Settlement Agreements

Until 29th July 2013 settlement agreements were known as compromise agreements, however, they are essentially the same thing with a new name.

A settlement agreement is a binding agreement between an employer and an employee. The employee usually agrees to accept a sum of money in return for agreeing not to bring certain claims against the employer in the Employment Tribunal or other courts. Essentially the employee is signing away his or her rights.

Sometimes an employer will ask an employee who is being made redundant to sign a settlement agreement. Whilst redundancy is potentially a fair reason for dismissal it can become an unfair dismissal if the employer does not follow the correct procedures. Some employers like the assurance of knowing that the employee will not be able to bring a claim for unfair dismissal, even if the claim has no merit. Other times, there is a difficult history between the employee and employer and hence an even greater reason for the employer to end the relationship on agreed terms.

One of the key features of a settlement agreement is that the employee must receive independent legal advice from a qualified adviser (usually a solicitor) before the settlement agreement is signed. The employer usually pays for the employee to be advised and usually the settlement agreement says how how much the employer is willing to contribute toward the cost.

Since the recession started I have advised more than a hundred employees in connection with their settlement agreements. I also act for employers and so have experience seeing it from both sides of the fence.

Liam Hastings specialises in employment law and civil litigation. For further information please telephone 01245 835 305 without any obligation.

Disclaimer: this is only a brief overview of the law and not intended as a substitute for legal advice.

John McCririck Loses Age Discrimination Claim

Liam Hastings of Hastings & Co Solicitors based in Chelmsford, Essex looks at the recent case of John McCririck –v- Channel 4 Television Corporation & IMG Media Limited.

Racing pundit and TV personality John McCririck has lost his claim for age discrimination against Channel 4 and production company IMG Media Limited.

The key issues for the Employment Tribunal to determine were (a) whether John McCririck was not allowed to work because of his age and if so (b) whether the treatment was a proportionate means of a legitimate aim.

In a 44 page judgement theTribunal came to the conclusion that the Respondents had a legitimate aim namely that they wished to bring horse racing to a wider audience. The tribunal also accepted that McCririck was rejected not because of his age but because IMG’s new executive producer found him to be loud mouthed and chauvinistic.

It remains the case that for an employer to defeat a claim for age discrimination it has to show that either the treatment was not age related or alternatively that it was a “proportionate means of achieving a legitimate aim”.

Hastings & Co Solicitors specialise in employment law. Please telephone Liam Hastings on 01245 835 305 for further advice or assistance.

Disclaimer: this blog is intended to give a brief overview of the law and does not substitute for independent legal advice.

The Employee Shareholder

Liam Hastings of Hastings & Co Solicitors based in Chelmsford, Essex takes a look at the new class of employee – the “employee shareholder”.

Background

As of 1st September 2013 the government has introduced a new type of employee – the employee shareholder. Section 31 of the Growth and Infrastructure Act 2103 makes it possible for employers to offer new recruits or existing employees the chance to become employee shareholders in return for signing away certain employment rights.

How does it work?

To create a valid employee shareholder the employer must give the employee a minimum £2,000 worth of shares (which the employee must not pay for). The employee must also  sign a written agreement and must have independent legal advice on the agreement before it is binding.

The first £50,000 worth of shares will be exempt from Capital Gains Tax. However, this will not apply to anyone who has a “material interest” in the company (defined as anyone with 25% of the voting rights in the employer or parent company).

What rights are signed away?

  • The right to make a claim for “ordinary” unfair dismissal.
  • The right to a redundancy payment.
  • The right to make request study or training.
  • The right to request flexible working.

In addition, the notice requirements for employee shareholders taking maternity leave will be different.

What rights are not taken away?

Aside from the above rights, all other rights remain the same. This includes, for example, discrimination claims and claims for unfair dismissal for reasons where the dismissal is automatically unfair (eg for whistleblowing dismissals).

What other issues are there to consider?

There are a number of issues to consider including:-

  1. Valuing the shares.
  2. Whether the company’s articles of association need changing.
  3. The type of shares to be offered and the rights to be attached to those shares.

Comment

We understand that enthusiasm and take up has been very poor and we are not surprised.

We doubt there will be much take up from small companies on account of the not insignificant set up costs and the need to give away a sizeable chunk of shares. We doubt it will become common practice for small businesses employing non-key staff.

However, the exemption from capital gains tax could be significant and might be attractive to key employees in high growth companies.

Hastings & Co Solicitors specialise in employment law. Please telephone Liam Hastings on 01245 835 305 for further advice or assistance.

Disclaimer: this blog is intended to give a brief overview of the law and does not substitute for independent legal advice.

Warning about the danger of using private investigators to follow sick employees

West Yorkshire Fire Service got into bother recently after they hired a private investigator to follow a sick employee. They ended up paying the employee £11,000 compensation.

http://www.bbc.co.uk/news/uk-england-leeds-23588092

Hastings & Co Solicitors are based in Chelmsford, Essex and specialise in all aspects of employment law. Please contact Liam Hastings on 01245 835 305 for further advice or assistance.

Changes to Employment Law on 29 July 2013

Employment Law Update

Liam Hastings of Hastings & Co Solicitors based in Chelmsford, Essex looks at recent changes to employment law.

A number of changes came into force yesterday including:-

1.    Fees are being introduced in the Employment Tribunal

Employees wishing to start claims in the Employment Tribunal must now pay fees. The fees are paid in two stages. The first fee is paid when the claim is issued and the second fee is paid shortly prior to the claim being heard.

There are two sets of fees. For basic claims eg unpaid wages the initial fee will be £160 and the hearing fee will be £230. For more complicated claims eg unfair dismissal claims the initial fee will be £250 with a £950 hearing fee.

In some instances Employers will be ordered to pay fees also, for example if making a counterclaim or on appeal to the Employment Appeal Tribunal.

The Tribunal will have discretion to order the losing party to reimburse the winning party of the fees paid.

Employees on low incomes will be able to apply for a fee remission. Nonetheless, employee groups are worried that this will deter employees from bringing genuine claims.

This is probably good news for employers as less claims will be made.

2.    New unfair dismissal compensatory award

The unfair dismissal compensatory award limit will become the lower of the statutory cap (currently £74,200) or one year’s pay. The new cap will apply where the effective date of termination is after 29 July 2013.

3.    Compromise agreements to be renamed settlement agreements

“Compromise agreements” will now be called “settlement agreements”. However, they will operate in the same way as before.

4.   New employment tribunal rules of procedure

The new rules of procedure will replace the old rules and simplify the procedures.

5.   Pre-termination settlement discussions

Most offers made or discussions held with employees with a view to terminating their contract of employment will be inadmissible in any  subsequent unfair dismissal proceedings. So, for example, an employer will be able to make an offer to terminate an employee’s employment without fear of the employee referring to the offer in subsequent unfair dismissal proceedings. However, employers need to be careful as there are certain exceptions and the offers/discussions will not apply to other types of claims for example discrimination claims.

Hastings & Co Solicitors specialises in employment law. Contract Liam Hastings on 01245 835 305 for further advice or assistance.

Disclaimer: this is a very brief overview of the changes introduced yesterday and not intended as a substitute for legal advice.