. Too much leeway early on only causes problems in the future.
Absence reporting should be done over the phone rather than via text or email, with the staff member having to give a clear reason for their absence. Failing to follow the procedure should have repercussions, be that withholding sick pay or taking disciplinary action. Include a clause in your employment contracts that allows you to request a medical report from employees. This could be necessary in the case of long-term absences or increasingly frequent sick days.
Monitoring absences can reduce the frequency and costs of staff absence, but too many businesses fail to properly monitor their staff. The smaller your business, the simpler monitoring staff absences should be.
A proactive approach, which takes into account general attitude, productivity at work, and key dates that might tempt employees to stay off work, can be useful. As a start-up, your business is unlikely to have an HR professional to deal with recording staff absences and that's where HR software can help. It can automatically monitor staff absence levels and tell you when they are getting too high, as well as ensuring your business complies with the relevant legislation.
Once you have a procedure for absence reporting and monitoring, you'll want to look at how your business can reduce absences and keep unnecessary costs down. Currently, few businesses set targets for reducing absences, but as a start-up, implementing absence reduction tactics early on will prove beneficial.
While disciplinary action is one way to reduce unauthorised time off, prevention strategies such as well-being programmes have been linked to reduced absenteeism and increased productivity and could therefore be worth pursuing.
Following these three simple steps and putting in place measures to make staff accountable for their absences will pave the way for effective absence management in your business and benefit your start-up in the long-run.
Copyright © 2105 Stuart Hearn, who has 20 years' HR experience and is CEO of OneTouchTeam, an online staff leave planner and HR system for small businesses. Connect with Stuart on Twitter @onetouchteam.
London Underground is holding last ditch negotiations with unions in an effort to avoid two 24-hour tube strikes planned for this week.
The strikes are over pay and working shifts as the Mayor of London, Boris Johnson, and London Underground attempt to bring a 24-hour service to London's underground system.
If the tube strikes go ahead, it will mean yet another wave of disruption for businesses since the 24-hour service was announced back in September 2014. The Federation of Small Businesses estimates that the strikes in February cost businesses up to £600 million, with cancelled meetings and staff absences accounting for a large proportion of the losses.
So what are your rights when strikes hit? Do you still have to pay employees who don't make it in to work?
As an employer, you are not automatically obliged to pay your employees if they can’t work.
Much will depend on your contracts of employment and any policies that you may have to cover absences.
These may set out how much effort you expect employees to make in order to get to work in the event of strikes, bad weather or other events. Can they walk, cycle or drive to work if they normally take the tube?
Your policy may also set out whether they will be paid if they cannot make it in to work, or whether they are expected to take unpaid leave or holiday. Having a clear policy avoids misunderstandings and disputes and so can save you money.
With advance notice, it may be possible for some workers to carry out their duties remotely or from home. You could allow employees to alter the place or times of work, perhaps starting and finishing early to avoid the traffic or queues for buses, making up hours at another time. This option could allow your business to keep functioning.
When making such arrangements, you must make sure you do not discriminate against any of your workers. Furthermore, if employees decide to work from another location, you must make sure that health and safety obligations are met and that the location and equipment are suitable for the work being done.
You should also consider whether it is unsafe or too difficult for employees to come to work. Expecting an employee to come in to work unreasonably could amount to grounds for a grievance claim, so caution is advised. Firing someone for not turning up could land you in hot water – unless there is a pattern of absence to back your decision up.
Generally speaking, if there’s travel disruption employers can ask staff to take paid holiday (annual leave) if they give notice that is at least double the length of time they want employees to take in annual leave. So for one day’s annual leave it would be two days notice.
That said, it's worth using your discretion and consider paying your employees as a gesture of goodwill – after all, it isn’t their fault if they can't make it in and keeping your staff happy is good business practice.
Whatever you decide, you should make it to clear what you expect. For example, that employees should make every effort to make it in to work; that they should communicate with you if it is not possible; and informing employees whether they will be paid if they don't show up or whether the absence will be taken from their holiday allowance.
If reports are to be believed, it’s probably the highest price anyone has ever paid for a steak dinner. You probably already know the story (how could you have missed it?), but let's remind ourselves...
As reported by The Telegraph et al, on 4 March former Top Gear presenter Jeremy Clarkson verbally abused and physically assaulted BBC producer Oisin Tymon. Why? Things turned nasty after Clarkson couldn't have a sirloin steak following a day’s filming. Indeed, no hot food was available at the Simonstone Hall Hotel in North Yorkshire, with the 55-year-old Doncaster-born presenter not reacting favourably to the offer of a cold platter.
According to The Telegraph, "during a 40-minute rant" Clarkson called Tymon "a lazy Irish ****" and threatened to get him sacked, before punching him. Witnesses allege a string of expletives during the fracas/mêlée (or "dust-up" as fellow Top Gear presenter James May quaintly called it), which reportedly left Tymon with a cut lip that required hospital treatment.
According to the BBC's official report into the incident, the "physical attack lasted 30 seconds and was halted by the intervention of a witness". The Mail said the Top Gear "production team had been scheduled to take a helicopter to their next location after filming, and return to the hotel at 8pm. However, Clarkson kept the helicopter waiting for three hours while he sat in a pub drinking rosé wine, Channel 4 reported."
Eventually, because the hotel chef had gone home for the evening, its general manager prepared a £21.95 steak for Clarkson, "to calm him down", although the broadcaster would soon pay a far higher price. Clarkson himself called Danny Cohen, director of BBC television, to report the incident, and reportedly tried to apologise to Tymon many times via text, email and in person.
On 10 March it was announced that Clarkson had been suspended from Top Gear (the rest of the hugely popular series has since been cancelled, despite furore from fans of the show and no lesser a figure than David Cameron, Clarkson constituency neighbour and friend, claiming his children would be "heartbroken if Top Gear was taken off air").
Clarkson's soon to expire BBC contract will not be renewed. He was already on a final warning, following claims he deliberately used a racist word during filming Top Gear’s Burma special in 2014. Amazingly, this came just months after calls for Clarkson’s sacking for allegedly using another racist word in an outtake leaked to the media. Outspoken Sun columnist Clarkson is well known for his un-PC remarks and opinions, of course, including once saying striking public sector workers should be "taken outside and executed in front of their families".
Clarkson is one of the world's most famous TV presenters, thanks to Top Gear's enormous global popularity (watched in 214 countries, it makes an estimated £50m a year for BBC Worldwide in overseas sales and £15m from events and Top Gear Magazine). He's reported to have earned "tens of millions of pounds from the global licensing of the Top Gear franchise". Many new lucrative opportunities will no doubt come Clarkson’s way and the BBC has said Top Gear will continue without him.
This latest unsavoury episode has made Clarkson even more of a 'Marmite' personality. He's loathed and liked with equal passion (more than a million people signed a petition calling for his reinstatement), but whatever his popularity and undoubted broadcasting talent, clearly his behaviour in March was totally unacceptable (which he accepts).
So, what lessons does it offer employers? Well, you need to have a robust disciplinary procedure. Your employees must understand what constitutes gross misconduct (this should be explained within your employment policies and possibly a workplace code of conduct) and know what action your business will take if they cross the line. Everyone should know that violence, abusive or racist language and all forms of unlawful discrimination have no place in your business. But sometimes even having all of the above won’t ensure acceptable behaviour, so, your should remind yourself how to lawfully terminate a employee’s contract. And on that bombshell…
Blog written by freelance editor, copywriter, journalist and Start Up Donut editor Mark Williams.
Yes, it’s the standard self-deprecating line from menopausal women, but menopausal symptoms in real life are not much of a joke and can affect the working lives of the 3 million-plus women over 50 in the workplace.
While the symptoms of the menopause are very common, including hot flushes, irregular or heavy periods and interrupted sleep, very few workplaces have any policy on accommodating the needs of women during this phase of their lives.
Despite an employer’s general duty of care to staff, and legislation on treating both genders without discrimination, in practice the menopause is still a taboo subject and women may be reluctant to flag up their needs or difficulties or ask for adjustments to be made.
Simple strategies such as providing desk-top fans where the workplace temperature can’t be regulated or varied, access to cold drinking water, sufficient toilet breaks and facilities for changing clothes or even adapting uniforms, could make a significant difference to women’s experience of the workplace and, consequently, to their productivity.
The physical and psychological changes that many women experience around the menopause can have a significant impact on their mental health and self-esteem. For women and for employers, addressing these issues without blame or ridicule could help employers retain experienced staff and enable women to enter the next stage of their working lives with confidence.
A recent leaflet, produced by Unionlearn with the TUC, looks at the most common symptoms of the menopause, the Health and Safety implications for employers, and suggests ways to support staff affected.
In the name of equality and work-life balance we’ve made great strides recognising the needs of pregnant workers, parents and disabled employees. Maybe it’s time to look at the (usually transient) needs of another significant section of the workforce and shed another taboo.
1 “If you run a business, it is advisable to seek professional help in writing a will. For example, if you are a majority shareholder but die unexpectedly without having a will, your shares, and therefore, majority ownership of the business, would be subject to the intestacy rules.”
From Why business owners need to have a will by Rob Martins.
2 “Health and safety is all about risk prevention, and in worst-case scenarios, what to do if an accident occurs. First, start by assessing potential risks in the workplace. Once these have been documented, state what you are doing, or have done, to control those risks.”
From Ten steps to creating a health and safety policy that works by Malcolm Tranter.
3 “The agreement should set out which matters require a higher level of shareholder support before being approved. This helps to protect minority shareholders from being ambushed during the voting process and is usually applied to decisions which have significant impact on the company.”
From Shareholder agreements - the basics by Saracens Solicitors.
4 “Both parents will be required to give their respective employers eight weeks’ notice before beginning shared parental leave. The required notice can be given before the child’s birth, enabling shared parental leave and pay to begin immediately after the compulsory two-week period of maternity leave.”
From How will the new parental leave rules affect your business? by Julian Cox.
5 “In certain circumstances, there is substantial risk, for example, if you offer a settlement agreement without having raised concerns about the employee’s work performance or conduct. You may try to claim that discussions and related documents are ‘off the record’ or ‘without prejudice’, but you are not entitled to treat them as such. If the employee refuses, they may argue the relationship of trust and confidence between you has been irretrievably eroded, and use discussions and any related documents as evidence in a claim for constructive dismissal and/or discrimination.”
From Settlement agreements: a guide for employers by Julian Cox.
6 “You will be expected to provide full details of your business interests in the event of a divorce, which should be backed up by paperwork. Clear and organised historical records can provide a paper trail that shows the court exactly how the business has been run and the involvement both partners have had. It will be better if you present this information, rather than your spouse, where details can be misinterpreted.”
From Protecting your business from the possible consequences of divorce by Vicki McLynn.
7 “By following medical advice from the GP, you can strengthen your position with regard to potential unfair dismissal and disability discrimination claims. While you shouldn't rely solely on medical advice, it can help to demonstrate that you have investigated the situation and taken into account all the circumstances before making any decision to dismiss. Proceeding to termination without medical advice can leave you open to a costly employment tribunal claim.”
From How to deal with long-term employee sickness by Davis Blank Furniss.
8 “Employment Tribunal submissions increased sharply between 2009/10 (628,000 cases) and 2012/13 (928,000 cases), with a marked rise in the number of women bringing Tribunal Claims as a result of alleged sex discrimination or unequal pay.”
9 “Acas figures also show that cases heard under Pre Claim Conciliation – the forerunner of the new Early Conciliation scheme – cost just £475 and one working day compared to £3,700 and four days for an employment tribunal. This should all amount to less stress, cost and disruption for everyone.”
From Acas Early Conciliation service by Fiona Prior.
10 “Contrary to popular perception, pre-nuptial (and post-nuptial) agreements are not legally binding in England and Wales. Although the Supreme Court decision (in the landmark case of Radmacher v Granatino) strengthened the force of pre-nups and ruled that they should be upheld by the courts as long as they are fair, judges can still order different financial provision in the event of a divorce.”
From Could pre-nuptial agreements become mandatory? by Muna Saleem.
Many thanks to the experts who shared their knowledge in 2014 to ensure this blog remains so popular. A massive ‘Thank You’ to all our readers, too, of course, we hope you found that reading this blog was helpful, thought-provoking and enjoyable. Happy Christmas – here's to a fantastic 2015…
Body art has become part of everyday life throughout western society. Long gone are the days when tattoos were considered a novelty favoured by specific social groups and subcultures.
However, not all employers welcome tattoos, so, should body art enthusiasts be told to cover up their tattoos at work or would this be discrimination? With one in five people in Britain now having a tattoo, this is a relevant employment law issue for many UK businesses.
Employers insist they have the right to make employees cover up if their appearance compromises the company’s image. But while there's plenty of examples of workers being asked to leave their job for having “excessive” tattoos, there's a growing number of dismissals of employees with minimal body art.
A recent example of “ink prejudice” involves a business consultant in Milton Keynes who reportedly lost her job because she has an image of a butterfly measuring 4cm across her foot. If body art is part of someone’s identity, surely censorship of this kind is not far removed from the stifling of other forms of self-expression, such as sexuality and religious belief?
Considering tattoos to be a form of self-expression also encourages debate over exactly what is an “acceptable” belief. Should a controversial symbol or phrase be permitted just because an individual believes in it?
With no single set of rules in place for having tattoos, organisations are free to put their own in place – and alter them as they see fit. Larger businesses can seemingly get away with this due to their prestige, but smaller businesses relying on a specific image can be damaged if they don't have the right to influence employee conduct.
However, there is room for argument thanks to the Equality Act of 2010, which can be used to claim that censorship of tattoos is an infringement of someone’s human rights if the image relates directly to a religious or cultural belief. This law provides “protection for people discriminated against because they are perceived to have, or are associated with someone who has, a protected characteristic”.
But does a self-inflicted body modification truly count as a characteristic?
With more people getting tattoos, it seems likely that body art will eventually receive less discrimination, but who gets to decide what is acceptable when it comes to body art? The questions are vast and opinions differ widely.
Copyright © 2014 Nationwide Employment Lawyers.
Are you an employer in the UK? If yes, you need to be prepared for the new law surrounding workplace pensions. Maybe you’ve already heard of auto-enrolment but think it won’t affect you as you only have a couple of employees. Or, as it’s being phased in gradually, you don’t need to worry about it for ages. If you do nothing, though, you may be caught out. The Pensions Regulator will always try and work with businesses to help them become compliant but it will issue enforcement notices that can lead to financial penalties for employers that don’t comply with their duties.
Staging dates (the date auto-enrolment starts) have already started for larger businesses (from 1 April 2014 – 1 April 2015 for businesses with 50 or more employees). Smaller businesses with fewer than 49 employees will need to start auto-enrolment between 1 August 2015 and 1 April 2017. This sounds like a long way off but The Pensions Regulator is advising that it can take at least a year to prepare properly for auto-enrolment. The first step is to check your staging date so you know when you need to start enrolling your staff. You can then use a planner on The Pensions Regulator website to help guide you through the process.
There is lots of information available to businesses about auto-enrolment pensions. You may view it as another unwelcome administrative burden on your business but the best way to lessen the impact is to get ahead of the game and find out what you need to do now.
More information on auto-enrolment:
If one of your employees is diagnosed with a serious illness, you need to understand your legal responsibilities regarding the support you are legally obliged to provide, as well the employee’s legal obligations.
Technically, if an employee is diagnosed with a long-term illness such as cancer, they are defined in law as disabled, and once under the Disability Discrimination Act (DDA) employers must make changes to accommodate the employee’s needs at work.
If you have any kind of long-term, serious illness it could be defined as a disability in law. Impairments must be long-term and substantial to count as a disability and they can be physical or mental. They must affect you for 12 months and significantly impact your daily life (eg it may take you much longer to get dressed in the mornings than if you didn’t have the impairment).
Progressive conditions, such as motor neurone disease or muscular dystrophy, also count, although these are assessed case by case. You automatically meet the “disability” criteria if you are diagnosed with HIV, cancer or multiple sclerosis. Generally, it is the effect of your impairment on your daily life that is considered when disability is defined legally. An underlying condition is not assessed; its consequences are. Technically, a person who is terminally ill is also defined as disabled.
There are certain impairments that are medically defined as mental illnesses that aren’t defined as a disability (eg kleptomania, addiction and pyromania).
If you’re employee meets the definition of disabled you must be aware of the Equality Act 2010, the most relevant aspects concern protecting your employee from any discrimination because of their disability. As an employer you must make “reasonable adjustments” to aid your employee in the workplace. This might be simple things like moving their desk or it could be allowing them to work from home for some time or allowing more time for doctor’s appointments, etc. You should show that you are doing your best to work with your employee and everything reasonable to enable them to continue to work.
The same obligations apply if your employee has a terminal illness. You might assume that an employee will want to stop working, but a lot of people want to continue working despite their illness to retain a sense of normality.
An employer must take into account a serious illness in every instance. You can’t reprimand an employee for taking too much time off for doctor’s appointments if they have cancer, for example. Also, you can’t give them an unfavourable appraisal because they haven’t met objectives as a result of their illness, without taking the illness into consideration.
There’s no fixed description, but adjustments are dependent on cost, how much they will help you, how practical it is to make them and whether the adjustment will affect the business, service or financial situation. Cancer support charity Macmillan lists examples of reasonable adjustments for employees with cancer (but these also apply to other illnesses):
You must pay statutory sick pay (SSP) to your employee if they have to have long periods of time off. You’ll only have to pay this for a maximum of 28 weeks. If your employee is off for a chunk of time you must leave their position open for them to return to. It is absolutely illegal to dismiss them.
Once the 28 weeks is up you do not have to pay SSP and your employee should move on to Employment and Support Allowance if they are still unable to work.
Blog provided by Simpson, Sissons & Brooke Solicitors.
Every four years a month-long ‘sickness’ spreads across many workplaces in the UK, but this year’s changes to flexible working rules could provide the cure for World Cup fever.
In case you didn’t know, the 2014 FIFA World Cup is set to kick off in Brazil on Thursday 12 June, with the final taking place on Sunday 13 July. Most matches are scheduled outside of normal UK 9-to-5 working hours, however, many employers could see higher than average levels of staff ‘sickness’ and poor performance following late night matches (pub drinking hours will be extended to 1am for England matches). There may also be squabbles amongst colleagues about working particular shifts or days.
From 30 June 2014, all employees with 26 weeks’ continuous service have the right to put forward a case for flexible working, regardless of whether they are a parent or carer. Employers could consider using the World Cup as an opportunity to trial flexible working in the workplace.
Flexible working can cover anything from the hours, place and time of work and employees can request different kinds of flexible working, such as flexi-time, part-time working, compressed working hours, term-time working, shift working and job sharing.
Thanks to advancements in technology, working from home has become more viable for many employees. Many have faster broadband, laptops, tablets and smartphones and with remote email access, face time applications and online file sharing, employees do not need to be ‘in work’ to ‘do work’.
Employers are expected to deal with requests in a ‘reasonable manner’ and can only reject flexible working requests on specified business grounds. Trialling flexible working during the World Cup could help combat high levels of ‘sickness’ or workplace squabbles, while providing an opportunity to see how granting flexible working requests could affect your business in the future.
If employers find that the trial has a detrimental impact on the business, such as increased costs, an inability to reorganise work among existing staff, poor quality of work, low performance or inability to meet customer demand, requests could be rejected at the end of the trial period or at a later date.
Flexible working can increase productivity, loyalty and motivation amongst employees, however, it will not be suitable or logistically possible for every business, but employers should consider having regular reviews to re-assess rights versus the business needs.
Could retiring at the age of 65 soon become a thing of the past? A report published by The Economist Intelligence Unit (EIU) is calling on businesses to adapt to what it describes as “an ageing population”, and says that doing so will ultimately benefit them and all employees.
According to the EUI: “71% of senior executives at European businesses expect the proportion of employees aged over 60 to increase by 2020 [22% expect it to ‘increase significantly’]. As a result, 43% expect increased worker demands and subsequently higher costs for employee benefits. However, strategies employed to manage an ageing workforce will benefit all employees, as work-life balance becomes a priority.”
About half of the executives surveyed by the EIU plan to alter their employee benefits to adapt to the wider workforce’s changing needs, as the focus on work-life balance becomes more of a priority.
Monica Woodley, the report’s editor, says: "Retirement as we think of it today could soon become a thing of the past. By 2020, European businesses say that managing an ageing workforce will be a top priority. However, the strategies and benefits being instituted by employers to target this demographic - such as offering flexible working hours - will see all employees benefit."
The report also found that just half of “C-suite executives” (ie COO, CEO and CFO) surveyed believed they offer “a fully comprehensive benefits package to attract and retain employees”.
By 2020, senior executives believe that managing an ageing workforce will have “moved up the human resources agenda, from the number seven issue to a top three concern,” says the EIU. Many will “adapt their structures to ensure that older workers who reduce work hours or responsibilities retain their status within the business and continue to feel valued.”
According to the EUI, employee priorities are moving away from money to lifestyle. “Although managers think the top concern for employees now is job security,” says the organisation, “by 2020 — when the economic climate and job market are expected to have improved — work-life balance and employment flexibility are expected to be more important.”
Furthermore, 43% of respondents expect more employees to want/demand greater healthcare and retirement provision from their employer, with 55% believing that employers (not government) will have to ‘pick up the tab’ for our ageing population receiving greater healthcare benefits. Some things, it seems, never change.
This morning, the weather presenter on the radio pronounced that this weekend the UK would be warmer than Corfu. Then I spied my children’s headmaster in the playground in a short-sleeved shirt.
This can only mean one thing — summer has arrived, albeit temporarily if previous summers are anything to go by. For many businesses, this brings with it the nightmare of trying to balance staff holiday requests.
Only yesterday, one of my colleagues asked me about my plans over the school summer holiday. We are a small, but, if I may say so, perfectly formed team. We work very flexibly with several of us working from home at least some, if not all, of the week. Three of us also have school-aged children. Whilst this flexibility means we can let our kids out in the garden or go off with their friends to the local park whilst we work, it is still inevitable that we will all want some time off for a family holiday or even keep an eye on our children from time to time.
As a team, we need to make sure our work is covered. This means that between us we will need to negotiate who has which weeks and how the work is covered when one of us is away. In a small team, this can be relatively easy if you all get along, are prepared to compromise and ‘dig in’ whilst the team is ‘down a woman’. Where this isn’t the case, keeping everyone happy and making sure everyone gets their fair share of the prime-time, school holiday isn’t an easy act. So how do you manage holiday requests?
Ask employees to submit their holiday requests well in advance. There is nothing to stop you allocating holiday on a first-come-first-served basis. Advanced notice of employees’ holiday intentions allows you to plan workloads and appropriate cover.
Let employees know how much holiday they are entitled to. If you impose restrictions on how much, when and how many staff can take leave at the same time, make sure employees are aware of your rules. If you require a minimum amount of notice for holiday requests, make this clear too.
Part-time, fixed contract workers are entitled to be treated no less favourably than full-time workers. Make sure your rules do not unfairly discriminate against one group of workers. It may be possible for younger or new employees to argue that allowing senior staff, or those with a longer length of service, first choice on holiday dates is unfair. It could also cause serious resentment amongst staff.
Legally, all staff must take at least four weeks’ holiday per year. It’s in your interest to make sure your staff take sufficient breaks. Not only to help ensure you comply with the law, but simply because tired workers are less productive and are at increased risk of serious health problems.
You should also make sure you get a break too. Many business owners don’t take a holiday for fear of losing clients, money or because they are afraid to delegate work to their staff.
A break from work is good for everyone. You will have a happier and healthier workforce. It will improve the morale and productivity of your staff and - if the weatherman is to be believed - their tan.
Further reading: understand your employees' employment rights
Drawing on a range of statistical resources, the infographic below seeks to show the realities of employment in the UK in 2014 – with several major trends evident.
There are almost 30m people working in the UK, and for the first time, more than 1m of them are aged 65 or more. There remains a North-South divide when it comes to employment (perhaps no surprises there). While the average unemployment rate is 10% in the North East of England, in the South East it’s just 5%. Total average employment in the North East is 67.4% – significantly lower than in the South East (76.6%).
Employment Tribunal submissions increased sharply between 2009/10 (628K cases) and 2012/13 (928K cases), with a marked rise in the number of women bringing Tribunal Claims as a result of alleged sex discrimination or unequal pay.
Interestingly, while the National Minimum Wage is set to increase £6.50 for those aged 21 or more from October 2014 (a 19p increase on the current NMW rate of £6.31), this is still considerably lower than what unions and others describe as ‘the living wage’, said to be £7.65 an hour, and much lower than the ‘London living wage’ (£8.80 an hour).
Unhappy employees will now have to lodge their disputes with the Acas Early Conciliation service if they are considering taking you to an employment tribunal.
All complainants are now required to notify Acas before they can proceed to tribunal. Under the conciliation scheme, Acas will contact the employee within two working days to offer conciliation. You and the employee would then have up to one month to resolve the dispute with the aid of the Acas conciliator.
The service is free, confidential and impartial — and, if Acas figures are to be believed, successful. Acas suggest that three quarters of all complaints are resolved via the conciliation service without recourse to the employment tribunal.
Employers should welcome this move. Acas figures also show that cases heard under Pre Claim Conciliation — the forerunner of the new Early Conciliation scheme — cost just £475 and one working day compared to £3,700 and four days for an employment tribunal.
This should all amount to less stress, cost and disruption for everyone.
Employers should tread with caution when managing disability-related sickness and leave. So what are the key areas to consider?
For discrimination law purposes, a person is disabled if they have a physical or mental impairment that has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. This definition is contained in section 6(1) of the Equality Act 2010.
In some cases, it may be obvious to a manager whether the employee is disabled, in other cases it may be necessary to obtain a medical report to consider the extent of any ‘reasonable adjustments’ required by the disabled employee.
Disability leave can be used when the employee needs to be away from work to attend medical appointments or become familiar with reasonable adjustments. Disability leave can be managed in a similar way to general leave, but it should be treated as a priority.
Distinguishing between general sickness and disability-related sickness absence is good practice, because it helps to remove disadvantage experienced by people with disabilities. It is recommended that disability-related sickness is not included in the employee’s total sickness record. If the sickness is included in the employee’s total and then influences decisions relating to promotion, references or selection for redundancy, this could result in a potential disability discrimination claim under the Equality Act 2010.
A range of adjustments can be made to assist a person with disabilities in their return to work. Common adjustments include:
It is often advisable to agree that adjustments be made for an initial trial period, after which both parties should review their effectiveness and discuss any changes.
Blog provided by Bob Teasdale, business development manager for My HR Toolkit.
If you employ anyone, you must display the health and safety law poster or provide each employee with a copy of the equivalent pocket-sized card. The poster must be displayed in a place where your workers can easily read it.
The poster explains health and safety laws and employer obligations. Details of employee safety representatives or health and safety contacts can be added.
The current version of the health and safety law poster was published in 2009. You can continue to display earlier versions until 5 April 2014, as long as they are readable and contain up-to-date contact details. After this date, you must use a new version, detailed here.
The Forum of Private Business has produced this useful reminder of why Health and Safety at work matters.
For more information, the Health and Safety Executive website features a convenient series of frequently asked questions about the health and safety law poster.
As a small-business owner, every employee will be absolutely vital to your success. Any kind of absence can become a problem, especially when staff members miss work through long-term illness. In these circumstances, it is important that you handle matters in a delicate and legally compliant manner. So what should you do?
If another member of staff cannot reasonably cover the absent employee’s responsibilities, and resources allow, you may need to appoint a temporary replacement. This can prevent other staff members from becoming overstretched, while ensuring that all work is completed on time and to a high standard.
Remaining in contact with the employee on long-term sick leave can make their return to work easier. This should be tailored to their particular circumstances to ensure any contact is dealt with in a sensitive and appropriate manner. During these conversations, employees should be made aware of their sick pay position and any significant developments within the workplace that may affect them.
With the employee's consent, employers can request a report from the employee's GP to determine the seriousness of the condition and when they’re likely to be able to return to work. You can also seek their opinion on whether the condition might amount to a disability, whether any reasonable adjustments need to be made, whether a full recovery is likely and if a return to work is advisable.
By following medical advice from the GP, you can strengthen your position with regard to potential unfair dismissal and disability discrimination claims. While you shouldn't rely solely on medical advice, it can help to demonstrate that you have investigated the situation and taken into account all the circumstances before making any decision to dismiss. Proceeding to termination without medical advice can leave you open to a potentially costly employment tribunal claim.
You may need to make certain adjustments to enable an employee to return to work, which can include a phased or gradual return, modification of work activities, hours and location or the introduction of specialist equipment, to give a few examples. It is also important that you show your support with regards to any medical assistance that the staff member requires.
By proactively handling long-term illness in a confident and legally compliant manner, small-business owners can help speed up a staff member’s return to work. If a contract of employment needs to be terminated, making sure that you have followed a lawful, fair procedure can also work to reduce the risk of complaints and claims being successfully made against your business.
Blog supplied by Davis Blank Furniss, a full service legal firm with a team of solicitors specialising in employment law.
A settlement agreement (previously called a compromise agreement) is a legally binding confidential agreement between an employer and employee. A severance payment is typically given in return for their agreement not to pursue any employment tribunal or civil courts claims arising from their employment or its termination. A settlement agreement can provide additional protection for employers, including reaffirming post-termination restrictions and duties of confidentiality, while preventing employees from bad-mouthing their ex-employer.
For example, when faced with an employee with work performance or misconduct issues and the employer is concerned about instigating formal performance or disciplinary procedures. They might not be confident they will achieve the required improvement within a reasonable period. In other circumstances too, settlement agreements are useful because they offer employers a quick and clean method of terminating someone’s employment without having to undertake a long and difficult redundancy, disciplinary or capability process, which usually involves substantial management time.
In certain circumstances, there is substantial risk. For example, if you offer a settlement agreement without having raised concerns about the employee’s work performance or conduct previously. You may try to claim that discussions and related documents are “off the record” or “without prejudice”, but you are not entitled to treat them as such. If the employee refuses, they may argue the relationship of trust and confidence between you has been irretrievably eroded, and use discussions and any related documents as evidence in a claim for constructive dismissal and/or discrimination (if appropriate).
The ACAS guidance on settlement agreements sets out inappropriate behaviour when employers offer a settlement Agreement that would entitle an employee to refer to conversations and submit documents as part of an employment tribunal claim.
There is no prescribed sum, it will depend on why the employer wants to terminate, the terms in the employee’s contract and any potential claims they may have against you. You’re effectively compensating them for not filing an employment tribunal claim, as well as terminating their employment. At the same time, you, the employer, needs to ensure that all contractual entitlements (eg notice or payment in lieu, holiday entitlement, etc) are taken care of. Given the legal implications, it’s wise to seek professional legal advice before making such an offer. For added peace of mind, the settlement agreement should also be professionally drafted.
For ex gratia payments, usually between 14 and 21 days of the agreement being signed, but employers may want to pay salary, accrued holiday and bonuses or commission through the payroll on the usual payroll date.
It’s in the employer’s interests for the employee to sign the agreement. For this reason, in the overwhelming majority of cases, the employer contributes £250-£500 plus VAT towards the employee’s legal fees in having to seek independent advice. In other cases, employers might not offer any contribution, for example, where there are strong grounds to dismiss the employee if they won’t sign the agreement.
There is a risk they may use the settlement agreement and conversations about it as evidence in bringing a grievance, while resigning and claiming constructive dismissal and discrimination.
Blog supplied by Julian Cox, Partner and head of the employment law team at London-based commercial law firm Fletcher Day.
Valentine’s Day is upon us (it’s on Friday Feb 14 in case you didn’t know) and it’s a time when love is (supposed to be) in the air and all around.
That can include the workplace too, of course, with many of us meeting our future ‘significant others’ at work. Examples of well-known couples who met at work include Barack and Michelle Obama, Bill and Melinda Gates, Brad Pitt and Angelina Jolie, Rupert Murdoch and Wendi Deng, Jude Law and Sienna Miller.
While some couples that meet at work go on to marry and/or live happily ever after together, many workplace romances are short lived and some end in tears. And when they go wrong, relationships can quickly sour and this can have serious consequences for employers.
Jo Eccles, business adviser at the Forum of Private Business says having a clear policy that sets out your business’s stance on relationships between employees can prevent “nasty fall-out” later on.
According to Eccles: “Depending on which survey you read, the number of people who’ve been involved in workplace liaisons is anywhere between 30% and 70%. There is no law against office romances, and while an employer might not like them, it doesn't mean they can legally stop them. However, employers have the right to expect their employees to behave in a professional manner while at work and all parties should bear in mind that romantic liaisons may create conflicts of interest.”
These, she says, can affect “the trust and confidence of colleagues in relation to a conflict of interest, fair treatment or their own ability to discuss issues openly with, for example, their line manager. Then there is the perception of the other employees, clients or customers in relation to professionalism and fairness of the business and its employees, or conflicting loyalties and breaches of confidentiality.”
Eccles says that while some businesses have rules that do not allow employees working in the same department to enter into romantic relationships with each other, “many employers find the best approach is to put in place a policy that deals with relationships in the workplace”.
This includes defining what a close personal relationship is, as well as requiring that personal relationships between staff must be disclosed to a line manager, “to flag up any potential conflict of interest”. She says alterations to procedure may also be required, such as changes to supervision, shift or work patterns, while employees need to know what to do if a personal relationship with a colleague breaks down.
There’s no doubt that the cost of living has risen in the past few years and for many, wages haven’t kept pace with inflation. It’s an issue that is high on the agenda across the political spectrum. But if you run a small business, how does it affect you?
With the Labour Party constantly highlighting the cost of living crisis, George Osborne has nailed his own colours to the mast, telling the BBC in January that the UK can now afford to raise the National Minimum Wage (NMW) above the rate of inflation. And he said that the rate for over-21s would have to increase to £7 an hour by 2015 for its real value to return to where it was before the downturn.
Wow — that’s a bit of an about-turn for a Conservative Party that opposed the whole concept of a National Minimum Wage in 1999.
Now, with unemployment levels falling and skills shortages in some sectors, all this means one thing — businesses are under pressure to pay their employees more. But if you are still facing the tightest of margins, can you afford to pay the minimum wage, let alone more?
But the real question should be — can you afford not to?
From this month, the government is introducing new penalties for what it calls “rogue employers” that fail to comply with National Minimum Wage regulations. So what does this mean for small businesses?
It’s a tougher stance for the government and may well come ahead of a above-inflation rise in the NMW in the next few months.
Interestingly, business groups that tend to be lukewarm about the NMW are showing more support for increasing wages for the lowest paid workers. CBI director-general, John Cridland, said in his 2014 new year’s message that the numbers receiving the NMW was “a serious challenge that businesses and the government must address".
Certainly, the Living Wage campaign has put the value of a living wage at £7.65 per hour outside London and £8.80 per hour in the capital — considerably more than the current NMW rate of £6.31 per hour for those over 21.
If we all agree that the NMW is “good for society” where does this leave the struggling small business? Perhaps what the government needs to do now is to combine the stick of regulation with education about the positive benefits of paying staff decent wages.
The simple fact is that paying employees a decent rate is good for business — raising morale, encouraging career progression and boosting productivity. What’s more, staff that are properly rewarded provide a higher level of customer service and display more loyalty to the company. And there are tangible cost savings — with less absenteeism and lower recruitment costs.
Perhaps we need to stop seeing wages as just a necessary cost and start seeing them as a valuable investment in the future of business and the economy as a whole.