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, but they can also 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, so he or she can get advice on the terms of the agreement and any claims that they might have against the employer. Typically, agreements 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.
Anyone who has been employed for two years or more has the strongest rights, but some dismissals are automatically unfair regardless of length of service. Examples include claims of being dismissed due to discrimination or complaints about health and safety. If an employee has asserted other statutory rights then he or she can bring a claim without having two years service.
If an employer wants to dismiss an employee, they have to establish a fair reason to do so, the most common being redundancy, misconduct and incapability. They also have to follow a fair dismissal procedure.
Employees have a right not to be discriminated against, although the law only relates to nine protected characteristics, namely age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
If an employee with one or more of these protected characteristics is treated less favourably in some way as a result, then he or she will be protected. 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 frequently take longer to decide and the highest awards of compensation are often made in discrimination claims.
Redundancy, TUPE & business reorganisation
Businesses constantly change. They start up, they grow, they decline, they merge with other businesses and they restructure. Typically, such changes affect the number of employees needed and the type of jobs available.
Rights have to be managed during these processes. Employees should not be thought of or treated as 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 & disciplinary procedures
Employers 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 exist to ensure any grievances are dealt with promptly and fairly.
In terms of discipline, the general principle is that employees cannot reasonably be blamed for not maintaining standards, if these have not been clearly set out. So, a disciplinary policy should clearly state the standards that are required and what would amount to misconduct or gross misconduct. There should also be clear procedures to ensure employees get a fair hearing.
Drafting contracts & policies
Employers are legally required to provide an employee with a statement of formal contract terms within two months of the employment start date. The terms should include the employee’s name, job title, place of work, pay details (including holiday and sick pay), pension entitlement and notice period.
Another factor which might be considered is whether employers would get greater protection by including additional contract terms. Examples might be an entitlement to suspend an employee or require a medical assessment; or to impose confidentiality obligations and restrictions regarding return of property or not working for competitors when he or she leaves the job.
In addition to the terms of these contracts, employers should also think about other relevant policies, which often form a staff handbook and are more flexible, so can be easily changed. 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 & casual workers
Not all of the people you work with will be classed as employees.
Workers, who at first glance are similar to employees, have more flexible contracts and, typically, fewer employment rights (for example, generally they cannot claim unfair dismissal or a redundancy payment). However, they still have the right not to be discriminated against as well as the entitlement to receive the national minimum wage, and to be paid holiday and statutory sick pay.
The self employed 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 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.
These 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 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 expert in identifying solutions and negotiating to ensure the best possible outcome for your business.
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