Keep employment contracts short and policies long ?

The title of this post may cause some surprise – employment contracts are vital aren’t they ?

Well, yes they are but they can also end up boxing an employer into a corner – but why ?

The reason is that employment contracts are the same as any other form of contract – once agreed, neither party to the contract can alter the terms without the others consent.

This creates particular difficulties in the employment relationship where things can change rapidly, both in terms of legislation and employment trends. By way of 2 brief examples, 2 major changes in workplaces have evolved very quickly :-

1. the rise of remote or home working

2. the use of the internet and social media in the workplace

Starting with the premise that there may be some logical reasons to leave some issues out of an employment contract, there remains a sensible solution so that both employer and employee know where they stand, yet there is flexibility without the need to try and vary the contract which may create friction. The solution may be to include a number of provisions in policies and procedures or staff handbook, and make clear that these documents do not form part of the contract and are variable at the employer’s choice.

Employers should be aware that the above suggestion is not a panacea for all employment law issues and that certain issues such as pay, working hours, role and holidays do not to remain in the contract. It should also be remembered that simply having a set of detailed policies and procedures in no way obviates the need to seek a consensual and happy workplace and to treat staff consistently and fairly.

Employment law is a highly sensitive and political area, employers should also remember that regardless of what is included in contracts of employment or policies and procedures. employment law is fundamentally statute based and statutes will override unlawful or even potentially illegal content in contracts or policies or actions by employers. Remember also that Tribunals and Courts will often interfere in emp0lpoyment contracts to imply terms due to the perceived inherently unequal bargaining position between employer and employee.

Further advice and services relating to employment contracts available here.

Double whammy for employment & personal injury cases

For some years now it’s been increasingly difficult to get legal aid for those that aren’t on benefits but who will never be able to afford access to justice i.e the vast majority of the population.

Aside from family law, the legal issues which impact most directly on the general public relate to employment law and personal injury and in those areas, no win no fee advice has to an extent filled the gap (a lot mire successfully in injury claims with perhaps the exception of claims relating to medical negligence) but even this is now being erradicated by the swingeing personal injury reforms making no win no fee for low value personal injury claims much less likely and by the forthcoming changes to the employment tribunal rules resulting in court fees being payable.

double-whammy

Even worse, many employment law and personal injury claims overlap with each other. Take the example of an employee who sustains a repetitive strain injury at work. In some instances, this may create a disability and may be caused by negligence or a breach of statutory duty by the employer. This means there is a potential injury claim.

Let’s then assume that the employer is an all round bad egg and decides that instead of making adjustments to help the employee top deal with his or her disability, as required by law, they will instead dismiss the employee who is no longer able to do the job properly. Such a dismissal, especially if proper process is not followed and even perhaps otherwise may constitute unfair dismissal and also, potentially disability discrimination claims, both employment law claims which would typically be started in the employment tribunal. Let’s then assume that the employee, through his or her strenuous efforts and some luck, a couple of months post dismissal, finds another job with a very good and understanding employer.

In the above circumstances, the employee would have very strong and legitimate claims, but both the employment tribunal and personal injury claims might not be worth, in pure financial terms, more than £5,000.00 each. The personal injury claims would be a small claims matter and no costs would be recoverable, making it difficult for the claimant to find a lawyer to take the matter on and still retain the likely damages, plus in the employment tribunal, a person who through no fault of there own has had no income for several months would have to pay a court fee to start a claim and also face the same issue of having to pay the lawyer out of any damages recovered.

It is far from unlikely that in the above situation, the completely blameless victim might have no option other than not to pursue his or her claims, to accept that he or she would possibly get very little financial compensation after legal fees or to decide that it’s simply not worth the stress and hassle of doing anything, meaning that an employer who has let that employee down in a big way escapes scot free.

Both the personal injury system and employment tribunal system have been subject to some excess and abuse in the last 10 years or so, but the reforms that have been brought in certainly do not appear to be fair.

Race Discrimination

An employer will be in breach of its statutory duty under the Race Relations Act 1976 if it discriminates against an employee on the grounds of race. Racial grounds are defined as grounds of colour, race, nationality or ethnic or national origin. Race discrimination can take place at anytime during the employment lifecycle including: recruitment, promotions and dismissal.

Types of Discrimination

There are four types of race discrimination:

Direct Discrimination

Direct race discrimination takes place when a person treats another person less favourably on racial grounds. It is for an employment tribunal to decide what constitutes less favourable treatment by comparing the treatment of the claimant to that of another racial group. The motive / intentions of the employer are irrelevant and there is no defence once direct discrimination has been proved.

It is important to note that in order for there to be direct discrimination it is not necessary for the claimant to have received less favourable treatment. In Weathersfield Ltd v Sargent [1999] IRLR 94 the employer was found to have been guilty of direct discrimination after instructing an employee, who subsequently resigned and was found to have been constructively dismissed, to discriminate against blacks and Asians.

Direct discrimination is permitted where there is a genuine occupational requirement (GOR) such as:

  • Participation in a dramatic or other performance where the employment of a person of a particular racial group is necessary for authenticity; or
  • In a place of food and drink where the employment of a person of a particular racial group is required for authenticity ; or
  • Where the job role can be most effectively performed by a person of the same racial group as the people they are serving, for example, in a refuge.

Indirect Discrimination

Indirect discrimination takes place where all racial groups are treated equally, however, the effect of a particular practice imposed (on all employees) by the employer has an adverse effect on a particular racial group putting that racial group at a disadvantage. For example, in JH Walker Ltd v Hussain and Other [1996] IRLR 11, the employer was held to have been indirectly discriminatory when it decided that no holidays could be taken for its peak season between May and July. When the Muslim festival of Eid fell in June the company refused to make any exceptions to the policy even though its Muslim employees offered to work extra hours to compensate.

Employers have a defence to indirect discrimination if they can show that the practice is a proportionate way of achieving a legitimate aim. This requires an employment tribunal to consider whether there is a balance between the discrimination and the purpose of the practice taking into account whether there is an alternative way of achieving the same aim.

Harassment

Section 3A of the Race Relations Act 1976 defines harassment as unwanted conduct that either intends or has the effect of violating a person’s dignity or creates a degrading, humiliating of offensive environment. Employees are also protected from harassment by the Protection from Harassment Act 1997 which can force an employer to introduce steps to combat harassment. It allows employees to claim damages and / or injunctive relief in the civil courts and to prosecute in the criminal courts.

Victimisation

Victimisation provisions protect employees from being treated unfairly for brining claims of discrimination against the employer. In Chief Constable of West Yorkshire Police v Khan [2001] 1 WLR 1947 it was held that there are two stages for establishing harassment:

  • A comparison between how the claimant is being treated with another employee who has not previously brought a complaint against the employer; and
  • The less favourable treatment must be motivated by the complaint brought by the employer.

Vicarious Liability

Employers should be aware that they can be held vicariously liable for acts of racial discrimination by its employees during the course of their employment even where the acts have been done without the employer’s knowledge or approval. Employers will have a defence if they can establish that they took sufficient steps to prevent racial discrimination.

This post supplied by Ben Jones who blogs on Darlingtons employment law site which can be found at http://www.darlingtonsemploymentsolicitors.co.uk

Equality Questionnaires and discrimination at work

Discrimination in the workplace does not only lead to inequality, it may also cause substantial harm to individuals, undermining confidence and making the workplace a stressful place to be. Applying for information under the new Equality Act 2010 (“the Act”) is a way of finding out if you are being treated equally and fairly.

In 2010, the Act replaced the previous anti-discrimination acts. There were historically a number of different statutes dealing with different types of discrimination, such as the Race Relations Act, the Disability Discrimination Act and the Sex Discrimination Act. The Act provides guarantees that individuals will not be treated differently as a result of having one of a number of defined characteristics which are protected. For example, the Act ensures that individuals must receive the same salary as someone else doing work that is ‘like’, ‘equivalent’, or ‘of equal value’. Continue reading

Importance of professional advice for valuing a business before sale

Darlingtons-25th-January-078The following article is provided by Debbie Serota from Darlingtons Solicitors. Debbie is an expert in advising on business sale transactions and additional content from Debbie can be found at http://www.businesslawyers-online.com

The majority of well drafted legal agreements for the sale or purchase of a business or company or a shareholders agreement governing how the company is to be run on a day to day basis should provide for how the company or business is to be valued in the event of a sale.

We have all seen these “expert valuer” clauses in documents and they often appear to be a fairly standard clause which people tend to skip past when negotiating a contract and don’t think of the potential impact at a later stage if the clause is not well drafted. Unfortunately this can lead to fairly serious issues. Continue reading

Compromise Agreements are not all the same

Compromise Agreements, soon to be known as settlement agreements, are commonly used by employers as an inducement to employees to agree a mutual termination of employment.

The agreements are generally quite standard, as they are statutorily based and one of the features of compromise agreements is that the employee must receive independent and qualified legal advice which the employer normally pays for.

In the majority of compromise agreements, there is an ex gratia payment made to the employer, in addition to contractual notice money, to encourage the employee to sign. According to Marc Jones from Turbervilles, an expert in employment law, this amount tends to be in the order of 2-4 months equivalent salary but does differ depending on the underlying legal issues or disputes between employer and employee.

So, we’ve established that most agreements are fairly standard and without a lot of difference typically in the inducement. It’s then up to the employee whether to sign up or take his or her chances by perhaps making a claim for unfair dismissal or discrimination or trying to remain in post even though he or she knows that the employer would really rather they leave. Recent changes in the Employment Tribunal are also likely to impact thinking on both sides – see here on this.

But, in some situations and sectors, compromise agreements can be more complicated, especially for those in the Financial Services sector or senior employees such as directors. Often in those situations, the employer will seek to incorporate additional clauses into a compromise agreement in the form of post employment restrictive covenants, whether these were included in the contract of employment or not. In addition, the issue of contractual rights can be difficult, as regards things such as bonuses, share options and other benefits, and these agreements can require an additional and expert amount of negotiation.

If you have been offered a compromise agreement which is complex or high value, such as executives with bonuses or other complex or lucrative contractual entitlements, Matt Gingell of Gannons specialises in these situations.