Employment

Settlement Agreements are often used when employment relationships are coming to an end by agreement.  Settlement Agreements represent the only route whereby an employer can pay compensation to an employee and guarantee that the employee will not take the money and still bring a claim.  Employees are usually paid a sum in addition to their strict legal entitlement as an incentive to sign away their rights to bring a claim. There can be issues for employers in broaching the subject of a possible leaving deal.  The government introduced “protected conversations” which are designed to enable employers to have an off the record or without prejudice conversation with employees to talk through possible leaving options. However, the rules applied to these are not straight forward and don’t apply to all situations.  

We offer advice to employers about how to approach the subject of a potential Settlement Agreement and are often engaged to draft the agreement itself.  

We are frequently instructed by employees to advise them upon the terms of draft Settlement Agreements and, in particular, whether the deal on offer is something it would be reasonable for them to accept.

It is important for employers to give careful thought to the terms of senior executive contracts.  On the one hand there will be a wish to fully incentivise the senior executive which will mean that careful thought needs to be given to the reward structure.  On the other hand thought needs to be given to the damage which can be caused upon termination of the relationship.

Employers often seek advice from us in relation to executive pay structures and also in relation to post-employment restrictions.  The latter need to be very carefully drawn up with the role of the particular senior executive in mind and the precise nature of the damage that he or she could cause should he or she leave to join a rival or to set up his or her own business in competition.  

Courts start from the stand point whereby they wish to encourage freedom of movement but will uphold post-employment restriction clauses often known as “restrictive covenants”, provided that employers can show why they are absolutely necessary to protect the interests of the business concerned.  Employers often seek advice around these issues.

Also, employees entering into a contract often seek advice to ensure that they are not putting themselves in a difficult situation.  

We also often give advice at the end of the relationship, advising on compensation packages and drafting relevant documentation.  The advice might be on behalf of the employer or the employee.

In most cases employees require 2 years’ continuous service to enable them to bring a claim for unfair dismissal.  There are exceptions though which can catch employers out. With claims for unfair dismissal the employee has to show that there has been a dismissal – which is not usually in dispute.  It is then for the employer to convince an Employment Tribunal that the dismissal was for a potentially fair reason. Typically, this might be for a reason of misconduct, incapability (including sickness), redundancy or a catch all known as “some other substantial reason”.  If one of these potentially fair reasons is established it is then for the Tribunal to decide whether or not the dismissal was fair considering all of the circumstances including the size of the employer. The larger the employer, the more carefully it has to proceed. A winning employee can obtain a Basic Award which equates to a redundancy payment, plus compensation of up to one year’s pay capped at approximately £80,000.  

We frequently advise employers about adopting appropriate processes and procedures to ensure that any dismissal is a fair one.  

We also act for employees advising upon the merits of bringing a claim and in pursuing a claim itself, including representation at an Employment Tribunal.  

Discrimination law has grown and grown over the years both in terms of the categories of persons protected by the laws and also the grounds upon which claims may be brought.  

Claims for discrimination may be based upon gender, age, race, sexual orientation, religion or belief, disability, maternity/pregnancy, marriage or civil partnerships and gender reassignment.  

The Equality Act 2010 is designed to clarify the different types of discrimination claim and the different heads of claim one can bring in each type of discrimination.  There are some differences though, particularly relating to disability discrimination. Typically, discrimination may be direct, i.e. someone is treated less favourably specifically because of the particular characteristic applying to them, for example: their age or race.  However, discrimination can be more subtle and known as “indirect discrimination”. This applies when an employer imposes a policy or practice which applies across the organisation but which is more difficult for someone who has the particular protected characteristic to comply with, for example: it may typically be more difficult for women who tend to have more childcare responsibilities to agree to a new shift working system.  

Employees don’t need any particular length of service to be able to bring a claim and, indeed, don’t necessarily need to be employed at all.  Discrimination law is one of the most complex parts of employment law and both employers and employees commonly require assistance either in terms of preventing discrimination or in fighting claims when discrimination is alleged to have occurred.

The laws surrounding redundancy are involved, but most employers can fairly select employees for redundancy if the process is carefully planned and executed.  Special rules apply when an employer proposes to dismiss at least 20 employees, from the same “establishment”. In other cases a different process applies depending on whether an employer is likely to choose one person in a stand-alone role for redundancy or a selection is between two or more employees undertaking the same or broadly interchangeable roles, in which case a selection procedure has to be applied.  This is quite tricky for employers as the practice used to make a selection must be objective and it is not always possible to make objective comparisons between employees.

Redundancy basically occurs when an employer needs fewer employees to undertake the work available, or when it has less need for employees to undertake work at a particular place of work.  There is a set formula for calculating redundancy payments for those with two or more years’ employment. This is based on age, length of service and gross weekly pay, but is subject to various caps.  

If an employer gets the redundancy wrong it is vulnerable to claims for unfair dismissal.  

We regularly advise employers upon a redundancy process from start to finish, and advise employees upon the fairness or otherwise of a particular redundancy and, as appropriate, bring Tribunal claims on their behalf.

Employment relationships don’t always run smoothly.  Sometimes there is a breakdown between employees and management, or sometimes between fellow employees, or even teams of employees.  

Workplace mediation is being used more and more to seek to address breakdowns in relationships.  Mediation is far from being an easy option. The mediator seeks to create a non-threatening environment within which to explore the challenges being faced and work with the employees concerned with a view to achieving a resolution with which everyone can live.  The mediator is not simply a postbox, but will put matters from different angles to seek to assist employees with understanding alternative view points.

At Davies and Partners Solicitors we have Nigel Tillott, one of the region’s most experience mediators.  

As well as addressing problems within the workplace itself, mediation can be used after the relationship is at and end and when there is a dispute between the former employee and his or her former employer.  This can be particularly effective in sensitive areas, such as alleged discrimination, enabling disputes to be resolved in private.

Employees are entitled to a written Contract of Employment within the first two months.  The reality is that this is a key document as it is the first point of reference if there is dispute.  Careful thought should be given to what goes into the contract.

We are frequently asked to advise employers upon drafting contracts.  Sometimes employees about to start a new job, particularly if it is a senior one, require advice upon the contract terms.  

Companies have policies and procedures which sit alongside the employment contract.  These govern how an organisation is run. There are a number of policies and procedures which are necessary for the smooth running of the business and others which the outside world, for example potential clients and Employment Tribunals expect employers to have.  These range from disciplinary procedures to equal opportunities policies, anti-bribery and corruption policies and whistleblowing policies.

The Transfer of Undertakings Protection of Employment Regulations, usually known as TUPE, applies when an employer is selling its business to another organisation.  

TUPE can also apply when an organisation supplying a particular service to a business is no longer required to do so and the work is moved to another contractor or in-house.  

As the name suggests, the regulations are in place to protect the employment of those employed by the selling company or the company which is no longer to provide services.  Whilst there are some exceptions, broadly employees’ terms and conditions of employment move from the existing employer to the new employer without any alteration. The period of continuous employment is not in any way affected.  The rules surrounding TUPE are complex. Outgoing employers are required to notify employees of the proposals at an early stage and, in most cases, to consult about those proposals.

Usually, there is a requirement to provide notification to representatives of the employees concerned.  This in itself can cause challenges as most employers do not have employee representatives on hand in order to enter into discussions for these purposes.  There are severe restrictions upon what the incoming employer can change; although changes, such as redundancy, can sometimes be justified as what is known as an “economic, technical or organisational reason” (“ETO”).  There is also a requirement upon the incoming employer to notify, and sometimes consult with, its existing staff.

If an employer gets it wrong the sanctions can be quite dramatic with awards often of 13 weeks’ pay per employee for failing to undertake the process properly and also potential claims for unfair dismissal.  Unless an employer is familiar with the TUPE process it is a good idea to seek legal advice upon its application.

From an employee’s perspective, he or she may wish to obtain advice to ensure that the issue is being dealt with appropriately during the process.

Sickness and ill health can be a very thorny issue. An employer may require advice in dealing with an ongoing sickness issue, or an employee may require advice about his or her rights.  

Sometimes we are engaged to bring or defend claims around this area.  

From an employer’s perspective, different considerations apply dependent on whether there is persistent short-term absenteeism or an employee has a long-term illness.  Often medical evidence is required to assist the employer’s understanding of the position. Persistent short-term absenteeism may typically be dealt with by way of a capability procedure and various warnings.  Consultations will be required when absence is long-term. In such circumstances an employer will require a good understanding of the employee’s illness, prognosis and whether there are actions which can be taken to enable the employment to continue but in an adjusted form before dismissing.  Often disability discrimination law is relevant to the picture.

Both employers and employees often consult us in relation to what is a complex area.

There are many claims which may be brought in an Employment Tribunal, relating, as the name suggests, to all manner of employment related disputes from claims for unpaid wages to equal pay, from the fairness of dismissal to discrimination.  Each claim is different and has different levels of complexity. We will do our best to give you an idea of the likely costs involved in matters and of factors which might cause the price to change.

In relation to unfair and wrongful dismissal claims we are required to provide generic information about likely costs without reference to the actual facts.  This is presumably because it is thought that these claims are generally more straightforward than, for example, discrimination or equal pay claims and it is therefore easier to provide cost ranges. There is no substitute for getting an actual estimate depending upon the details of an actual case, but we do set out below a range of costs for these matters.

First, we should perhaps explain what these claims are.  An unfair dismissal claim can be brought by an employee if he or she believes that the dismissal itself was unfair.  In most cases the employee will need 2 years of employment in order to bring the claim, although there are some exceptions, particularly where the employee is a whistleblower or has put forward various concerns and believes that he or she has been dismissed as a result of doing so.  

A wrongful dismissal claim is basically a claim for an employee’s contractual notice.  Sometimes employers dismiss an employee without payment. This can be justified in cases of gross misconduct or gross negligence, but of course the factual scenario is often disputed.  

Our pricing for bringing and defending claims for unfair dismissal:

Our pricing for bringing and defending claims for wrongful dismissal:-

Factors that could make a case more complex:

• Complex preliminary issues, such as whether the person bringing the claim is an employee at all;
• The number of witnesses and documents;
• A hearing likely to last longer than 1 day;
• If it is necessary to make or defend applications to amend claims or to provide further information about an existing claim;
• Defending claims that are brought by individuals representing themselves as these often take longer and Tribunals often allow a greater latitude to those representing themselves which in return requires more work to be carried out;
• Unfair dismissal claims where the employee doesn’t have 2 years’ service but is potentially able to bring a claim under exceptions such as because they have blown the whistle on practices at work;
• Other linked claims, which can add to the complexity significantly, for example claims for discrimination or equal pay

Disbursements

Disbursements are costs related to the progression of your matter which are not our actual fees.  These could for example be travel costs or if an outside person or organisation is used it may be their costs.  For example, in some circumstances it may be necessary to get medical reports, or a decision may be made to instruct a barrister either to advise upon the matter or part of it or potentially to represent you at Tribunal.

Barrister’s fees vary widely depending upon the experience of the barrister and to some extent the nature of the case.  Typically a barrister will charge a preparation fee and then a fee for each day spent at Tribunal. The daily rate can range from £500 plus VAT for the most junior barristers to £2,500 plus VAT or more for very experienced barristers.  Again we would liaise with you closely before instructing a barrister and gain a specific fee estimate before doing so.

Key stages

The fees set out above cover the work in relation to all of the following key stages of a claim:

• Speaking with you or by telephone or meeting with you  to obtain information about the nature of the claim, reviewing the relevant documentation and advising you upon the merits of the claim or defence, potential compensation and other relevant factors in making a decision to proceed with or defend a claim;
• Entering into discussions before a claim is issued to see whether a settlement can be achieved.  In most cases it is compulsory to make contact with ACAS, a Government funded organisation which is specifically tasked with trying to resolve employment related disputes;
• Preparing a claim or response;
• Reviewing and advising upon the claim or response from your opponent;
• Considering settlement and negotiations throughout the process;
• Preparing a detailed statement of the sums claimed or analysing such a claim made by your opponent;
• Preparing for and attending any procedural hearings prior to the main hearing;
• Gaining from you all documents which have any relevance to the matter, exchanging these with your opponent’s representative (or opponent where not represented), considering the relevance of the documentation disclosed.  Thereafter agreeing those documents which will go before the Tribunal at the Final Hearing;
• Speaking with witnesses or potential witnesses in order to obtain statements and drafting those statements;
• Keeping prospects of success under review and considering and analysing documentation disclosed by your opponent and their witness statements;
• Drafting other documentation required by the Tribunal to enable a smoother hearing and seeking to agree it with your opponent.  This could for example be a list of relevant issues, a chronology, or a list of key people and their roles;
• Preparation for and attendance at a Final Hearing

It is possible that some of these stages might not happen or indeed that some of them might happen more than once – for example it is not unusual for a Tribunal to have more than one Preliminary Hearing to consider different aspects of the matter.  

What else might be done about costs?

It is not compulsory for individuals to use a solicitor in relation to Employment Tribunal claims or defences.  However, the system is not straightforward and individuals often elect to use a solicitor. As an alternative we can be used for advice at key times in the process with you undertaking the bulk of the work.

It is also worth looking at other funding options.  Quite often employees and ex-employees may have legal expenses insurance attached to a household insurance or other insurance policy.  It is always worth checking this. Sometimes employers may have legal expenses insurance attached to either a specific or more general policy.  Again this is worth checking.

There are some occasions upon which we may be prepared to consider taking on cases for employees on a “no-win, no-fee” basis or applying a low hourly rate but with a mark-up if successful.  In all such cases we would need to review the case in depth before agreeing to do this and there would be a cost for this, typically between £200 – £500 plus VAT.

How long will my matter take?

Most matters are resolved at some stage and clearly the earlier the stage at which resolution occurs the shorter the duration of the matter.  

Pre-claim conciliation which is basically discussions before a claim is issued usually don’t take longer than a month.

If proceedings are issued the employer has 28 days to put a defence in from the time it receives the claim.  Often there are delays in the Tribunal sending out the documentation so this may be longer than 4 weeks from the time that the claim is sent to the Tribunal.

After that we are very much at the mercy of the Employment Tribunals.  At present they are very much under resourced. This is because the Government introduced Tribunal fees which reduced the case load by approximately two-thirds.  The Tribunal resources were scaled down accordingly. The Courts have now decided that the introduction of fees was unlawful because it denied access to justice. There has consequently been a threefold increase in the number of claims but the Tribunal system has not been re-resourced to cope with them.  This means that at present there are significant delays. Cases are often postponed at very short notice as Tribunals list more than one case for a particular Judge on a day on the basis that most will settle – this doesn’t always happen!

Often a Tribunal will decide it wants to have a Preliminary Hearing to look at setting out a timetable and procedure for the matter.  If so, this will usually take place within 3 or 4 months of the matter commencing – but this isn’t always the case. If the matter is a 1 day case it may be listed for a hearing within 2 or 3 months of the Preliminary Hearing, or if there is not a Preliminary Hearing it may take place within 3 to 6 months of the submission of a “defence”.  However, often matters don’t reach a hearing for considerably longer. If the matter is listed for a few days or more it is very unlikely to be heard within 6 months of a “defence” being submitted and could be as long as a year after this or longer still.

Other Issues

Funding of employment matters is clearly of importance to our clients.  We seek to be as flexible as possible to try and find a way of funding employment advice which best suits the client.  For employers, we often advise on an hourly rate, but more and more employers require costs certainty and pay a monthly retainer.  Alternatively, we can agree a fixed fee for specific items of work. For employees, finding a way of funding employment claims is crucial.  Tribunals only very rarely award costs such that any legal fees incurred will be payable by those incurring them. Often employees have legal expenses insurance but may not know about it – this might be through an add-on to household insurance for example.  We are prepared to look at taking on cases on a no win, no fee basis. Typically there will be some fee involved in looking at the case initially. Sometimes we may be able to agree a fixed fee for doing particular items of work.