In simple terms, a settlement agreement allows an employee to waive some, or all, of their employment rights in return for a sum of money. These agreements are often entered into to bring an end to a claim brought by an employee. However, they are also used to simplify the legal process when businesses need to merge or restructure.
As part of the process, the employer agrees to pay the employee’s reasonable legal expenses to enable the employee to get advice on the terms of the agreement and any claims that they might have against the employer. Agreements typically contain clauses dealing with confidentiality, return of company property and any tax issues affecting the payment of compensation.
Employees have a general right not to be unfairly dismissed.
Employees who have been employed for two years or more have the strongest rights. However, some dismissals are automatically unfair regardless of length of service. For instance, if employees claim that they have been dismissed because they have been discriminated against, have complained about health and safety or asserted other statutory rights then they can bring a claim without having two years service.
If an employer wants to dismiss an employee it has to establish a fair reason for the dismissal. The most common fair reasons for dismissal are redundancy, misconduct and incapability.
If employees want to dismiss employees for one of the fair reasons then they must also ensure that a fair procedure is followed.
Employees have a right not to be discriminated against. However, the law only relates to nine protected characteristics, namely age, disability, gender re-assignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
The law protects employees with a protected characteristic who have been treated less favourably in some way as a result of their protected characteristic. Discrimination rights also protect people when they apply for jobs.
Slightly different rules apply to each protected characteristic and the rules on discrimination are complicated. Cases often take longer to decide and the highest awards of compensation are often made in discrimination claims.
Redundancy, TUPE and Business Re-organisation
Businesses constantly change. They start up, they grow, they decline, they merge with other businesses and they restructure. Such changes typically result in changes to the number of employees required and the types of job roles available.
Employee rights have to be managed during these processes. They should not be an ‘afterthought’ during what is often a challenging time of change for the business.
Employers will be required to treat employees fairly and there will usually be an obligation to consult employees on the proposed changes in advance of them being made.
Grievance and disciplinary procedures
Employees are required to have policies in place to fairly deal with employee grievances and disciplinary matters.
Employees should know who to submit a grievance to and how to submit it. They should also be informed what processes and procedures are in place to ensure that grievances are dealt with promptly and fairly.
In terms of discipline, the general principle is that you cannot reasonably blame employees for not maintaining standards if you have not clearly set out what those standards are. A disciplinary policy should therefore set out the standards that are required and what amounts to misconduct or gross misconduct. There should also be procedures in place to ensure that employees get a fair hearing.
Drafting contracts and policies
There is a legal requirement that employers provide their employees with a statement of formal contract terms within two months of their employment start date. Such terms will include the employers name, job title, place of work, pay details (including holiday and sick pay), pension entitlement and notice period.
Employers will need to decide whether they can be better protected by having additional contract terms which might include an entitlement to suspend an employee, and entitlement to require an employee to attend a medical assessment and to impose confidentiality obligations and restrictions on the employee after they leave their employment regarding the return of property and not working for competitors.
In addition to contracts of employments, employers should also consider other relevant policies which often form a staff handbook. Such policies are more flexible than contract terms and can be easily changed by the employer. Examples include grievance and disciplinary, equal opportunity, use of electronic communications, anti bribery and corruption and family friendly policies (such as maternity and flexible working policies).
Contracts for self-employed and casual workers
Not all of the people that you work with will be classed as employees.
Workers, who at first glance are similar to employees, have more flexible contracts and typically have fewer employment rights (they generally have no right of unfair dismissal or a right to a redundancy payment). However, they still have the rights not to be discriminated against, an entitlement to receive the National Minimum Wage and an entitlement to be paid holiday and statutory sick pay.
Self employed people do not have the rights associated with employees or workers and are typically engaged to provide a specific service.
It is very important to determine which category of person anybody working with an organisation falls into as there are serious tax and related consequences if you get this wrong. Having a written contract in place at the outset to regulate your relationship is the most important protection.
Employment rights arise from many different sources including international law, UK Acts of Parliament, regulations, the decisions of judges in decided cases and custom and practice within particular industries and sectors.
Keeping up to speed with employment rights is essential if disputes within the workplace are to be identified at an early stage. Dealing with disagreements and misunderstandings promptly can avoid damaging and costly disputes.
Taking early advice on your rights and obligations is the starting point. We are also experts in identifying solutions for you and negotiating on your behalf to ensure the best possible outcome for you.
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