Employment Law Solicitors

We deal with all those specific issues that employers and HR directors typically encounter. This includes advice on minimising the possibility of unfair dismissal claims, how to change staff terms of employment and managing internal restructuring, redundancy processes and related employee consultation periods. We also advise on employer responsibilities when it comes to dealing with the long-term sickness or disability of employees.

How can we change our staff terms of employment?

Changing the terms and conditions of employment across any organisation takes time and needs to be well planned.

How you go about it will depend on the extent to which changes are permitted by your existing contracts, how major the change is and to what extent staff are prepared to agree to the change.

A minor change may be easily achieved either because the contract permits the change or because staff will agree to it easily.

Significant changes may be more difficult to achieve. It may be necessary to negotiate to seek agreement, so timing and incentives may be important. If agreement cannot be secured it will be necessary to consider going through a process of terminating the existing contractual arrangement and offering re-engagement on revised terms.

Both negotiation and dismissal and re-engagement will require careful thought and planning. In many cases, there will be a need to adopt a formal process of  collective consultation with employee representatives or trade unions.

We want to restructure our organisation what are the legal requirements for redundancies and employee consultations?

Restructures are common, as organisations look to restructure to gain efficiencies and respond to changing market conditions but that doesn’t mean they are uncomplicated, so careful planning and consideration is important to ensure success.

• Consultation: Engage in a meaningful consultation process with affected employees and their representatives. The consultation should be early, transparent, and conducted in good faith.

• Collective Consultation: If you plan to make 20 or more employees redundant within a 90-day period at a single establishment, you must engage in collective consultation with trade union representatives (where there is a formal recognition agreement in place) or elected employee representatives. This consultation must begin at least 30 days before the first redundancy if 20-99 employees are affected and 45 days if 100 or more employees are affected.

• Individual Consultation: In addition to collective consultation, you should conduct individual consultations with affected employees. Provide them with information about the reasons for the redundancies, selection criteria, and potential alternative employment within the organisation.

• Selection Criteria: Ensure that the criteria used for selecting employees for redundancy are fair, objective, and non-discriminatory. Common criteria include skills, experience, performance, and attendance.

All staff under redundancy notice must be given a reasonable amount of time off to look for another job.

• Alternative Employment: Explore all reasonable alternatives to redundancy, such as offering redeployment to other roles within the organisation.

• Notice Periods: Follow the required contractual or statutory notice periods for termination of employment.

• Redundancy Pay: Calculate redundancy pay accurately based on the employee’s age, length of service, and weekly gross pay. Ensure that employees receive their statutory redundancy pay entitlement, plus any holiday allowance that is still owing.

The specific requirements and procedures may vary depending on the circumstances, so it’s essential to consult with an employment lawyer to help you navigate the restructuring process successfully and minimise legal risks.

How do we deal with long term sickness and making reasonable adjustments to support disabled employees?

Dealing with long-term sickness and making reasonable adjustments for disabled employees is a critical aspect of employment law compliance in the UK. There are a number of issues to consider:

Long-Term Sickness Absence – it is important to:

• Maintain open and empathetic communication with the employee during their absence, keeping them informed of company policies and procedures.
• Obtain medical evidence to understand the nature and expected duration of the illness.
• Explore options for temporary adjustments, such as reduced hours or modified duties, to facilitate the employee’s return to work.
• Comply with statutory sick pay (SSP) entitlements and any additional company sick pay policies.
• Carefully document all discussions, decisions, and actions taken in relation to the employee’s sickness absence.
• Continuously review and assess the situation, balancing the needs of the business with the rights and well-being of the employee.

Reasonable Adjustments for Disabled Employees – you should take the following into account:

• Identify employees with disabilities and engage in open conversations about their specific needs and challenges in the workplace.
• Conduct an individual assessment of what adjustments are required, taking into account the employee’s disability and their role.
• Consider a range of adjustments, such as flexible working hours, modified duties, ergonomic equipment, or additional support and training.
• Ensure that adjustments are reasonable, practical, and do not impose an undue burden on the business or the individual.
• Document all discussions and agreed-upon adjustments in writing, creating an adjusted work plan if necessary.
• Regularly review and update adjustments as the employee’s needs or job role evolve.

How do we avoid claims for unfair dismissal?

Every employee who has the qualifying period of service (normally 2 years) has the right not to be subject to an unfair dismissal. If there is to be a dismissal, an employer must show that the reason (or if more than one, then the principal reason), falls into one of the 5 potentially fair reasons set out in the Employment Rights Act 1996.

These 5 categories are as follows:

• The employee lacked capability or qualification (in relation to the work they were employed to do).
• The dismissal was a result of the conduct of the employee (such as dishonesty, poor attendance, failure to follow instructions, which can amount to gross misconduct).
• There was a genuine redundancy.
• The continuation of employment would contravene a statute, for example the Employee needs to drive in their employment, but has been banned.
• Some other substantial reason (“SOSR”). This would be a dismissal which does not fall within any of the above reasons. Some examples are where there is pressure from a customer, or where there is a non-renewal of a fixed-term contract, such as a maternity leave cover.

To protect your business against claims for unfair dismissal it is important to

• Have clearly defined and well documented policies and procedures which include disciplinary and dismissal procedures. Ensure that employees are aware of these policies.
• Apply dismissal procedures consistently across all employees. Avoid discrimination or bias in decision-making.
• Before considering dismissal, conduct a thorough and impartial investigation into the circumstances leading to the potential dismissal. This includes gathering evidence and allowing the employee to present their side.
• Notify the employee in writing of the reasons for possible dismissal and invite them to a meeting to discuss the matter. Give the employee a reasonable opportunity to respond.
• Inform employees of their right to be accompanied by a colleague or trade union representative at disciplinary and dismissal meetings. Respect this right.
• Provide employees with the opportunity to appeal the dismissal decision. The appeal process should be impartial and conducted by a different individual where possible.
• In cases of poor performance or misconduct, consider alternative disciplinary actions before resorting to dismissal. This may include warnings, training, or performance improvement plans.
• Keep detailed records of all meetings, decisions, and communications related to the dismissal process. These records can be crucial if a claim is filed.
• Provide the appropriate notice period or payment in lieu of notice as per the employment contract or statutory requirements.
• Train HR personnel and managers in employment law and proper dismissal procedures to minimise the risk of procedural errors.
• Consider offering a settlement agreement when appropriate, which allows for a mutually agreed termination and waives the employee’s right to bring employment claims.

Issues that concern executives and board members include implementing protocols for managing board disputes and conflicts and how to minimise legal risk and potential harm to the business when terminating the engagement of a board member. We are often asked to advise on confidentiality and non-disclosure agreements and post-termination restrictions.

We are increasingly asked to advise on the key legal considerations to take into account when devising compensation packages for Board members, rewarding performance and encouraging loyalty.

Executives and Board members 

How do we minimise legal risk and potential harm to the business when terminating a board member? 

There may come a time when you want to remove a director from your business, for example if they are guilty of misconduct or neglecting their duties or if there is simply a need to restructure. These situations can be difficult and emotional and it is often beneficial to involve a lawyer to help guide you through the process:

1. By thoroughly reviewing the board member’s service agreement and consulting the company’s articles of association. A director will usually be both an employee and a director, steps will need to be taken to terminate both. Provisions relating to termination of employment will be in the service agreement and this may also include requirements on the individual to resign from their directorship on termination. The articles of association set out how the company will be run and will set out the necessary mechanism for removing directors from office. Both documents are likely to be relevant in this scenario.
2. If will be important to identify valid and justifiable reasons for terminating the board member’s employment. Our employment lawyers can help you to understand what is needed and what evidence you may need. To avoid the risk of unfair dismissal, following the right process is equally important and we can guide you through the steps required.
3. With high level terminations, even though the same legal principles will apply as for other employees, it is often the case that a mutually agreeable settlement agreement is preferred to engaging in a full formal process, particularly for performance related issues that might become drawn out; the relationship is likely to be strained during any process and, at this point, the individual is still a member of the board of directors. At DMH Stallard, we can help you to explore negotiation or mediation to reach a mutually agreeable solution.
4. You should be mindful that an outgoing board member may still have the right to access information about the running of the business while they remain a director and this could include information relating to your plans for them. There may also be corporate governance procedures to consider. Our employment lawyers would guide you through this and how to mitigate the legal risks.
5. A board member is likely to have important contacts with your key clients or customers and will also have had access to your highly confidential information. We can review and advise on the level of protection that you may already have any whether further confidentiality agreements are needed.
6. Finally, we would assist in creating a transition plan to ensure a smooth handover of responsibilities and minimise operational disruption resulting from the board member’s departure.

How can we protect our business effectively through confidentiality and non-disclosure agreements and with post-termination restrictions? 

Employers place a lot of trust in their employees – particularly senior employees.

Whilst it may be difficult to have a blanket protection, often the starting point is to manage confidential information through the use of confidentiality clauses and restrictive covenants in employment contracts.  It is important to:

1. Identify the specific types of sensitive information and trade secrets that need protection. This could include customer lists, proprietary technology, financial data, and business strategies.
2. Comprehensive provisions should be drafted into employment contracts that clearly define what constitutes confidential information and establish strict guidelines for its protection. These agreements would also include post-termination restrictions, specifying the duration and geographic scope of restrictions on the employee’s ability to use or disclose confidential information.
3. Depending on the business’s needs, our employment lawyers would customise confidentiality provisions, non-compete and non-solicitation clauses. Careful drafting is crucial, particularly for post-termination restrictions, as they will not be enforceable if the drafting is ambiguous or the provisions are left wider than absolutely necessary to protect legitimate business interests. Our employment lawyers can guide you through what is needed and prepare restrictions that give the best possible chance of protecting your business.
4. In addition to restrictions themselves, there can be other mechanisms for protecting your business, such as the use of “garden leave” where the employee is paid, but not allowed to work or access work systems during the notice period. This can prevent the dissemination of confidential information. Our employment lawyers can advise on the options available and assist with the necessary wording for employment contracts.
5. Finally, we would recommend the importance of regularly reviewing and updating confidentiality provisions and post-termination restrictions to ensure they remain relevant and enforceable.

In summary, our employment lawyers can help safeguard your business through well-drafted contracts with post-termination restrictions that protect sensitive information, while also ensuring legal compliance and providing a mechanism for enforcement if needed. These agreements are valuable tools for protecting a company’s intellectual property and competitive advantage.

What are the legal considerations when choosing compensation packages for board members to reward performance and encourage loyalty? 

Selecting compensation packages for board members in the UK involves various legal considerations aimed at rewarding performance and fostering loyalty while adhering to regulatory requirements and corporate governance principles and you must meet strict legal requirements.

1. Most companies will need to disclose the value of its directors’ remuneration, ensuring that shareholders and the public can evaluate them.
2. Compensation packages should align with shareholders’ interests and long-term performance. Many companies use share-based incentives, such as stock options or performance-based share plans, to tie board members’ rewards to the company’s success.
3. Compensation packages should include well-defined performance metrics that directly link rewards to the achievement of strategic goals. These metrics should be measurable and based on financial and non-financial factors, such as environmental and social performance.
4. To encourage loyalty and accountability, compensation agreements may include claw back provisions. These provisions allow the company to recover bonuses or incentives in cases of financial misconduct or misstatement, or in the event of a change in circumstances or final adjustments to profit figures.
5. Compensation packages must adhere to legal limits and regulations. Shareholder approval may be required for packages exceeding these limits.
6. Compensation should be benchmarked against similar companies to ensure competitiveness. However, excessive packages that appear disconnected from performance can lead to shareholder dissent.
7. Compensation structures should discourage excessive risk-taking by board members. If incentives encourage behaviour that could harm the company’s long-term health, it may raise concerns.
8. Compensation packages must not discriminate against any board member based on gender, ethnicity, or other protected characteristics, in accordance with anti-discrimination laws. There may also be gender pay gap reporting requirements.
9. Compensation should be subject to annual reviews to assess its effectiveness in motivating and retaining board members. Adjustments may be necessary to address changing circumstances.

Choosing compensation packages for board members in the UK requires a delicate balance between rewarding performance, promoting loyalty, and complying with legal and governance principles. Transparency, alignment with shareholder interests, and adherence to regulatory limits are central considerations in designing these packages. Our employment lawyers can guide you through this and, once the details have been chosen, we can assist you with the necessary drafting; litigation over poorly worded bonus or incentive schemes is very common, careful drafting is essential.

Navigating IR 35 issues is a complex legal challenge.  At DMH Stallard we have the skills and experience to help you successfully navigate and comply with the tax regulations, assess contracts and avoid and resolve disputes if they arise.   We can provide essential expertise to protect your business from potential liabilities and guide you through the minefield of IR35 legislation.

How do I know if my business is impacted by the off-payroll working (IR35) rules?

If your business is using contractors who provide their services through an intermediary (usually a personal services company (PSC)) your business will be the ‘end user’ in the supply chain and will be required to decide whether the contracting arrangements constitute ‘deemed employment’ or not.

The rules apply to both mid and large public and private sector organisations who satisfy two or more of the following criteria:

• More than £5.1 million in assets
• More than £10.2 million turnover
• More than 50 employees

What obligations are we under to determine the status of the contractors we engage? What are the consequences if we don’t comply?

If your business falls within scope of the rules and needs to decide whether ‘deemed employment’ exists you must carry out a ‘Status Determination’. The outcome of that determination must be communicated via a Status Determination Statement to the individual and the party you are directly contracting with. Failure to do so will place a financial risk on the end user as it will be considered to have the responsibility to deduct any tax and National Insurance contributions that should have been deducted by the fee payer i.e. the entity contractually obliged to pay the intermediary/Personal Service Company. 

To what extent do the working arrangements between the contractor and end client determine the contractor’s status?

These are central to the determination of status and established tests such as personal service requirements, control, mutuality of obligation and whether the contractor is genuinely in business on their own account will need to be analysed before a decision can be made.

How do we ensure our contractual documents with the parties reflect the reality of the arrangements?

Written agreements are essential to document the intentions of the parties and provide clarity on the services being provided. It will be necessary to set out a clear scope of services to be provided. This requires each agreement to be tailored to the services required and for those involved in the arrangements for the services to be fully appraised of these requirements.

How do we avoid the risks of a contractor being seen as an employee or worker?

Organisations often spend time and money putting together a detailed written agreement to regulate the arrangements, but then fail to monitor whether the way in which the services are being provided mirror the agreement. Those involved in managing contractors need to be aware of the risks of inadvertently changing the status of contractors by seeking to control how the services are provided and integrating contractors into the business. Regular audits should be carried out to ensure the status of the arrangements are as originally intended.

Our advice includes issues around invoicing and compliance with the relevant legislation as well as guidance on how recruiters are impacted by the Off Payroll Working Rules (IR35). We also regularly advise on the specific requirements recruitment agencies need to be aware of when entering contracts with government bodies and how agents must approach different classes of employees – from temporary workers to self-employed consultants and those offering services via an umbrella company or Personal Service Company.

Is my invoice to my client compliant with the relevant legislation and therefore payable?

Recruitment agencies and businesses must, like other UK businesses, issue invoices in compliance with UK tax and company law and include details such as the recruiter’s name, address, contact details and company registration number. They must also provide the client’s details, a breakdown of services provided, the rate or fee agreed upon and the total amount due. The invoices should, of course, include Value Added Tax (VAT) where applicable.

There are also industry-specific obligations. Recruitment businesses that do not comply with the Employment Agency etc. Regulations 2003 may not be able to invoice for “temp to perm” introductions at all. Regulation 10 sets out the steps required to charge a temp to perm fee. If the steps are not agreed with your client, no temp to perm fee will be payable.

It is possible, in some circumstances, to opt out of this part of the 2003 Regulations but this requires careful timing and notice of the opt out must be given to the client. If these provisions are overlooked, your invoice to the client for a transfer fee will, again, not be payable.

Do my Terms of Business need to be amended in response to the “Off  Payroll Working Rules”, and do these Rules apply to my business  at all? 

As a recruitment agency in the UK, it is advisable to review your terms of business to ensure they take account of the “off-payroll working rules”.  These rules were introduced to ensure that workers who supply themselves through a Personal Service Company, but who would otherwise be regarded as employees, are taxed as employees.

Here are some key considerations when amending your terms of business to comply with the off-payroll working rules:

1. Determination of Employment Status – Set out clearly who the end user of the worker will be. This will almost certainly be your client. It will be your client’s responsibly to determine the status of the worker you have supplied to it. Your client will then confirm the workers status by issuing a so called “Status Determination Certificate”. Ensure than, in your agreement with your worker, they are obliged to provide accurate information about their status to your client.
2. Define who gets the SDC (Status Determination Certificate) – As you are in the “contractual middle” between your client and the worker, (and any third party who supplies the worker to you), set out clearly that you are to receive a copy of the SDC from your client.
3. Communication and Dispute Resolution – Include provisions for the communication of information between you, the client, the worker and any third party that deal with any appeals by the worker about your client’s SDC.
4. Payment and Deductions: include provisions that give you flexibility to alter the payments due from your client to reflect the increased deductions that may be required by a SDC that alters the worker’s status. For the same reason, also ensure that your agreement with your worker or third party limits the amount you need to pay to them to the amount you receive from the client for their work. Ensure that your invoicing and payment processes align with these requirements.

It is important to seek legal advice when amending your terms of business to ensure they are compliant with the IR35 regulation generally and with the off-payroll worker rules, in particular. This area of law can be complex, and non-compliance can result in financial penalties, so taking proactive steps to align your terms with the rules is essential for your agency’s legal and financial well-being.

My business is about to enter into a contract with a Government body and not on my Terms of Business. What should I be concerned about?

Entering into a contract with a government body in the UK can be a significant opportunity for your recruitment agency, but it comes with some unique considerations and potential challenges. Here are key points to be aware of:

1. Public Procurement Regulations: Government contracts are subject to strict public procurement regulations. Ensure that your agency complies with the specific procurement rules and procedures of the government body. These may include competitive bidding, transparency, and fairness requirements.
2. Terms and Conditions: Government contracts often come with their own terms and conditions, which are likely to differ from your standard terms of business. These are likely to include the following:

• Compliance and Reporting: Government contracts often require rigorous compliance and reporting, including financial transparency, diversity and inclusion initiatives, and adherence to specific regulations. Be prepared to meet these obligations and maintain thorough records.
• Payment Terms: Government bodies may have longer payment terms compared to private clients. Ensure that your agency’s cash flow can accommodate these extended payment cycles.
• Data Security and Confidentiality: Government contracts may involve handling sensitive data. Implement robust data security measures and ensure that your agency complies with data protection laws, such as GDPR.
• Insurance and Liability: Review your insurance coverage to ensure it aligns with the specific requirements of the government contract. Government bodies often have strict liability provisions.
• Dispute Resolution: Understand the dispute resolution mechanisms outlined in the contract. Government contracts may require alternative dispute resolution methods or adherence to specific procedures for dispute resolution.
• Performance Metrics: Government contracts often include performance metrics and Key Performance Indicators (KPIs). Ensure your agency can meet these requirements and maintain a high level of service.
• Audits and Inspections: Be prepared for audits and inspections by government auditors. Maintain meticulous records and documentation to facilitate these processes.
• Termination and Renewal: Government contracts may have unique termination and renewal clauses. Familiarise yourself with these to avoid unexpected contract changes.

It’s crucial to engage legal counsel to navigate these complexities effectively. Government contracts can be lucrative but require strict adherence to regulations and terms, making thorough due diligence and compliance essential for your agency’s success in this sector.