Employment Law for Employees and Senior Executives

In cases like this, if as a long-serving, senior individual you have been invited to leave the business, there will often be a mixture of emotion.  In our experience it’s important to seek early, informed advice. Is this a situation where a swift, positive settlement might be achieved, allowing you to move forward to the next stage of your career?  Or is this a situation where you are being pressurised into leaving and need us to get behind you to establish the extent of the Board’s resolve, and the strength of its legal position?  In such cases a swift, aggressive stance may be called for, threatening and pursuing litigation.

What is usually critical is the need for you to get a clear assessment of the strength of any potential legal claims you may have (whether for discrimination, whistleblowing, breach of contract and/or unfair dismissal), and the costs and risks of embarking on formal litigation.  This enables you to meaningfully weigh up any terms being offered for an early agreement.

Employers will want you to sign an effective waiver of any potential claims that you may have on leaving employment. This is most commonly done be means of a Settlement Agreement, which requires the departing executive to have received independent legal advice as to the terms and effect of the Agreement. In most cases, the employer will pay a contribution towards the executive’s legal costs (in some cases that contribution can be many thousands of pounds).

Some executives instruct us immediately to negotiate detailed settlement terms directly with their employer. In other cases, we might help the senior executive reach ‘in principle’ terms, and we then review the employer’s draft agreement to ensure that the agreed terms have been properly incorporated into the formal documentation.

We’ll work with you to identify areas of potential risk for you. Where necessary we’ll seek to negotiate improved terms to help manage risks in areas such as tax liabilities, ongoing restrictive covenants and potential damage to your reputation.

There are many myths and misunderstandings about restrictive covenants limiting what an employee can do after leaving their employer.

The most fundamental of these is that such restrictions are unenforceable.

This is incorrect. If you breach a restrictive covenant, you could be liable for damages. You could also be made the subject of a permanent injunction to prevent further breaches.  In extreme cases, where you continue to breach the terms of a court order requiring compliance with the restrictions you could face imprisonment.

Critically, your new employer (or any other party who is encouraging you to breach the restrictions) can also be liable to a claim for damages. Tactically, the former employer may seek to engage the new employer at an early stage, and the new employer may find it easiest to simply sever ties with you.

However, a former employer will need to show that the terms of the restriction are not too broad (whether in duration, geographically or in some other way) and that it seeks to protect a legitimate interest which the employer can identify.

While it is often possible to successfully defend the terms of the restriction being enforced, this is an area where early, expert advice can make all the difference.

If a previous employer has indicated that they believe you are breaching a restrictive covenant you should avoid detailed engagement with that employer until you have taken specialist advice. DMH Stallard acts regularly in cases like this, successfully defending employees who have been unfairly accused by ex-employers.  Where necessary, it may be preferable to reach agreed terms with your former employer at an early stage, thereby retaining positive relations with your new employer and avoiding potentially expensive litigation for you.

Our many years of experience of working with clients in this vulnerable and distressing situation means we can robustly protect your rights while ensuring we get the best outcome for you in the long term. And it’s important to remember that you do have legal rights that we can strictly enforce if necessary. If your illness can be classed as a disability under the Equality Act 2010 for example it may well be that we can press your employer to make adjustments to your role and/or working environment to reduce their impact on you in light of your condition.  If necessary, we can bring a formal legal claim on your behalf to enforce your rights, whether during your employment or afterwards, if the employer insists on terminating your employment.

If on reflection, you are prepared to leave, we can represent you in agreeing terms with your employer. In our experience, most reputable employers will ultimately consider such situations compassionately.

If your health condition is such that you may not be able to work again, it is very important that you receive expert advice on any potential discretionary payments that may be available (for instance under a pension scheme or long-term incapacity policy). In addition, it is really important that the structuring and tax treatment of any settlement sum is very carefully handled.  We have experience of dealing with these situations for both employers and employees.

From a strict legal perspective if you and a colleague are doing the same or broadly similar job – or one that is of equal value– then you should be paid the same irrespective of gender. It is sometimes difficult to enforce this correctly, however. We can assist you by:

• Obtaining proof of any gender pay difference, even in circumstances where a private contract of employment prevents you from seeking information on what colleagues are being paid
• Establishing that the job you are doing is of equal value to the one being done by your better paid male colleagues; and
• Ensuring that any legal claim you have is brought within the appropriate time limits.

If you believe the misconduct is serious enough to be reported to the Financial Conduct Authority or other regulatory body you should seek legal advice on whether you will be protected under the Public Interest Disclosure Act, 1998 – the ‘Whistleblowing Act’ – if you report the matter. You may also wish to get legal advice about your statutory duties as a director in these circumstances. This would include an assessment of whether a failure to raise your concerns may be a breach of your duties and what steps you should take to safeguard your position.