Category Archives: Commercial

Gig Economy?

No FaceThe increase in ‘on demand’ relationships between commercial enterprises and individuals wanting to provide their labour in an informal and flexible way for short-term engagement opportunities poses a significant challenge to employment legislation and Her Majesty’s Revenue & Customs (HMRC).

The emergence of the so called “gig economy” defies traditional definitions of labour relationships as it is based largely around the use of technology platforms, often the mobile phone, to connect suppliers and users.
Prime examples are Uber, Airbnb and City Couriers.

If these engagements can be defined as employer/employee relationships, then current employment and taxation legislation will apply with the inevitable result of increased cost to commercial enterprises and increased protection for those supplying labour. The potential loss of revenue and absence of protection is leading to greater scrutiny of worker relationships in the ‘gig economy’ and in more traditional industries such as logistics, transport and construction where there is a practice of treating labour suppliers as self-employed.

Both Uber and City Couriers have been the subject of successful legal challenges to the self-employed status brought by labourers. There also appears to be an increase in the number of HMRC investigations conducted into employment status. The current uncertainty around a precise definition of “employee” that can be universally adopted by the legislature, commercial enterprises and individuals is certainly a cause for concern. Currently, UK law recognises three broad categories of labour provision; ‘employee’, ‘self-employed’ and ‘worker’ each carrying different rights and obligations

It appears that nowadays one approach that may be adopted by the courts to deal with thorny relationships that defy easy definition is to say, ‘you know it when you see it.’ Arguably such an approach inevitably leads to an increase in cases to determine employment status coming before the courts.

Historically, the courts have endorsed a list of questions, the answers to which assisted in determining whether the person or persons undertaking activities for a business was an employee, a worker or alternatively in business on their own account.

By way of example could an individual send someone else in their place to carry out the work instead of doing it themselves, were they entitled to paid holiday, did they have an opportunity to make a profit or run the risk of making a loss in carrying out the work, and could they turn the work down if it was given or were they legally obliged to do it? The answers to these questions were very often indicative of the type of relationship that existed. It appears that the weight given to these indicators by the courts has lessened if recent decisions are anything to go by. In the meantime, business owners should take heed, the label that the parties attach to the labour supply relationship will carry far less certainty without careful navigation through a number of signposts.

If you engage any labour on a self-employed basis and would like assistance in reviewing your current contractual relationships, contact a member of the team at FG Solicitors on 01604 871143.

Settlement Agreements – A Perfect Ending!

160519 Settlement AgreementSUMMARY: Learn more about settlement agreements with the answers to some of the most frequently asked questions.  

Q: When can we use a settlement agreement?

A:   Settlement agreements are often used to resolve workplace disputes, and to give the employer the certainty that once the agreement is signed there will be no subsequent employment tribunal claim from a disgruntled employee.  More often than not, the employment relationship will have broken down. The focus then is usually on avoiding unfair dismissal and discrimination claims. A whole raft of statutory employment rights and breach of contract claims can also be compromised.

There does not necessarily need to be a dispute as settlement agreements can be used in a variety of other circumstances where the employment will end.  For example, where there are performance or ill health issues, a voluntary exit or a restructure.

Settlement agreements are not however always about the employment relationship ending, as they can be used at any time during the employment relationship to resolve workplace disputes. For example, if there has been a complaint about how holiday pay has been calculated.

We would recommend that where a settlement agreement is being contemplated, legal advice is taken before any discussions take place with the employee so that any legal risks are identified and then can be properly managed.

Q: What are the benefits of using a settlement agreement?

A:  A settlement agreement allows an employer to manage legal, commercial and reputational risks all in one go in the knowledge that there will be no tribunal claim.  Significant management time, stress and expense can be saved.

Terms can also be agreed on issues that a tribunal would be unable to address. For example, the offer of a positive reference; or the introduction of post termination restrictions, where the existing contract is silent on the employee’s activities once they have left.

Settlement can also keep a dispute out of the public eye and be subject to strict confidentiality provisions.

These benefits need to be balanced with the fact the employee will want something in return, no matter how at fault they may be. Money is usually the main consideration but the circumstances may dictate an entirely different exit package.  There are also restrictions on an employer’s ability to compromise personal injury and accrued pension rights claims.

Q: Are there any essential requirements which need to be complied with to make the deal binding?

A: The following are essential to ensure that the employee is not able to bring an employment tribunal claim:

  • The settlement agreement must:
    – be in writing;
    – identify the complaints to be compromised; and
    – state that it satisfies certain legal requirements.
  • The employee must also have received independent legal advice.

A poorly drafted agreement or one which has been incorrectly signed may leave the door open for an employee to bring a tribunal claim, even if they have already been paid a sum of money.

Q: How long should we give an employee to consider a settlement agreement?

A: An employee should generally have at least 10 days to consider the settlement agreement and obtain legal advice. A shorter period could lead to allegations of undue pressure, permitting reference to the settlement offer in a subsequent tribunal claim, if settlement is not reached.

If there is a commercial imperative requiring a shorter period, legal advice should be taken.

Q: Do we have to pay for the employee’s legal advice?

A: An employer is not obliged to pay the employee’s legal costs.  To get the job done, an employer will often choose to make a contribution.  A good starting point is £250 plus VAT. The following factors may demand a higher contribution: locality, seniority of the employee and the complexity of the case.

Q: Can we recycle a settlement agreement used in the past for a different employee?

A: We would caution against recycling for two reasons:

  • Each employee’s circumstances are different; and these circumstances need to be taken into account in the agreement. A one size fits all approach will not provide the employer with the best possible protection; and may give no protection at all.
  • Any changes to the law may require amendments being made to the agreement.

Contact Details

If you would like to explore whether a settlement agreement may be the best option for your business where you have a workplace problem – please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Resolving Employment Disputes

10032845_mSUMMARY: What do you do when a tribunal claim is brewing…. Fight or Flight?

Whilst the number of tribunal claims are down, claims are still happening; unfair dismissal claims still prevail but often more complex issues such as discrimination and whistleblowing are involved.

Being on the receiving end of a tribunal claim can feel acutely painful from both a time and costs perspective. The following are a few simple do’s and don’ts to help manage a dispute which is brewing.

DO consider all the options for dealing with a dispute or a tribunal claim.

For example:

  • Acas Early Conciliation

Before a claim can be started an employee must contact Acas; Acas will then establish if the employee and employer can resolve the dispute without the tribunal’s intervention. Neither party has to participate in the process and if settlement cannot be reached, the employee is then free to claim.

Even if there is no interest in settlement, this process may serve as a reconnaissance exercise to understand more about the employee’s complaint in preparation for defending any subsequent claim.

  • Defend the case

Some employers may prefer not to shy away from the gaze of the tribunal because the complaint requires a robust response.  For example:

  • there is no case to answer;
  • the employee’s settlement expectations are unrealistic; or
  • there may be important financial and commercial considerations. Disabusing staff of a settlement culture may be one reason. Broader issues may also be at stake, which relate to pay, hours and holidays.
  • Judicial Mediation

Mediation has the advantage of taking place in a less formal setting in comparison with a full tribunal hearing. The mediator, an employment judge, will work with the parties on a confidential and without prejudice basis to explore if there is a way of resolving the dispute.  The parties are free to discuss their differences and consider the options for resolving the dispute, without the fear of their discussions being repeated if the mediation fails.

Agreement can be reached on matters which a tribunal would not be able to address. For example, the employee leaving, an apology or a reference being issued, or the employee being provided with assistance to find another job.

From an employer’s perspective a satisfactory commercial outcome, without having to concede its position can often be achieved.

  • Settle the case before the hearing

Once a tribunal claim has been issued, the Acas conciliation service will still be available to consider with the parties whether there is a solution. Settlement agreements can also be used.

DON’T ignore a tribunal claim once received.

Employers only have 28 days from the date when the claim is sent to respond to the tribunal setting out why the claim is disputed.  A response will usually be rejected if received after the expiry of the 28-day time limit.  Possible consequences are that a judgment could be issued without the employer being able to defend its position. This could be costly as compensation for discrimination claims is uncapped, and the maximum compensatory award for unfair dismissal from 6 April 2016 is the lower of £78,962, or one year’s pay.

Until and unless settlement is properly concluded, a response must always be filed.

DO consider ways to limit an employee’s opportunity to bring a claim in the first place.

Effective ways to reduce the risk include:

  • having legally compliant contracts of employment and policies and procedures;
  • introducing a robust appraisal system and ensuring current job descriptions exist;
  • communicating to staff the expected workplace standard of behaviour to reduce the risk of harassment and discrimination claims; and
  • dealing promptly and fairly with grievances and whistleblowing complaints.

DON’T forget …..

…. if a dispute arises, a sound strategy, which acknowledges the needs of your organisation and the merits of the complaint, will go a long way towards finding the right solution, whether that be a hard fight in the tribunal or a quick exit via the settlement route.

Contact Details

If you would like to identify the right strategy for your employment disputes, please contact a member of our Employment Law team:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.