We help employers to avoid mistakes that could result in employment law claims and litigation in the Employment Tribunal. Help is on hand for all stages from consultation to drafting the settlement agreement. Our expertise includes dealing with shareholdings and transfer of shares. There is always judgement needed which is where our years of experience can help.
Being specialist employment law solicitors means we will have dealt with similar problems in the past. This translates to cost savings for you.
- Experience builds a commercial awareness and knowledge in how to apply our skills successfully to get the job done.
- We can meet a short notice at our central London offices. You will be looked after by a partner. Clients quickly realise we offer a great service.
Ideas to explore
Defending dismissal decisions
How you go about terminating an employment contract will vary depending upon the employee or director in question. The starting point is to review the employment contract and other employment documentation. We then move onto how we can work an exercise which is least likely to leave you with an employment law claim.
A well advised employee
A well advised employee will appeal against a dismissal decision. Employers must therefore plan for this. Collation of evidence is a step not to be overlooked tempting although this is. Lack of evidence in support will leave employers exposed. In the UK employment law is biased towards the employee.
Risk for an employer who is not so well advised
If the employment agreement is not terminated properly the employer will be in breach. One of the implications is that the post termination restrictions will not be enforceable. This may pose a risk to the business.
Typical lines of response from employees
The position will vary from case to case. We have explained below some of the more common approaches taken by employees.
An employee faced with dismissal may claim discrimination. Most employees know that if their discrimination claim succeeds, their compensation is potentially uncapped. In addition, they may gain an award for injury to feelings. A discrimination claim will definitely cause a lot of work for the employer and may have been raised as a tactical manoeuvre. Our job is to see if we can flush out the intentions.
Review evidence supporting discrimination claim
First we review the evidence. Then we tell you the employee’s likelihood of success.
Often employees allege discrimination to increase their settlement payment. Usually, a robust defence quickly ends the claim. If the employee persists then the law around the burden of proof, if applied tactically, often helps employers.
An employee might claim their employment was terminated as a result of a protected disclosure, i.e. a whistle-blowing claim.
Whistleblowing allegations are common in financial services and the public sector. Even if the claim is not genuine, employers must respond.
An employee who has not yet been dismissed may resign and claim constructive dismissal. The employee claims that the employer’s conduct was tantamount to a breach of the employment contract.
The employer’s response depends on the facts and when the employee informed the employer. We quickly determine if you can eliminate the claim. At other times, the rules of contributory fault can reduce potential compensation.
Whether a departing employee or director he can retain the shares will depend upon the Articles of Association and or Shareholders Agreement. Employers need to consider their position. Sometimes the articles and or shareholders’ agreement will include good and bad leaver provisions which enables the employer to force a compulsory transfer of shares. But, if the company only has standard articles adopted the ability to force a transfer of shares does not automatically exist meaning the leaver will remain a shareholder. Shareholders leaving the business can create problems but often a strategy can be found.
Mitigating the risk for employers
We mitigate the risks by positioning the decision to terminate within accepted reasons for dismissal. The reason determines the employer’s procedure, and the employee’s compensation and damages. Broadly reasons are:
Gross misconduct dismissals can be instant, potential reasons could include e.g.
- Drink or drug related offences;
- Offensive behaviour;
- Breach of restrictive covenants; or
- Misuse of confidential information
Employers must have evidence they followed a fair procedure. Typically, this includes an investigation and disciplinary hearing. Employers should plan on employees appealing the disciplinary hearing outcome. Sometimes the threat is enough to force a resignation.
In practice, poor performance is unlikely to constitute gross misconduct. Employers must go through a capability procedure. To avoid claims, this procedure must be correctly executed.
In practice, employers often compromise the employee out of the business, and offer a settlement agreement. We often advise on the amount to offer in the settlement agreement.
Employers can swiftly act. Often the process can be completed within a week.
However, the paperwork and evidence of fair selection must be prepared in advance and applied. Employees have no right to appeal a redundancy decision, unless the employment documentation includes this right. However, in practice appeals are allowed as this helps to reduce the risk of an employment law claim.
It is inevitable that employees will claim or threaten to claim against employers.
- Some claims have merit: we tell you how to respond.
- Many claims lack merit: we dispose of such claims effectively and efficiently.
- Picking up the pieces: sometimes employers make mistakes. We look to pick up the pieces and place the employer back in the driving seat.
Most employers avoid devoting the management time to fighting the case in the Employment Tribunal. A sensible settlement depends on what an Employment Tribunal or Court would award the employee. We use the following factors to formulate an offer:
Could you have followed a correct procedure and dismissed fairly?
A dismissal that was inevitable, substantially reduces any unfair dismissal claim.
Does the employee have legal expenses insurance?
An insured employee is usually more willing to litigate.
How long will the employee take to find another job?
The employee’s age, skill set, and industry experience are factors. Settlement agreements cover loss of earnings, although employees have a duty to mitigate their losses.
Has the employee already found another job?
We often make settlement payments conditional upon employees warranting they have not received a job offer.
Does the employee have on-going losses?
The maximum award for on-going losses usually covers 24 months.
Can the employee easily pay Employment Tribunal fees?
Now that employees must pay fees to the Employment Tribunal when commencing a claim, the number of claims has dramatically reduced.
Are you making an example of the employee?
Usually this is so other employees drop their unfair dismissal claim. You could refuse to settle and call the employee’s bluff. This is known as the floodgates principle.
Is the employee needed for a hand over?
Clearly we consider practicalities.
Does the employee have two years continuous service?
If not, then the employer’s exposure may only be the notice period.
What is the best timing for entering into a settlement agreement?
Usually, employees must bring their claim within three months of termination of employment. You don’t need to offer a settlement, until you’ve received a claim.
Often employees threaten to bring claims when their employment is terminated. However, they move on, and don’t bring the claim. Hence waiting can save you money.
Does the employee hold company shares?
Termination of the employment contract might trigger a compulsory sale of shares. In these circumstances termination requires planning. For instance, consider who will purchase the shares and at what price.
A settlement agreement can be seen as the way to correct mistakes. For example:
- If the post termination restrictions in the employment agreement are non-existent or not fit for purpose – the settlement agreement can recite new restrictions which are more suitable.
- If the employer has concerns about potential damage the employee has done it can stage payments under the settlement agreement until the danger is passed.
- If the employee is worried about his reference the terms can be agreed as part of the settlement agreement and used to encourage the employee to sign.