Employment law for employees
- Matt Gingell
- Updated: Fri, 31st Mar 2017
We guide senior employees and directors through employment law concerns. We are realistic and tuned into the commercial sensitivities. A busy practice provides plenty of employment law experience to share. Usually, we stop a mess from escalating.
Our employment law work includes:
We resolve employment law queries for a range of both employees and directors. The backgrounds are diverse. They range from large multi-national public companies, financial institutions through to the private sector. We deal with benefits attached to employment such as shares, options, bonus payments and intellectual property. Our employment law service is personal and confidential.
Employment and director contracts
We deal with a variety of sensitive areas including:
- Review of personal guarantees required by lenders;
- Secondments and transfers abroad;
- Review of employee share awards, options, articles and shareholders’ agreements;
- Rights on termination of employment;
- Changes to the role during employment; and
- Know how and post termination restrictions.
Personal guarantees required by lenders
A review of the employment position is recommended if the director is being asked to give a personal guarantee on behalf of the business. This is because the director will face risk and exposure and changes to the employment contract could alleviate some of the risk.
Secondments and transfers abroad
We do look at the terms upon which secondments and transfers abroad are proposed. A review can put the employee or director in a much better position upon return to the UK. For example, it may be the case that continuity under policies such as death in service and permanent health can be preserved following negotiation. Many employers do not offer such benefits without a prod.
Another review area is the tax position and applicability of local taxes and whether they leave the employee or director in a worse position.
Many of our clients when joining as a director also receive shares requiring them to enter into a shareholders’ agreement. We are are often asked to explain the implications. We negotiate potentially contentious terms such as drag and tag along provisions and good and bad leaver clauses requiring the compulsory transfer of shares.
Post termination restrictive covenants are generally more enforceable if included in a shareholders’ agreement. We watch out for you.
A gift of shares can give rise to tax issues for employees and directors. We review the tax position and estimate potential liabilities. The risk with share awards is if the shares decline in value, the tax paid on award is not repaid.
Determining the tax liability in private companies where there is no quoted market is a complex area on which we do provide guidance. Special rules apply where the award is over a minority shareholding.
Often we are asked about incentive arrangements such as EMI options, unapproved options and LTIPs. If the award is in a business which is a large corporate or PLC it is often not possible to do much to change the scheme rules but it may be possible to negotiate a better share incentive package of greater value to you.
If the share award is in a business which is a private company you really do need to look carefully at the terms because private companies often do not have the same constraints as public companies and there is a lot more variation.
Termination of employment and/or directorship
Being practical, when taking up a new role, consideration should be given to implications if the role is terminated. We plan ahead for you.
Changes to your role during employment
We advise on the range of events which can jeopardise your position – missing out on promotion, unfair allocation of a bonus, allegations of under performance, redundancy or re-organisation, the list goes on. Whatever the situation, we tell you your best tactics.
Know how and the enforceability of post-termination restrictions
If you have created know how whilst in employment which you intend to take to a new role – the intellectual property needs protecting. We suggest ways in which you can operate without fear of the employer making claims against you.
Some post termination restrictions are simply unenforceable. However, some post termination restrictions may well be enforceable and legitimately limit future activities. Within one provision there may be some clauses which are enforceable and some which are not. Our aim is to ensure that the employee understands the risks of an injunction or damages claim if he takes a particular course of action. We fit the latest law to the facts.
Employee and director grievances
Senior employees and directors do use the grievance process to advance their goals. A grievance can provoke an employer into offering a settlement agreement.
In some cases, a grievance is raised where an unfair grading has been given in an appraisal. Often an employer will grade an employee low, knowing that in a “redundancy exercise” they can use that low grade to score that employee for selection for redundancy. An employee is well advised to raise a grievance in that situation to protect his position.
In practice, we find the most successful grievance outcomes arise where the grievance has been well planned. There is a skill to writing a good grievance. A good grievance will highlight unfair treatment. Every grievance is unique to the employee and the particular circumstances, the politics and characters.
Preparation of the grievance
We do prepare grievances for employees often working discretely in the background. We steer our clients to the pointers needed for a powerful grievance.
Employee and director disciplinary hearings
Employers may initiate a disciplinary process. Sometimes, the disciplinary process is just the pre-cursor to dismissing the employee for minimum compensation. We spot such tactics which we find are surprisingly common.
It is very rare for a disciplinary to be upheld in favour of the employee. However, we find a robust response to a disciplinary process can bring better results than anticipated.
We work with employees discretely in the background preparing them for the disciplinary hearing. We draft responses which are tactically designed to create obstacles for the employer. Often the objective is to encourage the employer to enter into settlement discussions.
Appeal to a disciplinary decision
Employees do have rights of appeal and usually we advise the employee to appeal. The employer knows that the process is stressful and difficult for employees and trades on that. A good result for the employer would be for the employee to resign as this saves the employer redundancy costs under a settlement agreement. Resignation is seldom in the employee’s best interests.
Employee and director departures
If you are leaving your current role we can negotiate on your behalf. Some clients prefer that we simply act in the background to enable you to achieve the best exit terms.
Employee and director settlement agreements
We have a continuous flow of employees who have a settlement agreement to review. We tell you if the compensation on offer is good enough. If you are happy with the deal then we are authorised to sign a settlement agreement. Our sign off is required to confirm that you have received independent legal advice since this is a requirement for the settlement agreement to be binding.
Employee and director share holdings
Often employers will not want former employees or directors holding shares. There are number of ways this can be achieved. Often the transfer value for the shares is up for debate. There are multiple business valuation methodologies. Which method is best for you depends upon many factors – we guide you.
Employers often link the share value to good and bad leaver clauses. Our aim is to safeguard the value you receive. We will argue your case.
Employee and director share options
Most share option schemes will provide for what happens when someone leaves employment. Typically employee share options will lapse when an employee leaves. Share option terms often allow for an option to be exercised early for “good leavers”. There can be scope for negotiation on who is a “good leaver”.
Employed director of a private company
The dismissal of director in private companies gives rise to additional considerations. In particular, considerations about resigning as a statutory director at Companies House. Much depends upon how the service agreement interacts with the articles of association or shareholders’ agreement. We tell you what steps the employer can take. We look for grounds of resistance for the director.
Employee and director track record
We do not have a list of successful court cases to boast. This is because usually, we settle any employment law dispute out of court. We pride ourselves on a near zero litigation track record, demonstrating a successful approach. You will find that what ever is happening to you we have dealt with before.
- Compromise agreement – we negotiated a senior director’s settlement agreement due to a management restructure following the sale of the business. We significantly improved his compensation.
- Post-termination restrictions – our client was a director in a software development company. We advised him on his exit from the company, securing the variation of post termination restrictions in his employment contract and an enhanced price for his shares.
- Employee IP – we advised a software developer who was offered a job by a technology company on how to protect the intellectual property that he was bringing to the new company. His IP was documented and protected before he signed the employment contract and appropriate provisions were included in the employment contract to recognise his ownership.
- Share Purchase Agreement – We negotiated on behalf of a founder of a company who was to be tied into the business for a number of years, following its sale. We negotiated a reduced tie-in period with a 12-month review, lower damages payments and a smaller proportion of the purchase price allocated to the earn out.
- Disability discrimination – We advised an employee on a claim for disability discrimination at work. She was injured at work and later dismissed on capability grounds. We were successful in getting our client re-instated arguing that the employer had not followed the correct redeployment procedure given that our client was disabled. Our client received back-dated salary to the date her notice period end.
We have particular experience in advising employees and directors in the financial services industry on their employment contracts and implications arising from regulation by the Financial Conduct Authority (FCA) in areas such as banking, capital markets, corporate finance, debt & structured finance, derivatives, financial auditing, hedge funds and wealth management.
We have dealt with a range of issues for executives from the financial services industry including whistle blowing and discrimination claims.