Accountancy Resources
Employing people seems pretty straightforward: hire the candidate and set them to work – but is it really that easy?
Looking after staff and treating them well can make a company more efficient and subsequently more profitable, but getting the employee part of the business wrong could have a negative effect through:
Given the number of legal obligations and responsibilities an employer has to deal with on a regular basis, it’s important to understand the need to minimise potential litigation.
For example, take an employee that takes two to three-hour lunches, frequently “works from home”, leaves work early, passes work off to their colleagues, take’s regular sick days when they’re not – in essence, this employee is stealing from the company. Bad behaviour creates a negative work environment with low levels of productivity that hurts performance and profits.
So, as an employer, what are the areas of employment law that you need to have a basic understanding of? Read on or click any of the links below to skip straight to the topic you want to know more about.
A settlement agreement (also known as a compromise agreement) is usually given to an employee as a result of the termination of their employment, this includes redundancy. It acts as a prevention method for civil claims against the employer at any stage in the future.
These legally binding, voluntary contracts can be used to either end an employment relationship on agreed terms, or resolve an ongoing workplace dispute. Employees should be given a reasonable amount of time to consider the conditions within the agreement, although there can be a period of negotiations in order for the agreement’s outcome to be reached. If no agreement can be reached then depending on the nature of the dispute, a resolution can be pursued through performance management, disciplinary or grievance process. It is important that employers follow the required process, otherwise, they may be looking at grounds for a claim of unfair dismissal
A restrictive covenant is usually presented as a clause in a contract that prevents the employee from either:
Your employees may be an attractive asset to a competitor if they have access to a company’s business knowledge so it may be wise to protect company and customer information through a restrictive covenant in their contract of employment.
General clauses within restrictive covenants include:
Unfair dismissal is intended to protect employees from being dismissed from their job without a justifiable and valid reason. The dismissals are classed as ‘automatically unfair’ if an employee is exercising specific rights to do with reasons such as:
Unfair dismissal cases must always be considered according to individual circumstances, which sometimes can end up becoming a settlement agreement in order to abstain employees from making any claims against the company.
Wrongful dismissal is where the employer breaks the terms of an employee’s contract in the dismissal process, for example dismissing an employee without giving them the proper notice or is dismissed without notice. Wrongful dismissal should not be confused with unfair dismissal.
Damages are assessed on the basis of what the employee would have received had the employer not breached the contract.
Redundancies can regrettably happen when employees are dismissed because their job no longer exists, for example, when:
One important factor of redundancy law is the provision of redundancy payment, this compensates employees for their dismissal with a proportionate, tax-free sum that reflects the length of their service to the company. The length of service in order to receive a redundancy payment is two years of service.
For redundancy to be fair, a justifiable set of criteria needs to be produced such as length of service, skills, disciplinary proceedings, or qualifications. If unjustifiable criteria of redundancy selection are supplied then this could go on to be classed as unfair dismissal or a discrimination claim.
Direct discrimination is when an employee is treated less favorably than other employees because of a personal characteristic. Indirect discrimination occurs where a seemingly neutral condition would put a person of one sex/race/religion etc. at a particular disadvantage to another person of differing sex/race/discrimination.
Organisations should always ensure policies are in place to prevent discrimination, thereby treating employees fairly and considerately; categories of discrimination are as follows:
Whistleblowing is when an employee brings information about a wrongdoing to the attention of their employers or a relevant organisation, whilst being protected under certain circumstances relating to the Public Interest Disclosure Act 1998. Commonly referred to as ‘blowing the whistle’, the law that protects whistleblowers is for the public interest, allowing employees to speak out if they find malpractice in the organisation. Blowing the whistle is also known formerly as ‘making a disclosure in the public interest’.
Qualifying disclosures of information where the employee believes that one or more of the following matters is or has taken place, or is likely to happen in the future:
If the employee is dismissed for whistleblowing, they can make a claim for unfair dismissal.
New mothers in the UK are normally allowed up to 52 weeks maternity leave, with the first 39 weeks entitled to statutory maternity pay. These are the basic statutory maternity leave rights, regardless of how long they have been employed, how much they’re paid, or how many hours they work.
Maternity leave rights also entitle the employee to return to the same job or a suitable alternative, and their period of continuous employment is not impacted by maternity leave.
In 2015, the reform of flexible parental leave will introduce a new system of flexible parental leave with parents choosing how they should share care of their child during the first year of birth. Employed mothers will be still entitled to 52 weeks of maternity leave; however working parents will be able to choose to share the leave.
A contract of employment is an agreement between employee and employer, which acts as the basis of the employment relationship. This generally includes details such as pay, holidays and working hours, with the contract starting as soon as the offer of employment is accepted.
There are two types of terms within a contract. Express terms are those that are expressed in the contract of employment. Implied terms refer to the obvious requirements such as an employee will not steal from an employer, or if someone is employed as a driver then the terms would assume that the employee has a valid driving license.
If either the employee or the employer breaks either the express or implied terms then a breach of contract occurs.
These regulations were introduced to give agency workers the entitlement to the same or no less favourable treatment as permanent employees with respect to working conditions and basic employment. These rights include:
The regulations do not cover self-employed individuals working through their own limited company or working on managed service contracts.
Generally, injunctions are imposed by the employer if an employee is leaving the company and they suspect the employee intends to take customers, existing staff or information with them. The effect of the injunction is to prevent the ex-employee from acting in such a way.
Employers seeking to protect their business from the activities of former employees should ensure that employment contracts contain appropriate post-termination restrictive covenants.
Employers are able to protect their company’s business interests or clients through the inclusion of restrictive covenants, one covenant that is regularly included is a non-solicitation clause that prevents employees from soliciting clients once they have left their employment.
Non-solicitation clauses must not be confused with a restrictive covenant, non-solicitation clauses are a type of restrictive covenant. Restrictive covenants limit the ability of the employee to compete with the ex-employer, whereas non-solicitation clauses prohibit the poaching of the ex-employers staff or clients.
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