News
Employment Law, Compromise Agreements, Ex Gratia Payment, Negotiations - January 2012
It is advisable that employees try to negotiate the ex gratia settlement payment with their employer as early as possible, to maximise the amount they can get. This is especially the case if the employees have any unresolved grievances or appeals. These can be used as leverage in trying to get better payment than may be possible if no grievances were in place.
Employment Law, Restrictive Covenants, Employment Contracts, Compromise Agreements - January 2012
We often advise on other post-termination provisions (that is, aside from confidentiality), including non-solicitation and non-compete provisions.
- Non-solicitation provisions prohibit ex-employees from soliciting/dealing with certain individuals closely related to their ex-employers (employees, customers and suppliers).
- Non-compete provisions prohibit ex-employees from setting up a business which may be seen as a competitor to the ex-employer.
Normally, post-termination restrictions will last for 10-12 months. The idea behind them is to protect the ex-employer’s legitimate interests. However, it is possible for restrictions to be seen as too wide in scope by the Courts and therefore unenforceable.
Legal advice should always be sought in relation to post-termination provisions.
Employment Law, Restrictive Covenants, Employment Contracts, Compromise Agreements - January 2012
Employees should be mindful of restrictive covenants such as confidentiality provisions contained in employment contracts, which apply post-termination. These are normally contained in compromise agreements as well as employment contracts.
Employment Law, Indemnity, Tax, Compromise Agreement - January 2012
Usually there is a tax indemnity in a compromise agreement, meaning if Her Majesty’s Revenue & Customs (formerly Inland Revenue) makes claims for penalties from an ex-employer, the ex-employee has to indemnify the ex-employer for any taxes due. This would apply if for example, there has been a miscalculation of taxes payable under the compromise agreement.
It is advisable to have a provision in the compromise agreement to the effect that, in the event that Her Majesty’s Revenue & Customs issues a penalty against the ex-employer in relation to the ex-employee, the ex-employee then has the opportunity to discuss the penalty with the revenue services (at the employee’s cost) before the ex-employer makes payment.
Employment Law, Redundancy, Holiday, Payment In Lieu of Notice - January 2012
With regards to compromise agreements, it is always advisable to clearly set out any untaken accrued holidays and payment in lieu of notice and to show these separately, as they are both taxable.
Employment Law, Redundancy, Enhanced Redundancy Pay, Statutory Redundancy Pay - December 2011
In some cases employees can accept compromise agreements without going through the redundancy process. This could mean receiving an enhanced redundancy payment rather than a statutory payment.
Employment Law, Redundancy, Confidentiality, Redundancy Pay - December 2011
Some employees are still not aware of the importance of confidentiality and complying with those provisions within their employment contracts as well as the confidentiality provisions within their compromise agreements. A breach of any of these provisions will in most cases, and at the very least, lead to the employees being made to repay any redundancy payments as a debt to the company.
Employment Law, Redundancy, Payment in Lieu of Notice, Settlement Payment - December 2011
In order for an employer to provide an employee with payment in lieu of notice, this must be referred to in the employee’s employment contract. Some employers are incorporating the notice period as part of the settlement payment, which is tax free. We always advise that there is a risk that Inland Revenue may decide that this amount may in fact be taxable.
Employment Law, Redundancy, Re-employment, Compromise Agreements, Redundancy Payment - December 2011
We have seen employers implementing a practice whereby, they make employees redundant in the hope that once the climate changes, they would re-employ them. Those employees should note that if they are re-employed within two years of being made redundant, they would have to repay their redundancy payment. This is something which is usually included in the terms of a compromise agreement and which employees should be aware of.
Employment Law, Redundancy, Compromise Agreements, Setting Up Own Business - November 2011
A number of employees facing redundancy then contemplate setting up their own business. Such employees must be sure about certain issues, including the information they can put on their websites. Some employees will want to rely on and disclose work done during their employment. However, employees need to obtain consent from their employers in order to do this, and the details should be set out in a Schedule to their Compromise Agreements.
Employment Law, Compromise Agreements, Restrictive Covenants, Employment Contract, Post-termination - November 2011
Employees must at all times remember that there are restrictive covenants in their employment contracts. Post-termination of employment, employees will still be bound by the restrictive covenants in their employment contracts as well as the restrictive covenants in their compromise agreements.
Employment Law, Compromise Agreements, Confidentiality, Employment Contract, Post-termination - November 2011
Employees must at all times remember that there are confidentiality terms in their employment contracts. Post-termination of employment, employees will still be bound by the confidentiality provisions in their employment contracts as well as the confidentiality provisions in their compromise agreements.
Whether to enter a disciplinary procedure or accept a compromise agreement? - November 2011
Some employees are faced with the decision whether to go through a disciplinary procedure or take a compromise agreement. The seriousness of the action that has led to this situation has to be weighed up by the employee before deciding on whether to take a compromise agreement as the employee forfeits all rights to pursue any further action after signing the compromise agreement.
Employment Law, Redundancy, Compromise Agreements - October 2011
Employees facing redundancy can be very optimistic about their futures. We advise a large number of employees on their compromise agreements and it’s those employees that take a positive view on redundancy that seem to have a job even before their termination date.
Giving warranties not to pursue shares, bonuses or share options upon signing a compromise agreement - October 2011
In some cases an employee may have to give a warranty in respect of not pursuing any claims regarding any shares, bonuses or share options after signing the compromise agreement. If an employee has any share options schemes or any shares in the employer company then this must be addressed either in the compromise agreement or in a side letter from the employer company.
What 'independent legal advice' means in the context of compromise agreement - October 2011
Some employees are still misunderstanding what it means to take independent legal advice on a compromise agreement. What this means is that the employee has to receive independent advice from a solicitor on the implications of signing a compromise agreement before the employee signs the compromise agreement.
Incorrect calculation of redundancy payment and negotiating with HMRC - October 2011
Employers should allow employees the opportunity to communicate and/or negotiate with HMRC in the event that the calculations for redundancy pay are incorrect and HMRC has sent a demand or assessment to the employer (Past), on behalf of the employee.
The preferred position is for the employee to deal directly with HMRC rather than the employer paying the demand, say, and claiming an indemnity from the employee which would have been catered for under the compromise agreement.
Obligation of paying enhanced redundancy pay to employees, Employment Law, Compromise Agreement - October 2011
There is no obligation on an employer to pay an enhanced redundancy pay if the employer has not paid out such enhanced redundancy payments in the past. Employees are entitled to the statutory minimum redundancy payments.
Post-termination Provisions in Employment Contracts, Compromise Agreement - October 2011
Even when an employee is signing a compromise agreement, the employee should always refer to the post-termination provisions in the employee’s employment contract. If in doubt seek advice on employment law.
Employment Law, Confidentiality, Trade Secrets, Redundancy Payment - October 2011
