Employment Law Frequently Asked Questions
Q. What are compromise/settlement agreements?
Settlement agreements are legally binding contracts which outline the terms surrounding how an employment relationship will terminate. Employers sometimes refer to these as compromise agreements, severance agreements or termination agreements but they all serve the same purpose to waive the employee's rights to make a claim against the employer. This document must be in writing, voluntary, signed by both parties after taking legal advice and can be offered at any stage of the employment relationship.
Q. How would a Settlement Agreement arise and what is the benefit?
Whilst some issues at work can be resolved swiftly through internal measures and communication others aren't that simple. In a case where this type of procedure is not possible a settlement agreement is an effective way of ending the employment relationship without resorting to tribunal proceedings. This provides a clean break for both parties. The employer has the guarantee that no future, potentially costly, claims will be brought against them and the employee will have the security of possessing the termination document which sets out the financial settlement and other aspects such as a job reference which is then binding and enforceable.
Q. Does an employee have to accept the settlement offer?
No. An employee will not be obligated to enter into a Settlement Agreement if they are unhappy with the offer, or if they wish to deal with the termination of employment in a different way. If an employee does not sign the agreement they preserve full rights to make a claim against their employer and where negotiations are unsuccessful they can make a claim in the Employment Tribunal. It is important to remember that there is a strict time limit of 3 months less one day from the date of termination/last act of discrimination to do this and any 'off the record' discussions regarding the agreement usually cannot be referred to the legal proceedings.
Q. Can an employee suggest the Settlement Agreement?
Yes. An employee may approach an employer 'without prejudice' (off the record) to consider whether you would be willing to negotiate the terms of their departure from the business. This situation may arise if someone:
- feels unhappy at work;
- feels they have received an unsatisfactory outcome to a grievance and feel incapable of remaining in the workforce;
- is facing disciplinary action or performance management;
- believe they may have grounds to bring a claim in an Employment Tribunal
Q. Is the amount of money I have offered my employee fair?
Most compensation is based upon financial losses incurred so this figure will be dependent upon the surrounding circumstances and the terms of an employee's employment contract.
If an employee has been discriminated against they may be entitled to compensation for injury to feelings in addition to financial loss. The level of compensation will be dependent upon the seriousness of the conduct with the highest awards being for lengthy periods of harassment. An unfair dismissal claim allows an employee to claim a basic award based upon age, salary and length of service. These factors all need to be considered when deciding whether to accept a Settlement Agreement and whether the amount offered is 'fair.'
Q. Legal Costs:
A Settlement Agreement is not officially binding until an employee has obtained independent legal advice. Employers will usually agree to pay the legal fees and in return no legal claims will be brought against them. If an employee decides not to sign the Settlement Agreement it is highly doubtful that an employer will have to make a contribution towards the legal costs incurred by the employee.
Q. Can an employer or employee change their mind once a Settlement Agreement is signed?
No. Neither are obliged to accept a Settlement Agreement. Providing all the required formalities are satisfied the agreement is legally binding once signed by both parties and cannot be changed. This is one of the reasons why it is a legal requirement that an employee must receive independent legal advice from solicitor.
Q. What are Contracts of Employment?
Contracts of Employment contain the particulars of a person's employment. It is a legally binding document which creates the legal relationship between the employer and the employee. The Contract should include by law:
- The name of the employee
- The name of the employer
- The date employment began
- The date when any period of continuous employment began (which may well be the same date as the start date)
- The job title
- The rate of pay or the method for calculating pay (this could be by hourly rate or monthly salary)
- Working hours
- Holiday entitlement
- Entitlement to sickness pay
- Details of the Employer's pension scheme
- The length of notice for either employer or employee to terminate the employment
- If the employment is for a fixed term or temporary details of this contract
- The regular place of work
- Details of grievance and disciplinary procedures
Q. What is discrimination or unfair treatment at work?
Discrimination in the work place can happen more often that you think. Discrimination occurs when one employee is treated less favourably than other employees because of one of the protected characteristics listed below.
- Gender and gender reassignment
- Religion or belief
Q. What is a grievance procedure?
If an employee has a problem with an employer he or she may wish to formally raise a grievance. This gives the opportunity to sort the situation out without having to involve Solicitors. Each employer will have a different variation of a grievance procedure but the overriding principle should still be the same. To allow an employer and employee to deal with their differences internally so the relationship can continue amicably. Most important is to ensure there is a documented grievance procedure that can be followed.
Q. What is a disciplinary procedure?
If an employee breaches an obligation as an employee (i.e something is done against the rules at work) an employer may start disciplinary proceedings. This is an internal process which could result in the employee losing their job.
Situations where an employer may start disciplinary proceedings include:
- If an employee is caught or suspected of stealing from work;
- If an employee refuses to follow instructions;
- If an employee do not show up to work and is unable to offer a reasonable explanation;
- If an employee repeatedly breaches company policy or breaks a term of the employment contract;
- If an employee is caught or suspected of bullying or harassing another employee.
There are many other situations which could give rise to disciplinary proceedings which are not listed above.
Q. What are Maternity rights?
Maternity rights are triggered for women who are expecting or have just had a baby. Maternity rights protect a women to allow time off to give birth and nurse a newborn baby. Maternity rights protect women from being dismissed or discriminated against because of their pregnancy.
Q. What are Paternity rights?
Paternity rights are triggered for men whose partners are expecting or have just had a baby. Paternity rights protect men from being dismissed or discriminated against if they are requesting time off to be with their newborn baby.
Q. What are adoption rights?
Adoption rights relate to when a couple decide to adopt a child and request time off in order to welcome a baby into their lives. Adoption rights allow them the same rights as maternity and paternity rights which are to not be discriminated against or dismissed due to the decision to adopt a child.
Q. What is redundancy?
Redundancy situations arise when an employer has to terminate employment with some employees if it is restructuring, shutting down or cannot afford to pay the employees any longer. There are many complex reasons behind whether an employer would need to consider making employees redundant but some include:
- Deciding to shut down a store or department;
- A business makes a continued loss;
- A business goes into liquidation;
- A business loses a large section of business
- A business cannot afford to keep all the employees in employment
Q. What does terminating employment mean?
Terminating an employee's employment is very serious and should not be taken lightly. The repercussions of getting it wrong can be costly for a business and should be regarded as a last resort. If the correct procedure is not followed or the reasoning behind the dismissal is not fair then businesses can incur large legal costs defending employment law claims and could be ordered to pay compensation.
Whether a dismissal is fair or unfair will depend upon the circumstances and the process used for the dismissal.
Fair dismissals can be for:
- An employee's conduct
- Incapability i.e something that prevents an employee from doing their job
Before terminating an employee's employment it is vital for an employer to take legal advice to secure an employee Tribunal Claim is avoided. A Settlement agreement could be used.
Q. What is an unfair dismissal claim?
When people think of employment law they usually think of unfair dismissal claims. This often arises when an employee believes an employer does not have a right to dismiss them. An employer needs to be careful that the correct procedures are followed and that the employee is dealt with fairly when looking to dismiss an employee.
If an employee has over two years qualifying service they have the right not to be unfairly dismissed. If they believe an employer does not have a good reason for dismissing them or if they believe the employer has not followed disciplinary or dismissal procedures properly then this could be grounds for them bringing a claim.
Situations which could be an unfair reason for dismissal include:
- Requesting flexible working hours
- Needed time off for jury service
- Resigning giving the correct notice period
- Appling for maternity or paternity leave (including adoption leave)
- Being on maternity or paternity leave (including adoption leave)
- Exposing any wrongdoing in the workplace ('Whistleblowing')
- Asking to take legally required breaks
- Asserting statutory rights
Q. What is wrongful dismissal?
A claim for wrongful dismissal is where a contract of employment has been breached through the dismissal of an employee. If terms contained in the employee's contract of employment have not been complied with by an employer this could amount to wrongful dismissal if the employee has suffered a loss as a result. This is likely to be because of notice of termination periods contained in the employment contract not being given but other breaches of contract also apply.
Q. What is constructive dismissal?
Constructive dismissal occurs if an employee is placed in a situation where they have no other choice but to resign. This has to be a very serious situation and cannot simply be because an employee does not enjoy working anymore and wants to leave. It must be directly due to the conduct of the employer and a fundamental breach of contracts by the employer which forces them to resign. For example:
- Demoting an employee
- Refusing to pay an employee
- Letting other members of staff bully and harass an employee
- Forcing an employee to accept unreasonable changes to how they work
Q. What is TUPE? - Transfer of Undertakings (Protection of Employment) Regulations 2006
When a business is being taken over (or transferred) there are obligations for both the transferor and the transferee. The Transfer of Undertakings Regulations protect employees' rights on transfer. This includes protection against not being properly consulted and not being unfairly dismissed because of the transfer of the business. These regulations must be complied with on the sale or merger of any business whatever its size.
To find out more or discuss your individual requirements in further detail, our dedicated Employment Law solicitors will be delighted to help. Contact us today on 01603 693500 or email us using the 'Make an enquiry' form. Appointments available at our Norwich, North Walsham and Sheringham offices.