flexible working

Flexible Working: Estate Agent Awarded £185,000 for Sex Discrimination

Flexible working is not something that came about because of Covid-19. It is also a legally protected employee right to request a change in their work hours/nature. For Alice Thompson, an estate agent who left her job after being unable to attain flexible working hours, it was an opportunity to sue her former employer. She was successful and eventually awarded £185,000 for indirect sex discrimination. The main reason being that no serious counteroffer was made to Ms Thompson’s flexible working request. It was also found that the reasons given by the estate agents for rejecting her offer were unsubstantiated. This blog details how organisations can comply with the regulation of flexible working requests.

Flexible working – employee rights

Every employee has a statutory right to ask to work flexibly after working for their employer for at least 26 weeks. A flexible working request can be made once in any 12-month period. Employees can ask to:

  • reduce hours to work part-time
  • change start and finish times
  • have flexibility with start and finish times
  • do their hours over fewer days
  • work from home or elsewhere, all or part of the time
  • share the job with someone else

Such requests can be for:

  • all working days
  • specific days or shifts only
  • specific weeks only, for example during school term time
  • a limited time, for example for 6 months only

Flexible working – employer obligations

As an employer, upon receiving a flexible working request, you must look at the request fairly following the Acas Code of Practice and make a decision within a maximum of three months. After receiving a request, you should arrange to talk with your employee as soon as possible. If you intend to approve the request this may not be necessary. The employee is allowed to be accompanied by a work colleague to any such meeting, and you should make them aware of this. The discussion should take place in a private place.

You will need to consider the request carefully by weighing the potential positives and negatives to the business and employee. You should inform your employee of your decision in writing. If you wish to change or negotiate the nature of the request, you should discuss this with the employee. If you reject the request, it must be for one of the business reasons set out in the legislation (Employment Rights Act 1996 Part 8A Flexible Working):

  • the burden of additional costs
  • detrimental effect on ability to meet customer demand
  • inability to re-organise work among existing staff
  • inability to recruit additional staff
  • detrimental impact on quality
  • detrimental impact on performance
  • insufficiency of work during the periods the employee proposes to work
  • planned structural changes
  • such other grounds as the Secretary of State may specify by regulations

Employees will be allowed to appeal the decision – make sure you speak to the employee throughout this process as there may be things overlooked which a short conversation can rectify. Importantly, the law requires that all requests, including appeals, are decided within a period of three months. Unless you agree to extend this period with the employee. Therefore, it would be prudent to deal with the request as soon as possible. Furthermore, if an employee fails to attend two consecutive meetings concerning the same issue around a request, including an appeal, with no good reason, then the employer may consider the request withdrawn. The employee must be notified of this withdrawal.

Flexible working – discrimination

When making your decision around whether or not to accept an employee flexible working request, you must not discriminate unlawfully against the employee. This was how Ms Thompson, the estate agent, was recently able to successfully sue for £185,000, on the grounds of indirect sex discrimination.

The Equality Act 2010 implemented the principle of equal treatment for men and women as regards access to employment, vocational training, promotion and working conditions. Under the act it is unlawful for an employer to:

  • Discriminate directly by treating a job applicant or employee less favourably than others because of sex.
  • Discriminate indirectly by applying a provision, criterion or practice that disadvantages job applicants or employees of one sex without objective justification.
  • Subject a job applicant or employee to harassment related to sex, sexual harassment, or less favourable treatment because they reject or submit to harassment.
  • Victimise a job applicant or employee because they have made or intend to make a sex discrimination compliant under the act, or because they have taken action or intend to take action in connection with the act.

Flexible working – Ms Thompson’s case

In a recent employment tribunal case, it was found that Ms Thompson, a sales manager at a small firm of estate agents in Marylebone, London, had been indirectly discriminated against as regards to her employer’s response to her flexible working request.

Facts: Ms Thompson started working for the firm on 24 October 2016 with a flat rate salary of £120,000. In 2017 this was changed to £60,000 + 12% of sales commission + a bonus if she achieved a sales target. It was noted that the director, Paul Sellar, said “down to her, the office is doing well”.

In the spring of 2018 it became known that Ms Thompson was pregnant. On 1 June Mr Sellar took staff to a private members club for the evening so the staff could celebrate the pregnancy. According to Ms Thompson, Paul Sellar commented to a colleague’s partner: “I thought, for fuck’s sake, why is she pregnant when we are doing so well? I was warned about employing a married woman of her age”. The tribunal noted that this was a sentiment shared by many employers on learning a valued employee will be leaving work for 6 to 12 months and it could not, therefore, be held against Mr Sellar who had otherwise celebrated the pregnancy with the party and other kind acts.

There were a number of incidents cited by Ms Thompson which suggested unfavourable treatment, such as a trip to New York on which she felt excluded and occasions when Mr Sellar seemed angry after lateness due to a celebratory breakfast. On the whole, however, the tribunal found that Mr Sellar’s conduct in such matters was not harassing or discriminatory.

In October 2018 Ms Thompson began her maternity leave. Many other events occurred which were thoroughly discussed by the tribunal. One particularly strange bit of treatment was the response Ms Thompson got after asking whether time off on return would count as annual leave after she was signed off work by her doctor. Overall, the tribunal found that the conduct of Mr Sellar over this period was, although strange at times, reasonable. The exception was the way he dealt with Ms Thompson’s flexible working request.

Ms Thompson’s flexible working request

A formal request for flexible working was made in which Ms Thompson asked to work a four-day week and to finish early, at 5pm, because she proposed to use a nursery near her home in Brixton which closed at 6pm and was an hour’s journey from the office. It was discussed that the current cover for her maternity leave could step in on her day off. She was told there would be pro rata reduction in her salary, annual leave and commission which she understood. She said she could be available by phone during her hours out of the office. On 25th November Ms Thompson received a letter turning down her request for flexible working. It said:

“I have considered your request for a new flexible working pattern carefully. I regret to inform you that, on this occasion, we are unable to accommodate your request for the following business reasons: (1) the burden of additional costs; (2) detrimental effect on ability to meet customer demand; (3) inability to reorganise work among existing staff; (4) inability to recruit additional staff; (5) planned structural change… As you know, building and maintaining client relationships is an essential feature of sales. For continuity purposes, our clients expect consistency in the sales manager they deal with, which is a further reason why it would not be suitable to recruit additional staff to cover the proposed hours.”

See above in this blog to see how this corresponds with the ACAS requirements for dealing with flexible working requests. Ms Thompson appealed the decision and was able to meet with the estate agent’s employment consultant. The appeal was unsuccessful and shortly after, on 23 December 2019, she resigned.


In order to find a claim for indirect sex discrimination the tribunal needed to prove that the estate agents had applied to Ms Thompson a ‘provision, criterion or practice’ which is discriminatory in relation to Ms Thompson’s sex. The ‘provision, criterion or practice’ in this case would be the method by which the estate agents dealt with her flexible working request. The tribunal stated:

“It is not as obvious now, as it was a generation ago, that such a requirement [working 9-6 five days a week] places more women with children at a substantial disadvantage than men with children. The claimant argues it is still the case. She relied on a report of a 2018 survey carried out on behalf of Direct Line Insurance, headed: “Battle of the sexes – Mums still bearing the brunt of childcare”, reporting that 64% of mothers compared to 36% of fathers, are the primary carer for their children, despite workplaces increasingly offering flexible working hours, homeworking options, and shared parental leave.”

The tribunal then assessed whether Ms Thompson was at this disadvantage by considering whether the father had asked for flexible working, whether a closer nursery could be used etc. Then the tribunal went through each of the reasons given for refusing the flexible working request and finally stated: “Our conclusion is that the respondent [estate agents] has not shown that refusal of the proposed reduction in hours of work was proportionate to the real need of the business to maintain successful relations with customers. The indirect discrimination claim succeeds.”

Here to help

This case has stimulated a lot of debate around sex discrimination in the workplace. While some newspapers roll their eyes, others have shared similar women experiences which never made it to the courts. As an organisation you need to be alive to these issues. To make employees feel like their requests are being heard and that they’re treated fairly.

If you have any questions or need help dealing with flexible working requests or other employment law issues please contact any one of our employment lawyers Helen Monson or Imogen Finnegan or call us on 0203 637 6374.

employee references

Employee References – A Guided Tour Of Eventful Case Law

Employee references can often be a rewarding experience. A chance to pass on well-earned positive feedback for the benefit of a colleague’s future career. Many references are straightforward to give and useful to receive. They can, of course, cause complications when feedback is not entirely positive or when organisation’s fail to have a clear policy in place. Here is our guided tour through an eventful array of cases which illustrate their potentially contentious nature. The aim being that along the way you will pick up some tips on how you should go about giving (or receiving) employee references.

First things first – do you have to provide employee references?

There is no legal obligation to provide a reference for an employee or ex-employee and so if an employer wants to, they can refuse to give a reference. This was stated in the case Lawton v BOC Transhield Ltd [1987] IRLR 404. Employers should be careful, however, to treat employees consistently so they are not accused of discriminatory behaviour or of breaching an implied term of trust and confidence in employment contracts. It follows that organisations should have a policy in place to decide whether to give employee references at all and also on the nature of the information to be given.

On or off-the-record – be careful whenever making a statement

Case Number 1: McKie v Swindon College [2011] EWHC 469 (QB)

What happened? The claimant worked in higher education management. Leaving Swindon College in 2002, he went on to work at Bath College based on positive employee references he had received from Swindon College. In 2007 he went to work at Bristol College and then in 2008 he accepted a position with the University of Bath. Part of his role involved making site visits to Swindon College. This led to the University of Bath receiving an email from Swindon College saying they would not be able to give the claimant access for safeguarding concerns. The claimant was subsequently dismissed by the University of Bath. Such issues had not been mentioned in any reference and Swindon College claimed no investigation took place because the claimant left before it could go ahead.

Judgement: it was found that Swindon College was liable for negligent misstatement to the claimant in its employee references. The judge stated that ‘I am satisfied damage was foreseeable, the relationship was sufficiently proximate [and that], it is fair, just and reasonable and there is a causal connection between the negligence in and about the sending of the email and the damage whereof the claimant complains’.

Lesson: this case highlights why employers should be cautious when making any statement about a former employee. Even if a statement is not intended to be a reference, employers should remember that the tort of negligent misstatement can apply.

Recipient of employee references? – you could still be liable

Case Number 2: Bullimore v Pothecary Witham Weld Solicitors and another UKEAT/0189/10

What happened? The claimant had left her job with Witham Weld Solicitors (WW). She claimed unfair dismissal and sex discrimination against WW. After leaving she was offered a job subject to satisfactory employee references. A partner of WW wrote a damaging reference including that the claimant had brought proceedings against them. As a result, the claimant’s new employment contract was revised to include a six-month probationary period. The claimant refused to accept this change in terms and conditions.

Judgement: The Tribunal ruled that the claimant had been unlawfully discriminated against by both her former and prospective employers. Before the remedy hearing the claimant settled her claim against the prospective employer for £42,500 and was awarded £7,500 for injury to feelings against her former employee. The claimant then successfully appealed the case, claiming that the former employee was liable for future loss of earnings.

Lesson: The recipients of employee references must also be careful about any action they may take following receipt of a potentially discriminatory reference.

Liability only to the subject of the reference? – No, it can also be to the recipient

Case Number 3: Playboy Club London Ltd and others v Banca Nazionale del Lavoro SPA [2014] EWHC 2613 (QB)

What happened? Playboy Club Ltd operated a casino in London called The Rendezvous. In October 2010 Mr Bakarat, a member of the club, requested a cheque cashing facility of £800,000. As per Playboy’s policy, the club made a request for a positive banker’s reference for twice the amount of the cheque cashing facility. Mr Bakarat’s bank, Banca Nazionale del Lavoro SPA, was able to support such a financial commitment. Later, when Playboy tried to cash the cheques, Mr Bakarat had deposited, it was discovered they were counterfeit. Mr Bakarat’s account with the bank turned out to have always maintained a zero balance.

Judgement: It was held by the High Court that the bank could not have exercised reasonable skill and care in preparing the reference and was liable. However, on appeal, the Court of Appeal held that the bank did not assume responsibility to the casino, it being relevant that  reference had been requested but the bank did not know for what purpose.

Lesson: The reference giver is generally being asked by a prospective employer for information about an ex-employee because it has specialist knowledge. If the employer fails to do this and the prospective employer relies on the reference, then the reference giver could be liable for negligent misstatement to the prospective employer. However, this can be avoided by using an effective disclaimer or when a reference is given for an unknown purpose (as shown in the case described). Given that employee references are given for a specific purpose, i.e. to judge suitability for employment, it is less likely that an employer could argue that it did not know the purpose of the reference, which was the effective defence of Banca Nazionale del Lavoro in the case described.

Disclaimers and sickness absence

Case Number 4: AB v A Chief Constable [2014] EWHC 1965 (QC)

What happened? The claimant was a senior police officer with the defendant chief constable’s police force. Disciplinary proceedings were commenced against him alleging that he had improperly sought to influence a recruitment and selection process. During this time, he applied to a regulatory body for a job and was led to believe that any reference would not refer to the outstanding disciplinary proceedings. The claimant was offered the job subject to employee references being ‘entirely satisfactory’. A reference was sent which did not include information about the disciplinary proceedings and did not answer questions regarding the claimant’s sickness absence, which was extensive. After getting the job, the claimant received correspondence from the chief constable of the police force saying the initial reference had not answered all the questions and they intended to send a corrected response which they enclosed.

Judgement: The claimant argued that the corrected reference was in breach of the Data Protection Act 1998. There was no question that the contents of the reference amounted to personal data to which the Data Protection Act applied. Illness records would amount to sensitive personal data and no argument was advanced by the chief constable that this had been processed lawfully. The information about the disciplinary proceedings was deemed to be lawful for data protection purposes with the processing being ‘necessary for compliance with any legal obligation to which the data controller is subject’ – that obligation being the public law duty of honesty and integrity. However, given that the force had earlier given the claimant an assurance that employee references would be sent without such information, which was their policy and practice, and he had resigned from his position to take the new job, the force was found to be liable.

Lesson: The content of a reference amounts to personal data under the Data Protection Act 1998. Which means data must be disclosed fairly and lawfully. It is also important to note that the court mentioned that public sector workers have additional public law duties to act with honesty and integrity which would ordinarily mean that, in circumstances such as this case, providing a basic standard reference would be misleading.

Practical advice

Employers should have a clear policy, preferably in writing, about whom within the organisation can provide employee references, in what circumstances, what they can include and what they should not include. It would be useful for the policy to set out a template reference so that consistent wording is used. As shown by the case law, finding the line between providing useful information to a prospective employer and respecting the rights of the subject of the reference can be a delicate business. Taking a step back and making sure that all the information provided is fair and useful can be a good starting point. And finally, do remember to mark any reference ‘private and confidential for the addressee only’.

If you have any questions or need help dealing with employee references or other employment law issues please contact any one of our employment lawyers, Helen Monson or Imogen Finnegan, or call us on 0203 637 6374.

Dealing with redundancy

Dealing With Redundancy

Dealing with redundancy can be daunting for both employers and employees: employers need to ensure that they follow correct procedures and apply them fairly. Employees have a number of rights in a redundancy situation and both parties need to understand what these are. Before you read this article you may find it useful to check our settlement agreement calculator to see our estimate of what you should be entitled to receive from your employer if you are made redundant.

Dealing with redundancy from an employee perspective

Employees who are dismissed by reason of redundancy may be entitled to a statutory redundancy payment and they may be able to challenge the termination of their employment as an unfair dismissal.

The definition of "redundancy"

The definition of "redundancy" encompasses three types of situation: business closure, workplace closure, and reduction of workforce. The dismissal of an employee will be by reason of redundancy if it is "wholly or mainly attributable to" the employer:

  • ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it (business closure);
  • ceasing or intending to cease to carry on that business in the place where the employee was so employed (workplace closure); or
  • having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work (reduced requirement for employees).

Redundancy payments

Employees who are dismissed by reason of redundancy may be entitled to a statutory redundancy payment. Additionally, they may have an express or implied contractual right to an enhanced contractual redundancy payment. In circumstances in which an employer is liable to pay an employee a statutory redundancy payment, if the employer either fails to make the payment because it is insolvent or refuses to do so, the employee may apply to the Secretary of State for payment out of the National Insurance Fund.

Statutory redundancy payments

Under section 135 of the Employment Rights Act 1996 (ERA), employees with at least two years' continuous employment at the relevant date are entitled to a statutory redundancy payment if they are dismissed by reason of redundancy.

Statutory redundancy pay is calculated according to a formula set out in section 162 of the ERA 1996, which is based on age, length of service (subject to a maximum of 20 years) and pay (subject to the upper limit on a week's pay).

Claiming from the National Insurance Fund

Where an employer refuses to make a redundancy payment (or has made a part payment only), or the employer is insolvent, an employee may apply to the Secretary of State for a redundancy payment out of the National Insurance Fund under the scheme contained in section 166 of ERA 1996.

Contractual redundancy payments

In addition to a statutory redundancy payment, an employee may also be entitled to an enhanced contractual redundancy payment. This entitlement may be either express or implied:

  • If the employee's contract of employment expressly sets out a redundancy policy, the policy will be an express term of their employment. However, it is more common for a redundancy policy to become expressly incorporated by being set out in another document or collective agreement which is referred to in the employee's contract of employment. Another way in which a redundancy policy can be expressly incorporated into an employee's contract of employment is where a person with ostensible authority makes a verbal or written statement that results in a commitment by the employer to pay enhanced redundancy payments.
  • The most common way in which redundancy terms may be implied into an employee's contract of employment is where a set of redundancy terms are regularly applied in a particular trade or industry or by a particular employer. In order for employees to show implied incorporation of the enhanced redundancy terms into their contracts of employment, they must show that the custom in question is "reasonable, notorious and certain". This means that the policy's terms must be fair (and not arbitrary or capricious), must be generally established and well known, and must be clear cut.

In operating an enhanced redundancy payments scheme, an employer must be careful to ensure that the manner in which it applies enhancements will not leave it open to the accusation that it has disadvantaged some employees over others in a manner that is discriminatory. Age discrimination is a common issue in schemes which use age and/or length of service to calculate the payment, unless they closely follow the statutory redundancy pay model (above).

Redundancy and unfair dismissal

An employee who has sufficient qualifying service, i.e. has been employed for two years (although this time period depends on a number of factors and should by no means be taken for granted), is entitled not to be unfairly dismissed. Redundancy is a potentially fair reason for dismissal. Even if a dismissal is genuinely on grounds of redundancy, whether it is fair or unfair to dismiss for that reason normally depends on the application of the general test of fairness in section 98(4) of ERA 1996, namely whether the employer acted reasonably in dismissing the employee in all the circumstances.

A redundancy dismissal is likely to be unfair unless the employer:

  • Identifies an appropriate pool of employees for redundancy.
  • Consults with individuals in the pool.
  • Applies objective selection criteria to those in the pool.
  • Considers suitable alternative employment where appropriate, subject to a trial period.

Collective consultation (employer perspective)

Where 20 or more employees are being made redundant over a period of 90 days or less, an employer has a duty under the Trade Union and Labour Relations (Consolidation) Act 1992 to:

  • Inform and consult appropriate employee representatives. Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal takes effect. For less than 100 redundancies, the consultation period is 30 days.
  • Notify the Secretary of State (in practice a Form HR1). Notification must be received by the Secretary of State at least 45 days before the first dismissal where the employer proposes to dismiss 100 or more employees. Where less than 100 redundancies are proposed, the notification period is 30 days.

A tribunal may award up to 90 days' pay in respect of each employee where there has been a breach of the information and consultation duty. An employer may be fined if it fails to notify the Secretary of State.

Whenever there is an obligation to consult collectively, the employer will also need to ensure that it has followed a fair procedure in relation to individuals, including consulting with them properly, so as to minimise claims for unfair dismissal.

Alternatives to dealing with redundancy

When dealing with redundancy from the outset of the procedure (and throughout the consultation process), an employer should consider whether it can avoid making compulsory redundancies or reduce the number of compulsory redundancies.

If the employer is undertaking collective consultation, this is one of the matters over which it has a statutory duty to consult the employee representatives. It should also consider this during individual consultation as part of a fair redundancy procedure.

Initial steps that the employer should consider include:

  • Suspending or restricting recruitment.
  • Reduction or removal of overtime opportunities.
  • Not renewing the contracts of contractors.
  • Ceasing or reducing the use of agency workers.

If these initial steps are unavailable or are not sufficient, the employer could consider:

  • Inviting potentially redundant employees to apply for suitable alternative vacancies.
  • Inviting employees to volunteer for redundancy.
  • Inviting employees to consider early retirement under the pension scheme.
  • Temporarily laying off employees or reducing their hours. In some cases this may itself entitle the employees to claim a redundancy payment.

Dealing with redundancy - we're here to help

If you have any questions or need help dealing with redundancy or other employment law issues please contact any one of our employment lawyers Helen Monson or Imogen Finnegan or call us on 0203 637 6374.

Furlough EM Law

COVID-19 Furlough Job Retention Scheme

In this blog we explain what furlough leave is and how the Job Retention Scheme introduced by the Government as a result of COVID-19 can help employers and employees.

Please bear in mind the situation is fluid and if you would like advice around furlough leave or any other aspects of the COVID-19 Job Retention Scheme please contact one of our employment lawyers.


As a result of the economic impact of the COVID-19 pandemic, the Government has introduced the Coronavirus Job Retention Scheme. The scheme is intended to avoid redundancies by alleviating the pressure on employers to continue paying wages in full during the crisis period.

The scheme enables an employer and employee to agree to the employee being put on furlough leave i.e. a period of leave during which the employee is not required to work. The employer can then recover a proportion of the employee’s salary from HMRC. The level of reimbursement allowed will be the lower of 80% of wage costs or £2,500 per calendar month.

Once it is up and running the scheme will be backdated to 1 March 2020. The scheme will be open for three months and then extended if necessary. The Government expects the scheme to go live by the end of April 2020.

Which staff are included in the Job Retention Scheme?


The following individuals are covered by the scheme provided they were on the employer’s payroll on 28 February 2020:

  • Full-time employees.
  • Part-time employees.
  • Employees on agency contracts.
  • Employees on flexible or zero-hour contracts.

Employees who were made redundant since 28 February 2020 can qualify if they are re-engaged by their former employer.


The self-employed are not covered but a scheme is being set up to provide them with similar rights.

Does the employee have to be at risk of redundancy to be covered by the scheme?

The precise circumstances in which an employer can put employees on furlough leave remain unclear but it seems that the scheme is intended to cover employers who, without the scheme, would need to drastically cut their payroll as a result of the crisis, either through lay-off or redundancy. We will need to hear more from the Government about what evidence HMRC may require but we believe it is unlikely that employers will need to provide anything substantial to back up their claims. However, the Government has stated that it will retain the right to retrospectively audit all aspects of the scheme with scope to claw back fraudulent or erroneous claims.

Can you put employees on long-term sick leave on furlough leave?

Government guidance suggests that employees who are on sick leave or self-isolating should receive statutory sick pay (SSP) but can be furloughed once they have recovered or are no longer self-isolating.

It seems likely therefore that employees who are on long-term sick leave and have exhausted SSP will not qualify for furlough leave until they are fit for work.

Where an employer is selecting which employees to designate as furloughed, they must be mindful of the risk of discrimination if selection is linked to a protected characteristic such as disability.

Implementing furlough leave

What steps must employers take?

Government guidance states that employers should discuss the proposal with staff and make changes to the employment contract by agreement. It is a condition of eligibility for reimbursement that furlough leave is confirmed to the employee in writing.

Employers will need to:

  • Decide which employees to designate as furloughed employees.
  • Notify furloughed employees of the intended change.
  • Consider whether to consult with employee representatives or trade unions.
  • Agree the change with the furloughed employees in the form of a “furlough agreement” (more on this below). Most employment contracts will not permit an employer to reduce an employee’s pay, provide them with no work and change their employment status, without agreement. However, faced with the alternatives, which are likely to be unpaid leave, lay-off or redundancy, the majority of affected employees are likely to agree to be placed on furlough leave.
  • Confirm the employees’ new status in writing.This is an eligibility requirement for accessing the subsidy, and a record must be kept of this correspondence.
  • Submit information to HMRC about the employees that have been furloughed and their earnings through the new online portal, expected to be operational by the end of April 2020.
  • Ensure that the employees do not carry out any further work for that employer while they are furloughed.

Furlough Agreement

It is important that the agreement between the employer and employee for the employee to be placed on furlough is carefully drafted as it will amount to a variation to the employee’s employment contract. As well as covering rights to pay during the furlough leave itself, the agreement should address other benefits such as pension rights and bonus entitlement.

Deciding which employees to put on furlough leave

An employer could initially ask for volunteers. However, in some cases an employer may receive more volunteers than it wants to furlough. The procedure an employer follows to decide which employees to furlough may depend on its current financial situation. If the employer needs to very urgently furlough employees or make them redundant in order to be able to continue to trade, a limited selection procedure carried out on an urgent basis is likely to be acceptable. However, where an employer does not have any immediate financial concerns, it is likely to be more reasonable for it to follow a more comprehensive procedure in a similar way to redundancy scoring

It may seem unfair that some employees will be required to continue working, potentially increasing their risk of infection if they are unable to work from home, and others will be permitted to receive a substantial proportion of salary and not be required to do so. However, provided the employer has used appropriate, non-discriminatory criteria to choose who is granted furlough leave, it is possible for an employer to lawfully choose to furlough only part of the workforce.

Will employers need to collectively consult if they intend to put 20 or more employees on furlough leave?

The short answer is “yes” - the employer will have a duty to inform and consult appropriate employee representatives but this is a complex issue in these circumstances and what the employer should do depends on the employer’s position. If you are considering putting 20 or more employees on furlough leave please get in touch with us to discuss the best way forward.

Do employers have to top up the remaining 20%?

Employers are entitled to continue paying full pay during furlough leave, but they are not obliged to do so. If they do top up, they can only claim back employer national insurance contributions and minimum auto-enrolment payments up to the cap.

Withholding 20% of an employee’s salary will, however, amount to breach of contract and unlawful deduction of wages unless the employee gives their consent. It is expected that the majority of employees will consent since furlough leave is a better alternative than unpaid leave, lay-off or redundancy.

How does an employer make a claim to HMRC for reimbursement?

To claim, the employer will need to submit:

  • The employer’s PAYE reference number.
  • The number of employees being furloughed.
  • The claim period (start and end date).
  • The amount claimed.
  • The employer’s bank account number and sort code (UK bank account)
  • A contact phone number.

Employers can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated to 1 March 2020 if applicable.

Reimbursement will be paid via BACS payment to the nominated bank account.

The claim can only be made at the point at which the employer runs payroll or in advance of an imminent payroll because actual payroll amounts need to be submitted.

What can the employer claim back?

Employers can claim up to the lower of 80% of usual monthly wage costs or £2,500 per employee, plus the associated employer national insurance contributions and minimum auto-enrolment employer pension contributions.

Fees, commission and bonuses should not be included in the calculation.

The 80% calculation is based on the employee’s gross salary at 28 February 2020.

Auto-enrolment pension contributions and employer’s NICs can be reclaimed in addition to the cap.

The sum paid to the employee during furlough leave is subject to the income tax and national insurance in the usual way.

The reimbursement is made to offset those deductible revenue costs and should be treated as income in the business’s calculation of its taxable profits for income tax and corporation tax purposes, in accordance with normal principles.

If you have any questions or need help with any COVID-19 furlough issues please contact Helen Monson or Imogen Finnegan or call us on 0203 637 6374.

COVID-19 Employment Law London EM Law

COVID-19 Employment Law Issues

COVID-19 has put unprecedented pressure on businesses and their staff and has raised various employment law issues. An awareness of government updates and employment law will help you weather the storm. Here are some key points although please bear in mind the situation is fluid:

Coronavirus Bill 2019-2021

On 17 March 2020, the government published details of the Coronavirus Bill 2019-2021 and set out proposed emergency legislative measure to address the outbreak.

Important employment law issues raised include:

  • Employees and workers will be able to take emergency statutory volunteer leave in blocks of two, three, or four weeks’ unpaid leave. A UK-wide compensation fund will be established to compensate for loss of earnings and expenses incurred at a flat rate for those who volunteer through an appropriate authority.
  • Changes to statutory sick pay (SSP) include: allow for it be claimed from the first day of incapacity, which will have retrospective effect from 13 March 2020; enable employers with fewer than 250 employees to reclaim SSP paid in respect of the first 14 days of COVID-19-related sickness absence, which will have retrospective effect from 14 March 2020.

Statutory sick pay (SSP) and COVID-19 Employment Law

SSP is the right of all employees to receive payment from employers when they are unable to work due to illness. Many businesses offer sick pay policies in employment contracts.

In order to qualify for SSP an employee must be absent from work due to incapacity. Where an employee has not, at the point they are suspended, either been diagnosed with COVID-19 or exhibited symptoms, then it is unlikely that their absence will meet the definition of day of incapacity in the Social Security Contributions and Benefits Act 1992.

The deemed incapacity rules in the SSP regulations have been extended to explicitly include employees who are self-isolating or socially distancing following government guidance.

Is an employer entitled to send an employee home from work to self-isolate?

If the workplace and the nature of the role allow for remote working then this may provide the employer with an alternative to suspension for the purposes of self-isolation.

There may be a range of reasons that an employer may wish to send an employee home to self-isolate. The employer may be acting out of an abundance of caution, the employee may have had contact with someone who has been infected, or they may be exhibiting symptoms.

If there is an identified risk that an employee may have been exposed to COVID-19, then it is understandable, in light of an employer’s duty to protect the health and safety of other employees.

From an employment law perspective, the employer should consider whether it has an express right to require the employee to stay at home. If not, the question is then whether there is an express or implied right for the employee to attend work in these circumstances. It is unlikely to be a breach of implied duties to require an employee to stay at home in these circumstances, assuming there are reasonable and non-discriminatory grounds for concern, and the matter is dealt with appropriately, proportionately and sensitively.

What pay are employees entitled to when sent home?

Where the employer is able to continue work from home then, subject to any contractual provision to the contrary, they will continue to be entitled to their normal rate of pay.

If they are not able to do so then consideration would need to be given to the terms of the contract of employment, although most employment contracts will not provide for this type of scenario.

If an employee has been advised by government guidance to self-isolate or be socially distant then they will fall within the new deemed incapacity rules for SSP discussed above. In those circumstances is it likely that the employer could treat them as being on sick leave and pay them SSP (subject to any contractual sick pay policy).

Where an employee refuses to attend work due to fears about coronavirus, what action can the employer take and what pay are they entitled to?

If the employee can work from home, this may well resolve the issue. If not, the employer would need to consider the current public health advice, the specific reason that the employee is concerned about attending work and whether it would be discriminatory to refuse home working, take disciplinary action, or withhold pay.

If there is no discrimination angle, and the public health advice is such that the employee could reasonably be asked to attend work then it is possible that the employee could be investigated for misconduct in terms of refusal to follow a reasonable management instruction, and their unauthorised absence.

If the absence is unauthorised then the employee would likely not be entitled to pay as they are not willing to attend work.

Returning from ‘high-risk’ countries

As matters currently stand, government guidance does not advise self-isolation for those returning from countries with a high incidence of COVID-19. This means, arguably, an employer requiring an employee to self-isolate because they have returned from a high-risk country, will need to pay the employee full pay.

This does not seem to reflect the government’s intention. However, given the link between public health guidance on self-isolation and SSP it seems to represent the legal position.

Can we change our enhanced sick pay scheme to provide that only SSP is payable in the event of absence due to COVID-19?

Where the relevant employee’s sick pay entitlement is out in their contracts, to amend this will amount to a variation of contract. There are a number of ways an employer could achieve this:

Consent – employers could seek written consent of the relevant employees to the contractual change. While employees are unlikely to agree to a change in terms that is not in their favour, they may be willing to do so where their agreement may help the employer to stay in business.

Dismissal and re-engagement - where employees are unwilling to consent to a change in their contractual sick pay entitlement, an employer can consider dismissing them and offering them re-engagement on the revised terms. Even if the affected employees accept the new terms, they will be entitled to claim unfair dismissal in respect of termination and wrongful dismissal, if the employer does not give them the required notice to terminate.

Unilaterally imposing the change – employees may respond to a change that is imposed on them unilaterally in a number of ways. They may “work under protest” and bring claims for breach of contract or unlawful deductions from wages. Alternatively, they may resign and claim constructive dismissal.

Where the relevant employees’ contracts specify that their sick pay entitlement is set out in the employer’s separate sickness absence policy, which may be amended from time to time, it will be much easier for an employer to make the change. The employer should confirm the change in writing to employees and ideally ask them to provide written acknowledgment.

Lay-off and short-time working

Laying off employees means that the employer provides employees with no work (and no pay) for a period while retaining them as employees; short-time working means providing employees with less work (and less pay) for a period while retaining them as employees. These are temporary solution to the problem of no or less work. However, if employees are laid-off or put on short-time working in circumstances where the employer does not have the contractual right to do so then the employer will be in fundamental breach of contract entitling the employee to resign and claim constructive dismissal.

A better option is likely to be the Coronavirus Job retention Scheme which will pay employees' salaries of up to £2,500 a calendar month as long as they are kept on the payroll.

COVID-19 Employment Law: Coronavirus Job Retention Scheme

The introduction of a new Coronavirus Job Retention Scheme (furlough leave) was announced by the government on 20 March 2020. Under the scheme, all UK employers, regardless of size or sector, can claim a grant from HMRC to cover 80% of the wages costs of employees who are not working but kept on the payroll ("furloughed"), of up to £2,500 a calendar month for each employee. Employers can choose to top up the remaining 20% if they wish.

The Government will provide access to the scheme through an online portal which is currently under development. Once the scheme goes live it will be backdated to 1 March 2020. The scheme will be in place for at least 3 months. 

It is understood that the scheme will apply in respect of all employees on PAYE, including those on zero-hours contracts.

Employers cannot require employees to be furloughed unless the employment contracts allow for this which is highly unlikely. It is therefore advisable for employers to obtain the agreement of the employees to be furloughed within a properly drafted furlough agreement. For those employees who do not agree then you are left with either imposing furlough on them (which would amount to a breach of contract) or making them redundant.

We have published a separate blog dedicated to the COVID-19 Job Retention Scheme here.

If you have any questions or need help with any COVID-19 employment law issues please contact Helen Monson or Imogen Finnegan or call us on 0203 637 6374.

Statement Of Employment Particulars EM Law London

Statement of Employment Particulars: New Requirements for Employers

A statement of employment particulars is a written form that an employer must give an employee when the employee first starts working for the employer. It sets out the bare bones of the employment contract (more on this below).

From 6 April 2020 the statement of employment particulars is changing – more detail will need to be included.

This has come about as a result of recent legislation:

  • The Employment Rights (Miscellaneous Amendments) Regulations 2019 and;
  • The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018.

Requirements prior to 6 April 2020

In order to understand the changes made it is useful to have a firm grasp on what is required prior to 6 April 2020.

Section 1 Employment Rights Act 1996 (ERA) details that employees who are to work for more than a month must be provided with a statement of employment particulars. This is sometimes referred to as a ‘section 1 statement’ and it must be produced within two months of the start of employment. It must include:

  • Names of employer and employee
  • Date employment commences
  • Date of any period of continuous employment
  • Hours
  • Pay and interval of payment
  • Holiday entitlement and holiday pay

The ERA does not require information regarding disciplinary procedure to be included within the same statement but it must also be made available to employees within two months of employment commencing.

Requirements post 6 April 2020

  • The right to a statement of employment particulars will start from day one of employment and those working for less than a month are no longer an exception.
  • The definition of those affected has changed from ‘employee’ to ‘worker’ which means those with looser service contracts (worker contracts) will, in some cases, still have a right to a section 1 statement.
  • There is more information required in a section 1 statement and this must be contained within a single document. Particulars to be added are:
    • Days of the week a worker is required to work.
    • Whether working hours or days may be variable.
    • Maternity leave and paternity leave entitlement.
    • Remuneration or benefits provided by employer.
    • Probationary period, including any conditions and its duration.
    • Any training provided by the employer which the worker is required to complete and any other required training in respect of which the employer will not bear the cost.
  • There are other particulars which are now required in the same principal statement and not a supplementary one:
  • The notice periods for termination by either side.
  • Terms relating to absence due to incapacity and sick pay.
  • Terms as to length of temporary or fixed-term work.
  • Terms related to work outside the UK for a period of more than one month.
  • The determination of an average week’s pay must be based on data from 52 weeks rather than 12 weeks or the number of complete weeks for which the worker has been employed.

Worker/Employee distinction

A section 1 notice, under the new requirements, is now available to both employees and workers.

This places the onus on the employer to determine whether their contract is with an ‘employee’ or ‘worker’ and tailor the information to suit either definition. A worker being loosely defined as someone obliged to provide work personally, but not carrying on business where the employer is the customer. Someone who is genuinely self-employed will obviously fall outside of this definition.

Disciplinary and grievance procedures as well as probationary periods would not normally apply to ‘workers’ and therefore specifying these in a worker’s statement could imply that they are an employee. It is important that employers do not sanction unwanted or potentially harmful rights to those normally defined as workers.

Existing Employees

As of 6 April 2020 an existing employee can request additional information now required in a section 1 notice at any time up to three months after the end of employment. An employee has no longer than one month to give such additional information.

It is also important to be aware that if new provisions are introduced and they fall within the remit of the new section 1 notice then existing employees should be notified of these changes. This is the case even when the existing employee has not, up until that point, requested a new section 1 notice.

Action to be taken by employers

Given that employers will be required to produce statements for employees on day one it will mean that full details of job offers will need to established from the outset.

Existing contracts will need to be reviewed. New contracts will need to be updated. The worker/employee distinction will need to be considered.

We are currently helping clients with the new rules – it’s quick and straightforward work. If you are an employer and would like our help please contact Imogen Finnegan or Helen Monson or call us on 0203 637 6374.

Signing a contract document

Settlement Agreement Lawyers - Help for Employees

Our settlement agreement lawyers are experts in advising employees and employers on settlement agreements. Our settlement agreement lawyers are Helen Monson, Rhodri Thomas and Imogen Finnegan who are experts in employment law matters.

If your employment is coming to an end, it can be an uncertain and confusing time. Figures from the World Economic Forum suggest that 7.1 million white-collar jobs could be made redundant by 2020. If this happens to you, your employer may offer you a settlement agreement. This blog explains what a settlement agreement is and gives you practical tips on how to manage one.

Settlement Agreement Lawyers - The basics of the contract

Formerly known as a compromise agreement, a settlement agreement is a legally binding contract made between an employer and an employee used to resolve an issue in the workplace. Most commonly used in the case of redundancy or when an employee’s employment is being terminated, settlement agreements lawyers are often tasked to draw up a contract to provide an alternative to the employer and employee going to the employment tribunal.

In most settlement agreements an employee will formally agree not to pursue certain claims against their employer in return for a termination payment of some description. The settlement agreement will contain a clear breakdown of the payments which have been agreed and will also state whether any of them are to be made to the employee free of tax. Usually, the first £30,000 of compensation will be tax-free. Once a valid settlement agreement has been signed, an employee will be unable to make an employment tribunal claim about any of the claims listed in the agreement. It is recommended that settlement agreement lawyers draw up the contract because if the agreement is unclear or misses certain clauses the agreement reached between the employer and employee can unravel.

Settlement Agreement Lawyers: Practical tips

Know how much you’re entitled to (roughly!)

If you’ve received a financial offer, you need to know whether or not it’s fair. If you have a strong potential claim against your employer, then you are more likely to get a higher termination payment. If you do not, then there is not much incentive for your employer to pay you a large sum. You should consider what potential claims you could bring, how likely it is that those claims would succeed, and how much you would be likely to recover if they did. The length of time that you have been working for your employer may also be taken into consideration. Our settlement agreement lawyers can advise you on what you are entitled to.

Don’t be scared to negotiate

Before entering into settlement discussions with your employer, you should take some time to work out what you want to achieve and how you’re going to do it. Think about what’s most important to you and similarly, what you can do without. It may be helpful to think outside the box when negotiating a settlement agreement and consider whether there are any non-financial terms that you would like to include. A good, agreed reference is often part of a settlement agreement. Our settlement agreement lawyers are experts at negotiating settlement agreements.

Try and reach a deal

Remember, settlement agreements are voluntary. You do not have to enter a settlement agreement and you should be given a reasonable amount of time to consider the proposal. According to the ACAS code of practice, you should get a minimum of 10 calendar days to consider a settlement agreement, unless you and your employer have agreed otherwise. There are, however, several advantages to reaching a settlement agreement, particularly if the alternative is going to the employment tribunal. A settlement agreement provides certainty, is confidential, and can be concluded within only a couple of days. In contrast, bringing a claim to the employment tribunal may take months, be costly, and you may not come out with the deal that you were expecting.

Get independent legal advice

Settlement agreements can often be long, complicated documents. Our settlement agreement lawyers can help you consider whether you’re getting a good deal and whether you have any grounds for a claim against your employer. Settlement agreement lawyers can also help with the negotiation process. Getting independent legal advice is also a statutory requirement. An employee must receive advice on the terms and effect of a proposed settlement agreement, as well as its effect on the employee’s ability to pursue their statutory rights. If you do not, your settlement agreement will not be valid.

Settlement Agreement Lawyers: The legal bits

The exact contents of settlement agreements are largely down to the parties and will vary depending on what each party wants. Usually a settlement agreement will set out the arrangements on termination, details of the settlement payment, and provisions on confidentiality. If you breach a confidentiality clause by speaking out about the agreement and/or its terms, your employer will have the right to bring a breach of contract claim against you and you may have to pay them damages.

For a settlement agreement to be valid, it must also comply with six statutory requirements. These are:

• The agreement must be in writing.

• The agreement must relate to a particular complaint or to particular proceedings.

• The employee must get legal advice from settlement agreement lawyers on the terms and effect of the agreement and its effect on the employee’s ability to pursue any rights before an employment tribunal.

• The settlement agreement lawyers must have a current contract of insurance, or professional indemnity insurance, covering the risk of a claim against them by the employee in respect of the advice.

• The agreement must identify the settlement agreement lawyers.

• The agreement must state that the above conditions have been satisfied.

The most common claims that employers will seek to protect themselves from are claims of discrimination, unfair dismissal, wrongful dismissal, breach of contract and harassment. An employer will want to waive as many claims as it can, but there are some claims which cannot be waived. These include certain statutory employment rights claims, claims in relation to accrued pension rights, and claims for personal injury that might be caused in the future.

Whether you’re an employer or an employee, it is in your best interests to ensure that you have a well negotiated and well drafted settlement agreement. If you have any questions about settlement agreements please contact our settlement agreement lawyers Helen Monson or Imogen Finnegan.

Dismissing an employee

Dismissing An Employee - be honest!

Our lead software lawyers are Imogen Finnegan and Helen Monson who are experts in all employment law matters.

Here is an interesting case - Rawlinson v Brightside Group Ltd [2017] UKEAT 0142_17_2111 (21 November 2017) - which highlights the risks to an employer of not being honest about the reasons behind the dismissal of an employee.

Dismissing an employee - the case facts

In December 2014 Brightside Group, an insurance business, employed Mr Rawlinson as their in-house lawyer – Brightside’s “Group Legal Counsel”.

Mr Rawlinson’s employment contract gave him a 3 month notice period.

Shortly after Mr Rawlinson’s engagement, Brightside appointed a new CEO – a Mr Wallin. Mr Wallin became concerned early on about Mr Rawlinson’s performance and started an internal investigation within the business. Mr Rawlinson was aware that the senior management considered certain matters needed to be addressed but detailed concerns were not raised with him.

The upshot of the internal investigation was that by the end of March Mr Wallin decided that Mr Rawlinson’s position was untenable for reasons of his performance. Without communicating this to Mr Rawlinson the company began contingency planning for how to deal with accessing legal advice following Mr Rawlinson’s departure. The intention was to give Mr Rawlinson his 3 months notice and make him work that period to try and ensure a smooth transition.

On 14 April Mr Rawlinson met with senior management but was not told about the intention to dismiss him. During that meeting, Mr Rawlinson asked whether any further feedback had been received about him and was told it had not.

By 5 May, nothing had been communicated to Mr Rawlinson and Mr Wallin was frustrated that little progress had been made in terms of contingency plans. He raised his concerns with the Company Secretary who, at a meeting with Mr Rawlinson on 14 May dismissed him, informing him that the company were going to take a different approach to sourcing legal advice in the future and would use external legal advice reporting into the CEO. Mr Rawlinson was told he was being given three months' notice and his dismissal would be confirmed in writing. He was deliberately not told that he was being dismissed due to concerns regarding his performance “to soften the blow”.

Mr Rawlinson was shocked by the decision to dismiss him and told the Company Secretary that, as Brightside were outsourcing the legal services to an external law firm, TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) would apply meaning that he would become an employee of the law firm that the work was being outsourced to. Mr Rawlinson asked for the name of this law firm but the Company Secretary declined to comment because of course there was no law firm.

In response to the Company Secretary’s failure to provide the name of the law firm, Mr Rawlinson said that he considered Brightside to be in breach of contract and that he would therefore not work his notice period.

Mr Rawlinson brought various claims in the employment tribunal. He claimed that Brightside were in breach of TUPE for failing to inform and consult him on the outsourcing of the legal function and he also brought a claim for constructive wrongful dismissal, contending he resigned in response to a fundamental breach of contract, namely the implied obligation in every employment contract that the employer will not act so as to breach the duty of mutual trust and confidence that exists between the employer and the employee.

The employment tribunal rejected the TUPE claim finding that there was no relevant transfer.

The employment tribunal also found that the implied obligation on employers to maintain trust and confidence had not been breached stating that Brightside had not been obliged to give Mr Rawlinson a reason for the termination of his employment. Brightside was not legally required to give Mr Rawlinson feedback on his performance or to warn him of the intention to dismiss him.

Mr Rawlinson appealed the decision.

Dismissing an employee - the decision

The employment appeals tribunal found in favour of Mr Rawlinson. The tribunal concluded that in all but the most unusual of cases, the implied term (that an employer will not act so as to breach the duty of mutual trust and confidence that exists between the employer and the employee) had to import an obligation not to deliberately mislead. That did not necessarily place the employer under a duty to volunteer information but if the employer chose to volunteer information, it should do so in good faith.

Dismissing an employee - comments

If you are dismissing an employee, honesty is almost always the best policy. Perhaps Brightside thought they was doing Mr Rawlinson a service by not being candid about the real reasons for his dismissal. On the other hand, maybe Brightside were just trying to look after themselves. They wouldn’t have wanted a row with Mr Rawlinson – would you want to tell your in-house lawyer that you were dismissing him because he wasn’t up to his job? When looking at the case the appeals tribunal noted that Brightside had not been “entirely altruistic” – they had wanted Mr Rawlinson to work his notice period and to keep him on-side to help with an orderly hand-over.

Whatever the motivation, coming up with what Brightside thought was an inoffensive way to deal with Mr Rawlinson’s dismissal backfired. Mr Rawlinson thought that Brightside were being deliberately obstructive with him by failing to tell him the name of the outsourced law firm. As a result, he resigned immediately so there was no orderly 3 month hand-over and Brightside ended up in the employment tribunal.

Being honest with employees makes it less likely for the employer to trip up. It is worth bearing in mind that the “real” reasons for dismissal are likely to come out by the disclosure required if the employees makes a subject access request.

If you need any help dismissing an employee get in touch with Helen Monson or Imogen Finnegan.

London City Jobs Brexit

City Jobs Brexit: Coping with Redundancy

The way that City jobs will be affected by Brexit is still not clear but, in 2017, Deputy Governor of the Bank of England Sam Woods said that forecasts of 75,000 job losses were “plausible.” This figure has since been challenged but, with no real certainty in terms of what the true Brexit impact on jobs will be, many are preparing for round(s) of rapid redundancy.

City Jobs Brexit: employment in the City

Brexit day is still months away but the financial services industry is already proving a nervy place to be. The sector saw a 29% drop in job openings in the year to June 2018, as uncertainty over Brexit and employment slowed hiring. While it is now hoped that fewer jobs will move out of the financial services sector in London to Europe as a result of Brexit impact on the UK, more recent positive figures are not all that they seem. Goldman Sachs, for example, initially caused concerned by stating that it would be moving jobs to Paris but has now said it will also create 150 new jobs in London as part of its new Marcus retail bank. However, on closer inspection, 50 of the Marcus jobs will be in call centres, as opposed to financial services positions. So, the situation remains uncertain.

City Jobs Brexit: redundancies in the City

Given the dampened hiring climate in the City it’s crucial for anyone facing redundancy under these circumstances to get the best possible departure deal. It’s not currently known what hiring prospects in financial services will be like post-Brexit, which makes it even more important to secure the right exit package, whether that’s via redundancy pay or a settlement agreement.

City Jobs Brexit: Redundancy – the basics

  • You have the right to be given notice of redundancy. This is based on the number of years of service – 12 weeks’ notice for 12 years or more, one week’s notice for every year of employment for two to 12 years’ service and at least a week for anything below two years. These are the minimum periods of notice that an employer must give in law but your employment contract may contain longer notice periods.
  • You may not serve out your notice. An employer can offer pay in lieu of notice or you may be asked to take Gardening Leave, which means serving out the notice period away from the office.
  • You have the right to be consulted. Redundancy law requires employers to consult employees before dismissing anyone on redundancy grounds. Different time limits and consultation requirements apply, depending on the number of employees being made redundant.
  • Once you’ve received your redundancy notice you’re entitled to paid time off to look for other work (usually two days). You can also take unpaid leave for training and to look for another job, within reason.
  • Your employer may choose to offer you a settlement agreement rather than go through the redundancy process to determine redundancy pay.

City Jobs Brexit: The settlement agreement

Settlement agreements are often used in a redundancy situation as an alternative to redundancy procedures. They usually offer a cash payment in return for the employee waiving their rights to bring any kind of legal action against the employer.

In the UK, a settlement agreement must be in writing and will not be binding unless both parties have taken independent legal advice. If you are in a redundancy situation and presented with a settlement agreement, it’s crucial to take legal advice to ensure the agreement is valid but also so that you get the best possible deal.

City Jobs Brexit: What’s the purpose of a settlement agreement?

To bring an employment relationship to an end on agreed terms. In a redundancy situation, the use of a settlement agreement is often to save the time and resources involved in going through the full redundancy process. Settlement agreements are legally binding documents and so should not be signed without a sound understanding of the contents.

City Jobs Brexit: Are settlement agreements voluntary?

Yes. Employees being made redundant are not obliged to accept a settlement agreement that is on the table. If you refuse a settlement agreement then your employer will be required to go through the official redundancy processes in order to legally make you redundant.

City Jobs Brexit: Why do employers choose settlement agreements?

Employers like settlement agreements because they save time and money by avoiding the redundancy process. They also prevent a situation in which an employee feels that the redundancy process has not been properly or fairly handled and subsequently makes a claim against the employer for compensation for unfair dismissal. Once the settlement agreement is signed, as long as it was properly handled, the employee cannot make any future claims.

City Jobs Brexit: Why would an employee accept a settlement agreement?

As employers like settlement agreements, they tend to offer incentives to employees to make signing the agreement more attractive than going through a redundancy process. So, for example, the agreement will usually contain an offer to pay more as a settlement sum than an employee would receive if their employment came to an end via a standard redundancy process.

City Jobs Brexit: What type of clauses might you find in a settlement agreement?

1. Employee entitlement – this covers what the employee is entitled to in return for signing the agreement and could be a combination of:

a) Contractual payments including:

  • Payment in lieu of notice
  • Accrued, but not taken, holiday
  • Any benefits due during notice
  • Bonus payments
  • Stocks and shares

b) A compensation payment. Above the legal minimums, the amount of compensation offered is dependent on an employer. The first £30,000 is usually tax and National Insurance free.

2. A reference – agreed job reference wording should be attached to the settlement agreement and a clause inserted that requires an employer to refrain from any less favourable oral references.

3. Confidentiality – usually, employees will be required to keep the contents of the agreement confidential.

4. A “non-derogatory” clause – i.e. the employee cannot speak in a derogatory way about the employer. It’s a good idea to make sure that this is reciprocal.

5. Restrictive covenants – there may be restrictions in the agreement on who an employee can go on to work for in the future. Variations and waivers can usually be negotiated.

A redundancy situation is not something to ignore – the right support will be key when it comes to handling the process effectively. Settlement agreements can be complex but, if well negotiated, can help to secure a bright future.

Please get in touch with one of our specialist employment lawyers Helen Monson or Imogen Finnegan.

Contract for Services EM Law

Contract for Services?

Does your business engage consultants?

In a recent case (Sprint Electric Ltd v Buyer's Dream Ltd and another [2018] EWHC 1924 (Ch), 30 July 2018) the High Court ruled that, despite the litigants entering into what was called a “contract for services”, the true nature of the relationship was that of employer/ employee.

Surprisingly, this was a great result for the employer – it meant that ownership in the intellectual property rights in the software that the employee had developed belonged automatically to the employer. Remember – in a true contract for services / consultancy arrangement – the consultant will own the intellectual property in the materials that he or she creates unless the contract says otherwise. Not so for employees.

But while Sprint Electric may be popping the champagne the case will serve as a worrying reminder to businesses that just because they’ve called a contract a “consultancy agreement” or a “contract for services” and included “proper” consultancy clauses in it, this doesn’t mean the court (or HMRC) will agree. Our lead contract for services lawyers are Imogen Finnegan and Helen Monson who are experts in all employment law matters.

Here is a reminder of some of the things that the courts will look at to assess whether a relationship is one of employer/employee or client/consultant:

Contract for services - Factors indicating employment status

• The company is required to provide the individual with regular work and the individual must make themselves available to do the work.

• The individual is required to provide the contract for services personally. Either there is no right to appoint a substitute or any right of appointment is subject to the company's approval.

• The company controls what the individual does, how they do it and when they do it. However, those holding senior, professional or skilled positions may retain significant control over how they carry out their work but still be employees. The individual may also be expected to conform to standards of, for example, behaviour expected of others within the same working environment.

• The individual is not normally free to enter a contract for services with other organisations without the express permission of the company. The individual may be subject to restrictive covenants in their contract.

• The length of the engagement is not determined (with the exception of fixed-term contract for services) and does not relate to the performance of a specific task.

• The individual is paid a fixed amount on a regular payment date irrespective of performance targets or completion of a specific task (however, note that commission workers may be employees). They may receive a pension, bonus, private medical insurance, company car or other benefit and be entitled to company sick pay.

• The individual is integrated into the company. For example, they perform services which are similar to or substantially the same as those performed by an employee, their name appears on the internal telephone directory, they have a company e-mail address, they have a company business card.

• The company provides the individual with the facilities and equipment required by them to carry out their job.

• The individual is paid even if there is not sufficient work to keep them fully occupied. The individual assumes no financial risk in working for the company.

• The individual is not responsible for payment of income tax and national insurance contributions (NICs) on their earnings.

Contract for services - Factors indicating self-employed status

• The company is not obliged to offer work on a regular or frequent basis and the individual has no obligation to accept any work that is offered.

• The individual has the ability to determine when and how they work and is not under the direct supervision of the company.

• The individual is not required to carry out the contract for services personally and has an unqualified right to appoint a substitute.

• The individual is free to provide their services to whomever they choose without operating exclusively for one organisation.

• The individual is engaged for a finite period to carry out a specific task or project.

• The individual is paid on completion of a specific task or project or on a commission-only basis. They are not entitled to participate in any benefit schemes and will not normally be paid overtime.

• The individual is not sufficiently integrated within the company to have a defined role and does not perform services similar to or substantially the same as those performed by an employee.

• The individual provides their own equipment and materials in order to perform the contract for services.

• The individual risks their own capital in the business and will be personally responsible for any losses arising from their work. They may be required to correct any unsatisfactory work in their own time and at their own expense. Conversely, they may have the opportunity to profit from the success of the project.

• The individual is responsible for payment of their own income tax and NICs on their earnings and is responsible for registering for VAT if the level of their supplies exceeds the relevant registration limit.

If you need any help putting a contract for services together or if you want your consultancy / contract for services arrangements reviewed get in touch with one of our lawyers at EM Law. Neil Williamson, Helen Monson and Imogen Finnegan are specialists in this area.