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New flexible working laws & procedures 2014 explained

New flexible working laws & procedures 2014 explained

A 60 second summary of the new flexible working laws, in pictures. Employers and HR Directors can be resourced with the essential knowledge you need to know when planning Flexible Working Policies and responding to Flexible Working requests. View the slideshare below

Posted in: Employment law for HR Directors, General

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Export Contracts, top 10 legal terms to include

Here are the most common legal terms we include in export contracts to protect UK exporters and questions The Legal Partners team are asked.
1 Find out who is the customer in the export contract?
It may seem obvious but from the outset of negotiations it is important to know whether the UK exporter is dealing with the direct end customer or via an agent or distributor in the country where the goods are to be sold.
2 Is the UK exporter or the Asian importer insuring the goods? 
The export contract will need to state clearly who is insuring the goods and from what point in the export process. Any specified Incoterm incorporated into the export contract may need to be amended for the UK exporter’s insurance coverage and what can be offered to the Asian importer.
3 Can an export contract legally and validly exclude liability?
Yes it can.
The export contract will need to clearly state if and to what extent the UK exporter accepts liability for loss subject to upper limits, or loss caused to third parties. Any liability which is excluded by the UK exporter should be limited only to those circumstances covered by the insurance policy and up to the level of that policy.
4 Should the UK exporter also get legal advice from the local lawyer in the country where the goods are to be imported?
Yes. There are usually local laws which will affect the Asian importer so it is worth checking during the negotiation process with one of our partner law firms in China (PRC), Singapore or Malaysia. If the UK exporter and Asian importer agree that the local law will govern the export contract then it will critical to get local law advice.
5 Are the Incoterms suitable to be incorporated into the export contract?
Yes they can be.
Each of these standard 3-letter descriptions eg EXW (ex Works London) prescribe set terms into the sales contract about who pays for transport & export/import licences/duties and who bears the risk of damage to the goods at what point in the export process.
If the UK exporter is uncertain which of the Incoterms to choose or if the Incoterm does not correctly describe what has been agreed with the Asian importer, then the detail for delivery including who pays for transport, insurance and any export and/or import licences should be written into the export contract.
See How to use Incoterms to de-risk your exports 
6 Will the UK exporter be responsible for obtaining an export licence? 
Each type of good which can be exported is assigned by the UK Government a commodity code. With the correct code, the Trade Tariff lists the other things that a UK exporter may need to import or export its, for example:

  • import/export licences or any special regulations for goods (called ‘measures’).
  • duty to pay.
  • VAT to pay.duty and tax reliefs.
  • exemptions from licences etc in certain countries.
  • customs procedures that apply to the goods

For more information see Gov.uk which has helpful advice to find commodity codes 

The export contract should state who will obtain the export licence and import licence – the UK exporter or Asian importer.
7 What payment method is to be used (such as documentary credits or collection arrangements)? 
Should the Asian importer give security for payments under the export contract?
Do due diligence on the importer and decide whether:

  • the Asian importer should provide a bank guarantee or performance bond; or
  • the UK exporter supplier should obtain credit insurance in respect of the Asian importer buyer.

Will payment be made in sterling or some other hard currency?
Because of exchange rate risks, the payment currency must be clearly stated in the export contract.
Consider also answers to these questions:
What deposit is required from the Asian importer?
What will be the time for payment (for example, 30 days after invoice date)?
To encourage prompt payment will the export contract state:

  • interest on late payments?
  • and/or a discount for early settlement?
  • and/or in an instalment contract, the entire price to become due if a single instalment is paid late?

The export contract should exclude the Asian importer’s right to make deductions or withholdings from any payments to be made.
8 Will insurance or financial backing be arranged through the Export Credits Guarantee Department?
The Export Credits Guarantee Department (ECGD) is part of UK Export Finance. It is the UK’s export credit agency, helping UK exporters and investors by providing credit insurance policies, political risk insurance on overseas investments and guarantees on bank loans.
For more information see: UK Export Finance 

9 When should legal title for the goods pass from the UK exporter to the Asian importer?
It is important to explain in the contract what the Asian Importer has to do to pay for the goods at the time they legally pass to the importer (called the point when “title to the goods passes”). If the goods are not perishable (eg food), a retention of title clause can be included in the export contract so the UK exporters keeps title (ownership) of the goods until full payment is received .
The UK exporter can reserve (keep) title to goods until it has received payment in full if the Export contract is written under English law.
10 What governing law and court jurisdiction or arbitration is best for the export contract?
It is important to propose a governing law which is internationally recognised like English law.
The next question to ask is: who is likely to need to sue, litigate or start legal proceedings under the export contract?
If it is the UK exporter, then a decision will need to be made about the best way to enforce any English law judgment against the Asian Importer and any assets depending where they are located.
Is arbitration better than a court hearing in an export contract dispute?
It can be easier to state that the dispute will be decided by an arbitrator (rather than a court) under London Court of International Arbitration (LCIA).
In international disputes, the enforcement of an arbitral award under the New York convention of the United Nations Commission on International Trade Law (UNCITRAL) is often easier than the enforcement of a national court’s judgment. This means that countries who are signatories to the convention will enforce an arbitration award from another country who is also a signatory to the convention.
For more information on UNCITRAL see A Guide to UNCITRAL: Basic facts about the United Nations Commission on International Trade Law. The UK, China, Singapore, Malaysia and many ASEAN countries are members of UNCITRAL.
For more information please contact Richard Mullett on 0208 334 8049.
For more general help information about exporting please see The Department for International Trade Export services for UK Business.
The Legal Partners are a Member of the Trade Advisory Network.

Posted in: Import Export Law for UK & Asia business

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Using NDAs to protect confidential information

Confidentiality agreements (sometimes called Non-Disclosure Agreements (NDAs) or Information-Exchange Agreements) should be signed at an early stage in negotiations, ideally before any information is exchanged.
In this article the descriptions Confidentiality agreement and NDA both mean the same agreement.
The agreement confirms that both exporter and Asian importer will keep confidential the terms of the negotiations, any sensitive product or service information and the terms of the eventual export contract.
It is often the first document entered into, before the document setting out the principles is signed – often called Heads of Agreement or Heads of Terms or Memorandum of Understanding. See  our article Heads of terms: how to negotiate

What legal protection do NDAs give an exporter?
An NDA ensures that information disclosed during negotiations remains confidential and is not used other than for the purpose disclosed. A confidentiality agreement creates a contractual right as well as helping to establish a relationship of confidence on which an action under general law can be based.
However if the exporter has any doubt that the information will not be kept confidential, then the information should only be disclosed by reference or in stages in return for information required from the Asian importer as the two-way trust during the negotiations is built up.
Can I include commercial terms in NDAs?
Yes.
It is possible to include commercial terms in NDAs if they are distinct and clear and do not prejudice the negotiations in the future. For example the NDA might say that the UK Exporter and Asian importer will share costs for attending a trade exhibition.
When does a duty of confidence arise when exchanging confidential information?
A duty of confidence may arise even in the absence of an agreement if the person receiving the information knows it is confidential, but an agreement helps to establish and define this relationship.
Database protection rights may protect confidential information contained in databases and supplement the protection gained by an agreement.
What are the limitations of confidentiality agreements?
Confidentiality agreements are difficult to enforce. Practical measures to keep information confidential are much more important than the ability to sue for damages for wrongful use or disclosure or seeking an injunction.
But in a negotiation, psychologically it is important to have NDAs signed at the start of the negotiations. This means that the UK exporter knows that the person it is dealing with has authority to sign the Non-Disclosure Agreement and the UK exporter can ask for two signatures with the second signature being a Board or equivalent director or President. This will show that the Asian importer has raised the project with the top decision-making body at the importer.
Confidentiality agreements are restrictive and will be construed against the party seeking to rely on them. Most jurisdictions will not enforce agreements if if the information covered is already public information confidential. Jurisdictions may (but rarely) require the duration of the agreement to be reasonable.
What are the legal restrictions on disclosure of confidential information?
Legal restrictions may prevent the disclosure of certain information by the parties. For example:
A company director or employee may be in breach of his duty of good faith (where this is implied in the employment relationship) or (where applicable) his fiduciary duties, if he discloses confidential information without authority.
Parties who are government contractors may be subject to restrictions under relevant official secrecy laws.
Data protection legislation in respect of personal data.
The supply of information to competitors under competition or antitrust laws.
What are the duties applicable during NDA negotiations? 
Various duties usually apply to negotiations under general law and take different forms from country to country. They include:
General duties to negotiate in good faith in the US and many continental European jurisdictions. If in doubt then a paragraph can be written into the Confidentiality agreement requiring both parties to negotiate in good faith.
General rules relating to pre-contractual misrepresentations.
Specific rules relating to the marketing of financial securities.
It is not usually possible to contract out of these rules completely (and in some cases, at all).
The country where negotiations take place will determine which duties apply. Where negotiations take place in the country of the Asian importer it is important to take direct “in-country” advice.
For details of our partner lawyers and law firms in Asia see: The Legal Partners in Asia.
For additional trade advice see the Department for International Trade Export Services for UK Business.
The Legal Partners are a Member of the UKTI’s Trade Advisory Network. 
What law should govern NDAs?
The UK exporter will need to plan for the worst case if it has to enforce the Confidentiality agreement in the country of the importer. This will mean as a minimum checking to ensure that the courts of the country where the Asian importer is based will enforce a judgment under the chosen law in the NDA.
Contact us if you need advice from our partner law firms in China (PRC), Singapore or Malaysia.
For more information or for an example NDA please speak to Richard Mullett on 0208 334 8049
 

 

Posted in: Import Export Law for UK & Asia business

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Appointing a Non–Exec Director? Terms to agree

Appointing a Non–Exec Director? Terms to agree

Why appoint a Non-Exec Director?

Bringing a Non-Executive Director or Chairman into a company can be a very smart move for CEOs, CFOs and for the Board, particularly at times of significant change or upheaval in the business. The objectivity and wise experience of the right Non-Exec will be a great asset for businesses of all sizes, and I mean from start-ups upwards.
A Non-Exec Director’s experience in the following areas can be invaluable:

  • industry contacts and knowledge
  • strategic vision built on his/her past success as a Board Director, for example – assessing new markets or a company acquisition or fund-raising. The recession that followed the financial crisis in 2008/ 2009 has given Directors a lot of invaluable knowledge and experience for dealing with distressed situations.
  • intelligent questioning “Why is the Company doing that?” and gentle challenging of a Board-assumed strategy, to ensure the strategy is right for the business.
  • sometimes it is a condition of a Private Equity funding round that a specified Non-Executive Director with industry experience is appointed.

How do I find a Non-Executive Director ?

These are some trusted routes;

  • your personal network
  • recruitment consultants or a specialist NED appointment company – if you want to pay a fee
  • professional or industry networking events and online communities such as  NEDonBoard.
    The Financial Times Non-Executive Director Club is a community of NEDs built over the last 16 years whose membership is exclusive to graduates of the FT’s NED Diploma or one of their learning programmes.

Once you have found your NED, these organisations, and the  Non-Executive Directors Association can provide training and ongoing advice for non-executives. The Non-Executive Directors Association also advises companies on how to assist them in fulfilling their roles effectively.

Once you have agreed the terms here is the checklist of information you need to agree with the Non-Exective Director to prepare a letter of appointment to be signed by the company and the new Non-Executive Director.

Before you produce the Non-Exec Director Letter of Appointment

You will need to check the company’s articles of association to check the precise method of appointment of new directors which must be followed, eg board resolution of the current directors.

If the NED will not be voting at Board meetings then there is no need to do this check or register their details at Companies House (see below).

What terms to include in the letter of appointment

  • Decide if the individual is simply to be appointed as a Non-Exec Director or if he/she will also be appointed to the role of chairman.
  • Set out the appointment start date.
  • Confirm the length of the initial term so the company can then stop the appointment if it is not working or decide to renew it.

How can the appointment be terminated by the Company?

Insert protections for the company to stop the appointment if there is breach of company procedures by the Non-Executive Director.

After the initial term insert what period of notice will be required to terminate the appointment from both the Company and the Non Executive Director.

What time commitment is fair for a Non-Exec Director?

Agree with the Non-Exec:

  • How many days a month the non-executive director will be required to work for the company eg 1 to 3 days or just a set amount of time each quarter
  • How often he/she should attend at board meetings – once a month or quarter?
  • Whether he / she will attend strategy days with the Company
  • If the Non-Executive will be required to attend any site visits
  • If the Non-Executive will be required to travel overseas.

Non-Exec Director’s role, duties & fees

Key questions to ask and agree with the Non-Exec Director are:

  • What are the Non-Executive’s duties?
  • How much will the Non-Executive be paid a year and when will the fee be reviewed?

A payment of £1,000 to £4,000 per day is fairly common and sometimes in private limited companies (not PLCs) an equity incentive can also be part of the package.

As a director, a Non-Exec is legally required to know whats going on in the business. The Non Executive Director should ask for, and receive, regular reports from the CEO, CFO and other relevant directors in a monthly board pack and be able to ask questions of the board. The Non-Executive Director will need to be fully up to date on company legal compliance and employment law and the other laws which apply to the business and the industry it operates in. Regularly reading the posts on this site will help!

Can the Non-Exec Director have outside interests?

It is important to find out what are the Non-Exec Directors outside interests so that the company knows what these other interests are and ensure there are no conflicts. Every Board Director who can vote at Board Meetings has a duty to disclose conflicts of interests.

It is good practice to ask the Non-Exec Director to write down what these interests are and to notify the company if any changes are made.

Insurance – what is Directors & Officers Insurance?

Non- Executive Directors will always want to know this insurance is in place to protect them in case they are sued personally whilst acting lawfully in their role for the company.

The company is permitted in Company Law and in its Articles of Association to have this insurance.

What to do after the letter of appointment is signed?

  • Provide a welcome pack for the Non-Executive Director.
  • Attend to the usual administration for a new company joiner, eg e-mail address &  update the website to show the company has now got this experienced person on Board.Notify the company insurers.
  • Within 14 days of the appointment, register the Non-Exec Director’s appointment details at Companies House  if he/she is going to have the right to vote at Board meetings. To do this, file the Appointment of Director Form AP01 on the Companies House website. Companies House is the UK Government registry where all company and director details have to be filed – please note there are late-filing penalties!
  • Update the company’s Register of Directors contained in the Statutory Books also called Company Registers.

We hope you have found this guide helpful reading. As dedicated business lawyers we advise many CEOs and CFO clients on negotiating contracts with their Non-Execs. For further advice and guidance on getting the right contract with your NED please get in touch, our contact details are below.

Posted in: Corporate and Business law for CEOs & CFOs

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Early Conciliation: new rules in employment disputes

Early Conciliation: new rules in employment disputes

From 6 April 2014 onwards, a new system of Early Conciliation (EC) requires employees to take some compulsory steps before they can make a claim against an employer.  It is mandatory in almost every case (there are a few very limited exceptions).
The Early Conciliation system requires employees who believe they have an Employment Tribunal (ET) case to inform Acas before their case can proceed through an ET.
The new system should not deter employers from attempting to resolve issues informally or through mediation.

The Early Conciliation system requires employees who believe they have an Employment Tribunal (ET) case to inform Acas before their case can proceed through an ET.

Early Conciliation, the new procedure in employment disputes.

This is how it works. An employee will be required to notify Acas before issuing a claim.
Step 1: The employee must send “prescribed information” in the “prescribed manner” to Acas.  Read here Acas’ explanation of the process https://www.acas.org.uk/index.aspx?articleid=4028, and their flowchart for employees considering a claim.
To quote Acas web site ” The quickest and simplest way to notify Acas [before issuing a claim] is online using the form on our website. If you cannot access the internet, contact Acas’ Early Conciliation support on 0300 123 11 22.”
Step 2: After an Acas “early conciliation support officer” has made initial contact with the employee and confirmed that they wish to proceed, the employee’s information is sent on to a conciliation officer.
Step 3: The conciliation officer then tries to promote a settlement within a “prescribed period”,  using a bit of shuttle diplomacy between  the employer and employee.
Step 4: If no settlement is reached, either because the conciliation officer thinks that settlement is not possible, or because the prescribed period expires, the conciliation officer issues a certificate saying this.
The employee will be unable to pursue most tribunal claims without this certificate. Why? Because the certificate carries a number which the employee needs in order to register his/her ET claim.
Limitation periods will be extended to take account of the “prescribed period”. When the employee notifies Acas this will “stop-the-clock” for 1 calendar month on the 3 month ET claim limitation period.
If necessary, the employee or employer should check with their legal services insurance provider before contacting Acas. Whilst notifying Acas before pursuing a claim is compulsory, whether making or responding to a claim, it is worth speaking to an insurer first to be absolutely sure there can be no question of having acted in a way that invalidates the policy.

Can an employer request Early Conciliation?

Employers responding to a claim will have the opportunity to request Early Conciliation if they consider that the issue that might lead to tribunal proceedings if it is not settled.
The employer will need to contact Acas with the details of the employee making a claim.  A “respondent EC” request form will be made available for the employer to complete and submit online.
Where Early Conciliation is requested by the employer:

  • There will be no “stop-the-clock” process for the usual 3 month limitation period after leaving employment when an employee can make a claim
  • There will be no specified time period in which Early Conciliation must take place.

If , having contacted Acas, the employee declines the offer of conciliation, or if conciliation is unsuccessful, the conciliation officer will issue an EC certificate confirming that the employees obligation to contact Acas has been satisfied. This will make it clear to the tribunal that there is no suspension of the usual 3 month limitation period and the employee can to lodge the claim
However, if the employee does then send an early conciliation form to Acas about the same dispute, this will trigger the “stop-the-clock” provisions, and Acas will manage the  process as for any other claimant making contact with them.

Here are the steps fro the new process
Step 1: employee sends completed EC form to Acas
The employee provides the following information on the EC form:

  • Employees Name, Address, Contact numbers (telephone and mobile) and e-mail address.
  • Employer’s name, address and telephone number.

Employees will not have to provide any information on the nature of their claim(s) on the EC form
The Employee must send the completed EC form to Acas by either:

  • Submitting the online version on the Acas website, or
  • Posting a hard copy to the address on the EC form.

Step 2: Early Conciliation Support Officer (ECSO) then contacts the employee

  • Acas will make reasonable attempts to contact the employee and, with the employee’s express consent, then try to contact their employer.
  • If Acas is unable to contact either the employee or the employer its conclude that settlement is not possible.

In practice, an employee’s completed EC form will be passed to an ECSO who will try to make telephone contact with the employee. The purpose of this will be to enable the ECSO to:

  • Check the details supplied by the employee, obtain basic information such as the length of employment, the date of dismissal or incident complained of, the best time and means for further contact and whether the employer is still trading.
  • Outline the conciliation process and to check whether the employee requires any reasonable adjustments (for example, provision of an interpreter).
  • Explain and discuss any misunderstandings surrounding the prospective claim (for example, qualifying periods).

The ECSO will make an initial call to the employee by close of business on the day following receipt of the EC form. If the employee wishes to proceed the ECSO will pass the case to the conciliator.
It is accepted that some employees will be difficult to contact. What amounts to “reasonable attempts” to contact the employee is to be left to Acas discretion, rather than specifying a maximum number of attempts and/or a specified period of time for the ECSO to attempt to contact the employee.
Where the ECSO is unable to contact the employee, or the employee indicates that they do not wish to proceed with conciliation, the case will be closed and a certificate confirming that the employee has complied with their obligation to contact Acas will be issued. The employee will then be able to present a claim to the tribunal.
Step 3: the conciliation officer attempts to broker a settlement between employee and employer
The conciliator contacts the employee
Where the employee wishes to conciliate, the ECSO will pass the file to a conciliator who will then contact the employee and formally establish whether the employee wishes to attempt to settle the dispute.
Where the employee has a legal representative, the conciliator will liaise with them rather than directly with the employee.
The conciliator then contacts the employee
The conciliator will make reasonable attempts to contact the employer to see if they are willing to participate in conciliation. If they are unable to make contact an EC certificate will be issued.
If the conciliator makes contact with the employer but they decline EC, the conciliator will notify the employee and issue an EC certificate.
Where both parties wish to conciliate: conciliation period
Where both parties have agreed to participate in the conciliation process, the conciliator will have one calendar month from the date of receipt by Acas of the employee’s completed EC form to promote a settlement between them.
The conciliation period may be extended by Acas for up to two weeks where the conciliator considers that there is a reasonable prospect of achieving a settlement by the end of the extended period and both parties agree to the extension.

Pre-claim conciliation: potential outcomes in unfair dismissal claims

In the case of a former employee bringing a claim for unfair dismissal there is specific provision for a conciliation officer to be able to promote reinstatement or re-engagement of the employee “on terms appearing to the conciliation officer to be equitable” with either the employer (or a successor or associated employer) as a means of settlement. The conciliation officer can promote settlement by way of compensation only where either:

  • The former employee does not wish to be reinstated or re-engaged.
  • These forms of settlement are not practicable.

Step 4: dealing with the outcome of conciliation

What happens when Early Conciliation fails?

  • If at any point during the EC period, or during any extension of that period, the conciliation officer concludes that settlement is not possible, Acas will issue an EC certificate.
  • If the EC period, including any extension of that period, expires without settlement having been reached, Acas will issue an EC certificate.

Where the parties reach a settlement
Where the parties agree to settle, Acas will draw up an agreement recording the settlement and may issue an EC certificate.
The reasoning for an EC certificate to be issued where settlement had been reached is two-fold:

  • If only some of the matters in dispute are settled, the employee will need an EC certificate to be able to bring a tribunal claim for the issues that remain in dispute.
  • If the settlement “fails” (presumably this means that the settlement is not concluded), the employee will be able to satisfy the tribunal that they had complied with their obligation to contact Acas.

There is no specific provision for what will happen in the event that the parties reach a settlement. This perhaps reflects that the conciliation officer will need to take a view on a case-by-case basis whether it is necessary to issue an EC certificate. For example, it may be apparent that the employee has settled a claim for outstanding wages on the termination of their employment but that the question of whether their dismissal was fair remains unresolved. The employee will still need the reference number from the certificate to commence their unfair dismissal claim despite having settled one aspect of their complaint.
Early conciliation certificate
When an EC certificate will be issued
Once a prospective claimant has submitted a completed EC form, the following are the points in the EC process which will trigger the issue of an EC certificate:

  • The ECSO is unable to contact the employee.
  • The employee tells the ECSO that they are unwilling to conciliate.
  • The conciliator is unable to contact the employer.
  • The employer tells the conciliator that they are unwilling to conciliate.
  • The parties agree to conciliate but during the conciliation period either party withdraws from the process.
  • At any point during a conciliation period (and any extension) where the conciliator considers that there is no reasonable prospect of achieving a settlement.
  • The conciliation period (as extended, if applicable) expires without a settlement having been reached.
  • The position when the parties reach a settlement is unclear. Presumably where a COT3 has settled all claims an EC certificate will not be issued (to avoid misleading employees into believing that they can issue proceedings). However, it appears reasonable to assume that Acas will issue an EC Certificate where a COT3 settles only part of a dispute. In such cases the employee will be able to bring a claim regarding unresolved issues where they choose to do so.

Information in the EC certificate
An EC certificate will contain:

  • The employee’s name and address.
  • The employee’s name and address.
  • The date on which Acas received the EC form or was telephoned by the employee.
  • The unique reference number given by Acas to the EC form.
  • The date of issue of the EC certificate, which will be the date on which Acas sends the certificate, and a statement indicating the method by which the certificate is being sent.

Who the certificate will be sent to
Acas will send a copy of the EC certificate to the employee and, if Acas has had contact with the employer during the EC period, to the employer.
How the certificate will be sent
Acas will send the EC certificate by email and, where this is not possible, by post.
The certificate will be deemed to be received:

  • If it is sent by email, on the day it is sent.
  • If it is sent by post, on the day on which it would be delivered in the ordinary course of the post.

The remainder of the employee’s limitation period will start running on the day following receipt of the certificate.
Bringing a tribunal claim
The ET rules will be amended so that employees will be required to include evidence, in the form of the unique EC reference number given to them by Acas, on their ET1 form to demonstrate that they have satisfied the EC requirement. Where the EC requirement applies and the employee fails to include the EC reference number on their ET1 form, the tribunal will reject their claim.
For more information about Acas please see their website www.acas.org.uk and if you would like any further information about this article please contact Abigail.

Posted in: Employment law for HR Directors

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Avoiding employer liability: social media & email

Avoiding employer liability: social media & email

Are you concerned about your liability as an employer when your team use social media and email at work? This guide highlights the risks of employer liability when your employees are using social media or sending e-mails and gives some practical suggestions of how to minimise those risks. The huge growth in popularity of social media in recent years has created challenges as well as opportunities for every business. Blogs and similar media present a unique opportunity to get a positive image of a business into the public domain as well as providing an efficient way of sharing information, knowledge and best practice with others. The other side of the coin is that legal liabilities can arise from the use of social media by employees (whether for business or private purposes). It is increasingly important for businesses to know how this can happen and how to prevent problems from developing.

Risk to reputation when employees use Social Media

Information that is written on the internet or in e-mails can seriously damage your business’ reputation and the reputation of individual employees. Your employees could lose their job, be sued or face criminal charges and your business could be sued or fined.

 Stop and think before you click

  • Writing something on the internet or in an e-mail is exactly the same as writing on paper and, because of the lack of control of who might ultimately see it, sometimes worse. Your business cannot control what the recipient does with an e-mail.
  • Inappropriate information that is written online or in an e-mail can have severe financial repercussions for your business. It can also create serious personal and disciplinary issues for individual employees.
  • Even if your employees are e-mailing or using social media in their own time, they could still get themselves and your business in serious trouble.

A classic example of a Facebook post causing employer headaches

Take the recent case of an employee, Mr Teggart, who posted an obscene comment about the promiscuity of a female colleague on his Facebook page while at home.
Although the colleague was not Mr Teggart’s ‘friend’ on Facebook, the company was mentioned in the post and other employers were ‘friends’ with him.
A disciplinary hearing took place to discuss Mr Teggart’s alleged gross misconduct for harassment of a fellow employee and for bringing the company into disrepute. The charge of gross misconduct was sustained and Mr Teggart was dismissed.
Mr Teggart appealed and he argued that he had intended the comments to be a joke; he regularly mocked people on his Facebook postings! He had not intended to harass anyone. His appeal was dismissed and the finding of gross misconduct was upheld.
Mr Teggart complained to the Northern Ireland industrial tribunal that he had been unfairly dismissed and his rights under Articles 8, 9 and 10 of the ECHR had been violated. His appeal was dismissed.
The decision highlights the fact that inappropriate or offensive comments using social media may justify dismissal for gross misconduct even when they are made out of work and in the employee’s own time.  Whatsmore, it seems clear that employees will struggle to establish that they have a reasonable expectation of privacy in relation to comments made on Facebook. Although an individual’s Facebook page is only open to “friends”, it is not private as comments can be copied and passed on to others.
If you want to know what Mr Teggart actually posted, a full transcript of the case can be found here Teggart v TeleTech UK Ltd [2012] NIIT 00704_11IT (15 March 2012)

Social media and e-mail can be very useful tools for business but it is important to consider the risks attached to their use to ensure that they are beneficial for your business and not harmful to it or your employees.

 E-mails and internet postings can be used in legal proceedings

  • E-mails and internet postings can be used against your business in legal proceedings or other regulatory investigations and you may have a legal obligation to disclose them to the other party, even if it is not aware of them.
  • Your business should never delete e-mails relating to:
  • a legal dispute;
  • an investigation; or
  • a potential dispute or investigation.

This can be a complicated area and the duty to disclose information includes disclosure of any that could be harmful to your business in the course of legal proceedings. You may need to take advice should you find yourself and your business in this position.

 It is very difficult to delete e-mails and online postings

Simply deleting e-mails or internet postings will not necessarily solve the problem. Forensic IT equipment can still find supposedly “deleted” messages.

Do not be hurtful or spread rumours

  • Online content or e-mails that could be thought of as obscene, racist, sexist, bullying or hurtful should never be posted or sent. Your business can be held liable for discriminatory acts committed by your employees.
  • If a comment  is made about another employee online or in an e-mail that  amounts to harassment, your business could be liable even if the employee  was  using  their  own equipment when they made the comment.
  • Exaggerating or making false or inaccurate statements about another company or person online or in an e-mail could lead to your business being sued, even if the e-mail was only sent to one person.

Take care with confidential information

  • Where possible, avoid sending confidential information by e-mail. Your business should take legal advice on how the information can be best protected.
  • Any e-mail containing confidential information should be clearly marked as “confidential”.
  • If your business receives an e-mail that contains “dangerous” material (for example, another company’s trade secrets), you should take legal advice immediately.

Do not make a contract by mistake

  • A legally binding contract can be made by a simple exchange of e-mails.
  • Your business should make it clear if it does not intend to be bound by what is communicated in an e-mail.

Do not copy someone else’s work

  • Other people’s work should not be used in e-mails or online posts unless:
  • your business has permission from the original author; or
  • you know that it is not protected by copyright.

Do not send or view offensive or unknown material

  • Encourage your employees to carefully monitor what arrives in their inbox, especially if they do not recognise the sender or the title of the e-mail seems peculiar.
  • If there is a risk that an e-mail may contain a virus, it should not be opened and your IT department should be contacted immediately.
  • Make your employees aware that they could be disciplined or even dismissed for forwarding inappropriate e-mails or accessing inappropriate websites at work. In severe cases it could also be a criminal offence.

Avoid unproductive usage

  • Most businesses allow light personal internet and e-mail usage as long as it does not interfere with their employees’ duties. However, you should make sure your employees are aware that excessive, unproductive use of the internet and e-mails at work may be treated as gross misconduct for which they could be dismissed.
  • E-mails can often be a waste of time. Encourage your employees to think carefully before copying someone in on an e-mail, especially if there is a long chain of e-mails attached.

 If you have a problem with a member of staff sending material that is inappropriate or offensive, or posting information on social media which is inappropriate, remember to get a printed copy as you may need this as evidence within any disciplinary procedure. You may need to do this very quickly as social media sites can be efficient in removing inappropriate comments and, whilst this quick action by them is positive in many ways, it can destroy the evidence that you as a business need.

Also keep in mind that just because a problem has arisen on social media, you as the employer do not need to respond in ‘social media’ time. Take time to reflect on the best course of action and to ensure you follow a proper procedure rather than reacting immediately and incorrectly. Take advice from The Legal Partners.

It is important to consider having a specific policy within your business dealing with the use of social media and e-mail. Case law has established the businesses are in a much better position in disciplining staff for inappropriate use when they have clearly informed staff of what is and is not acceptable. The Legal Partners can help with this and have a Social Networking and Smartphone Policy available. Please contact us for further information.
In summary: avoiding employer liability when employees use social media and email
Do:

  • Adopt a social media policy to encourage appropriate employee use of social media.
  • Use the policy to prohibit employees using social media in ways that could damage the company.
  • Provide training to employees on the appropriate use of social media, and monitor for compliance.

Do not:

  • Allow employees to disclose or misuse confidential or proprietary information.
  • Permit employees to use social media to harass colleagues.
  • Impose unnecessary restrictions on employee use of social media.

We hope this article has been useful. Please contact us if we can help further:

Richard Mullett – 0208 334 8049 / Richard.Mullett@TheLegalPartners.com
Abigail Oprey – Abigail.Oprey@TheLegalPartners.com
This document is not specific legal advice. If you can share your business situation we can advise you on correct policy and process and minimise liability.

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Transfer of Undertakings (TUPE) process, explained

Transfer of Undertakings (TUPE) process, explained

 

What is TUPE, when does it apply and what does it involve?

TUPE is the Transfer of Undertakings (Protection of Employment) Regulations which came into force in 2006. It is mainly aimed at protecting employees who are transferring over to a different company when all or part of the business is sold and when activities are “outsourced” or when service providers change. 
When does the TUPE process apply?
As an employer, TUPE can apply to an extensive number of different types of situations in business transactions, for example:
When a business is selling a division, the TUPE process applies.
When a business is transferring specific assets such as equipment, property or IT systems, the TUPE process applies.
When a business outsources some of its activites to a service provider, or brings some activities back in-house, e.g. recruitment, call centers, IT systems, payment processing, guess what, the TUPE process applies.
It is important that you are aware when TUPE applies and what could be the potential employment liabilities that could arise if TUPE is not carried out properly or not  implemented.   In short, the risk to a business of not following TUPE process is a fine from an Employment Tribunal of up to 13 weeks gross pay per employee affected by the transfer. Ouch!
For detailed guidance on making the TUPE process as efficient and risk-free as possible, read our checklist here. As an employee, hearing that the business is being sold or transferred can be an unsettling and worrying time.  From my personal experience of managing a TUPE transfer process, for the employer too it can seem like a bit of a battle ground between transferring parties so, here are:

5 things to include in a Transfer of undertakings (TUPE) Process.

TUPE law requires that the TUPE planning process covers the following 5 steps:

  1. Announcing to the employees affected when the transfer is going to happen.
  2. For those organisations employing more than 10 staff, informing the employees that they will need to elect employee representatives (if there are no Trade Union Representatives or employee representatives already exist of course).
  3. Holding frequent consultation meetings between current employer (the transferor), new employer (transferee) and transferring employees.

Bear in mind that points 2 and 3 will take significant time to co-ordinate.

  1. Making sure that employees are kept informed of the process as it is happening, with frequent email communication and face to face meetings.  
  2. The most important thing is that both sides take time to plan the TUPE process in good time;
  • taking into account all issues
  • and to assess the risks and liabilities that could arise

so that the business can be placed in the most favorable commercial position.
This list is not exhaustive. If you need advice on TUPE transfers, please get in touch.
For FAQS about the TUPE process, and more information, go to www.personneltoday.com/legal/tupe.
 
Anna Venditti now freelances having held both CFO and HR Director positions concurrently for an Internet Services and Broadcasting company, for whom she worked for 11 years, prior to the sale and TUPE Transfer of the business.  Anna is a client of The Legal Partners.

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Hiring new employees

Hiring new employees

Hiring new employees: the legal issues you need to know

This checklist highlights the key legal issues involved in hiring new employees, the legal issues you need to know and what you need to do.

Hiring new employees: before advertising

Make sure all staff involved in hiring new employees have had equal opportunities training (and they continue to receive it while working for your business).

Draw-up the following documents: 
 job description which sets out the title and main purpose of the job, the place of the job holder within your business and the main tasks or responsibilities of the post.
 a person specification which details the experience, know-how and qualifications, skills and abilities necessary for the job in question. The requirements can be split between those that are “essential” for the job and those that are merely “desirable”.
Ensure that none of the requirements in either document discriminates against any groups of employees. In particular, consider whether any requirements for specific qualifications, working hours or times, travel, age ranges or dress are necessary for the job in question.
Consider whether the job needs to be full-time or whether it is open to part-time, home working, flexible working or job sharing. If you specify that the job is full-time, you may need to be able to justify your decision.

Hiring new employees: the advert

  • Decide whether you want the job to be advertised internally, externally or both.
  • Consider using specialist publications, websites and agencies to target different communities, ages and sexes.

Do not make assumptions about the readership of any publication, for example suggesting you are seeking Australian applicants because you are advertising in a publication frequently read by Australians seeking employment in the UK.

  • Think carefully when writing the advert. Protection from discrimination because of a protected characteristic (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race religion or belief, sex or sexual orientation) covers all areas of employment, including job adverts. For example, avoid using language that might imply only someone of a certain age would be suitable (for example, “mature” experienced” or “young”).

Be very careful about the language used in your advert, for example asking for ‘male or strong female’ applicants suggests that the potential employer has a view that women employees are not as strong as male employees. This would be likely to be discriminatory and action could be pursued against the business.

  • Ensure any employees absent from work (including women on maternity leave or those on long-term sick leave) are informed of the vacancy to enable them to apply. Failure to do so could amount to discrimination.

Hiring new employees: the application

  • Using a standard application form when hiring new employees will allow your business to directly compare individual applicants’ answers against the selection criteria more easily and help avoid potential unlawful discrimination claims.
  • Draw up a shortlist using the same criteria used in the job description and person specification. Every applicant should be marked against the same criteria to help avoid any potential unlawful discrimination claims.
  • If your business is making redundancies you must consider applications for suitable vacancies from employees selected for redundancy ahead of external applicants. Women selected for redundancy while on maternity leave are entitled to be offered a suitable alternative vacancy (where one is available) in priority to other potentially redundant employees.

Hiring new employees: the interview

Think when and where the interview should take place. For example:

  • check whether the interview venue has access for disabled candidates;
  • holding an interview during a religious holiday could discriminate against applicants from that particular religion; or
  • candidates with children may require the interview to be conducted at a particular time.

Ideally, all shortlisted candidates should be asked the same or similar questions to allow you to compare their answers and avoid the possibility of a discrimination claim.
You should not ask any questions about the candidates’ personal life unless they are directly relevant to the requirements of the job (for example, it is unacceptable to ask a female candidate whether she plans to have children).
Keep a paper trail throughout the process to demonstrate how your business reached its decision to select the successful candidate. This should include:

  • selection criteria;
  • notes on the short listing process;
  • interview questions;
  • notes of panellists’ assessments of the interviewees.

 It is good practice to provide feedback to unsuccessful candidates if it is requested. A failure to do so could indicate your decision was based on discriminatory grounds.

Hiring new employees: the offer

  •  Make a written offer to the successful candidate.

Consider whether to set a time limit for acceptance and specify that acceptance should be in writing.

  • Your business can make the offer conditional on a range of criteria, provided they are not discriminatory. For example:

–       providing satisfactory references; or
 –       confirmation that the employee is free to work in the UK or has an appropriate work permit or immigration approval to work.

If you need advice in relation to immigration status or visas for prospective employees please contact The Legal Partners.

  • Before making a job offer, make sure the applicant confirms they are not bound by any restrictive covenants from their previous job; otherwise your business could be sued by their former employer. Restrictive covenants are used in employment contracts to protect an employer’s business by restricting the activities of an employee, generally after employment has ended. 

If you make a conditional offer to a candidate do try to confirm as quickly as possible when the conditions have been met and the offer is unconditional. A candidate may understandably not wish to hand in their notice at their current employment until such time as they have received confirmation of an unconditional offer and this may cause delays in their starting to work for you.

 

Hiring new employees: the contract

The Legal Partners can assist with the drafting of contracts including standard contracts, zero hours contracts and consultant/contractor contracts. Get in touch with us if we can help.

 

  • Consider whether the contract should be permanent or for a fixed term. If you decide a fixed-term contract is appropriate, you may need to justify why your business reached that decision.
  • Remember that an employee on a fixed-term or part-time contract should not be treated any less favourably than a permanent employee (for example, they should be allowed access to a company bonus scheme or instead receive an equivalent benefit).

 
Remember also that your business may not be able to dismiss an employee simply because their fixed-term contract has come to an end. The employee may have a claim for unfair dismissal. Unfair dismissal is any dismissal that is not for a fair reason or does not follow the correct procedure.
It is possible to have what are known as zero hours contracts and that can lead to situation where someone is a worker rather than an employee. Workers have some employment rights too but generally not at the same level as employees. If this is something that you would like to explore for your business please contact The Legal Partners for advice.

 

Hiring new employees: probationary periods

  • Your business can include a probationary period in the contract. This will enable you to assess the employee and vice versa. It also gives you the flexibility to dismiss someone using a shorter notice period of at least one week.
  • Probationary periods typically last between three to six months and can be extended with the consent of the employee at the end of the term (for example, if the employee was sick and your business was unable to adequately assess their performance, you may want to extend the period).

It is worth setting targets during the probationary period to monitor and assess the new employee’s ability in the role and to assist in making the probationary period a success which is in the interests of both the business and the employee.
You should also ensure that any recruitment fees paid to an agency can be reclaimed, possibly on a sliding scale, in the event that the probationary period does not work out.
 

More information
This Checklist is designed to help you understand the the main legal issues you need to know when hiring new employees.

Please contact us if you need further help:

Richard Mullett – 0208 334 8049 / Richard.Mullett@TheLegalPartners.com

Abigail OpreyAbigail.Oprey@TheLegalPartners.com

This document is not specific legal advice. If you can share your business situation we can advise you on correct policy and procedure and minimise liability.

 
 
 

 

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How and when to use Settlement Agreements, a checklist for employers

 

In the current Covid-19 situation, businesses and organisations may be in the unfortunate position of having to negotiate more staff exits. Settlement agreements may be one way in which a sensible mutually agreed termination of employment can be reached and evidenced.

This Checklist sets out the key issues employers should consider before entering into a settlement agreement with an employee, and how and when to use settlement agreements. 

Settlement Agreements used to be called Compromise Agreements. The Government renamed them in July 2013 to promote a culture of trying to resolve issues within the organisation rather than at an Employment Tribunal. For example, also in 2013, Pre-Termination Negotiations were introduced, which were designed to give employers a safe route to open discussions to offer a Settlement Agreement for an employee to leave without this leading to an unfair dismissal claim, by following the ACAS Code of Practice on Settlement Agreements under section 111A of the Employment Rights Act 1996.

What is a settlement agreement?

A settlement agreement is a legally binding agreement between a business and an employee under which the employee agrees to settle their potential claims and in return the employer will agree to pay financial compensation. Sometimes the agreement will include other things of benefit to the employee, such as an agreed reference letter.

In what circumstances will a settlement agreement be appropriate?

An employee can make a claim against a business under both their contract of employment and under statute. These claims may arise:

  • on recruitment;
  • during employment; or
  • when their employment has been terminated.

In many cases, a business may want to make a payment to an employee in return for an effective waiver of their potential claims. Businesses can enter into an agreement with an employee to settle potential claims when they are still working for the business, but in most situations, their employment will have ended (or will be about to end). Although it is usual for settlement agreements to be entered into where employment has terminated (or is about to terminate), it is possible to enter into one where employment is continuing. Unlike contractual claims, which can be waived by entering into a contractual waiver of such claims, statutory claims can only be waived in prescribed ways, one of which is by means of a settlement agreement.

There are a number of circumstances when an employer may wish to think about using a settlement agreement, for example: at the start of investigation; in disciplinary or capability processes; or in the event that an enhanced redundancy package (beyond that to which an employee is contractually or statutorily entitled) is being offered.

What are the legal requirements for a valid settlement agreement?

For a settlement agreement to be legally binding, there are a number of conditions that must be met:

  • The agreement must be in writing.
  • The agreement must relate to a particular complaint/s or particular proceedings. For example, it would not be possible to cover ‘all possible employment law claims’ in a settlement agreement. There should be reference to the actual issues that have arisen and then any other possible claims should be particularised to the extend of referring to specific sections of the specific Acts or Regulations.
  • The employee must have received legal advice from a relevant independent adviser (for example, a qualified lawyer or union official) on:
    • the terms and effect of the proposed agreement; and
    • its effect on their ability to pursue any rights before an employment tribunal.
  • The independent adviser must have a current contract of insurance (or professional indemnity insurance) covering the risk of a claim against them by the employee for the advice.
  • The employee’s adviser must be identified.
  •  The agreement must state that the conditions regulating settlement agreements have been satisfied.

Why does the employee need to see a Solicitor when negotiating a settlement agreement?

The employee is giving up legal rights in the Settlement Agreement, and so must be properly advised by an independent solicitor for any agreement to be legally binding. Independent legal advice for an employee when dealing with a settlement agreement is vital for employers to ensure that such agreements are binding. It would prove a waste of time and effort for an employer to negotiate an agreement with an employee only to find it was not legally watertight as a consequence of a lack of independent legal advice to the employee. The requirement therefore provides protection for both employees and employers in this process. It is usual for the employer to pay a contribution to the cost of the legal advice that the employee obtains. Currently this is standardly around £500 but there is no figure fixed by law and it may vary depending on the circumstances.

Possible content of a settlement agreement

Other than the legal requirements listed above, the contents of a settlement agreement are largely at the discretion of the business and the employee involved. Examples of common clauses include:

  • Compensation for loss of employment.
  • Contribution to legal fees.
  • Waiver of claims by the employee, including warranty that the claims listed are the only claims which the employee has against the employer.
  • Re-assertion or modification of existing restrictive covenants.
  • Indemnity from employee in relation to tax and National Insurance Contributions.

Confidential information

Protecting confidential information is usually crucial to a business and therefore settlement agreements often contain confidentiality provisions, for example, the employee agrees:

  • Not to use any confidential information.
  • Not to disclose any confidential information to any person, company or other organisation.
  • To keep the terms and existence of the agreement confidential.
  • To not make any derogatory comments about the employer (or any individuals employed by it) to a third party.

It is important however to appreciate that a settlement agreement should not prevent an employee from making a protected disclosure. In the light of the #metoo movement changes were also made to clauses around non-disclosure that solicitors were allowed to draft or permit to be in agreements that they advised on.

Which types of claim cannot be settled by a settlement agreement?

A large number of statutory claims can be settled by a settlement agreement, but there are some which should not be, namely:

  • Personal injury claims (unless the individual was aware, or could reasonably be aware, of the claim at the time the agreement was signed
  • Pension claims.
  • Claims following the transfer of a business.

If you need further advice on managing Settlement Agreements and Pre-Termination Negotiations or managing the effects on Covid-19 on your business, please get in touch, our details are below.

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Settlement Agreements – What, why how?

This Checklist sets out the key issues a business should consider before entering into a settlement agreement with an employee. A Settlement Agreement is the new name for Compromise Agreements. The UK Government (Department for Business, Innovation and Skills) renamed them in July 2013 to promote a culture of trying to resolve issues within the company rather than at an Employment Tribunal. For example employers can now use the new Pre-Termination Negotiations which allow an employer to offer a settlement agreement for an employee to leave by following the ACAS Code of Practice on Settlement Agreements under section 111A of the Employment Rights Act 1996.

What is a settlement agreement?

Settlement Agreements

A settlement agreement is a legally binding agreement between a business and an employee under which the employee agrees to settle their potential claims and in return the employer will agree to pay financial compensation. Sometimes the agreement will include other things of benefit to the employee, such as an agreed reference letter.

In what circumstances will a settlement agreement be appropriate?

  • An employee can make a claim against a business under both their contract of employment and under statute. These claims may arise:
    • on recruitment;
    • during employment; or
    • when their employment has been terminated.
  • In many cases, a business may want to make a payment to an employee in return for an effective waiver of their potential claims. Businesses can enter into an agreement with an employee to settle potential claims when they are still working for the business, but in most situations, their employment will have ended (or be about to end). Although it is usual for compromise agreements to be entered into where employment has terminated (or is about to terminate), it is possible to enter into one where employment is continuing. Although it is usual for compromise agreements to be entered into where employment has terminated (or is about to terminate), it is possible to enter into one where employment is continuing. Unlike contractual claims, which can be waived by entering into a contractual waiver of such claims, statutory claims can only be waived in prescribed ways, one of which is by means of a compromise agreement Although it is usual for compromise agreements to be entered into where employment has terminated (or is about to terminate), it is possible to enter into one where employment is continuing. Unlike contractual claims, which can be waived by entering into a contractual waiver of such claims, statutory claims can only be waived in prescribed ways, one of which is by means of a compromise agreem

What are the legal requirements for a valid settlement agreement?

For a settlement agreement to be legally binding, there are a number of conditions that must be met:

  • The agreement must be in writing.
  • The agreement must relate to a particular complaint or particular proceedings.
  • The employee must have received legal advice from a relevant independent adviser (for example, a qualified lawyer or union official) on:
    • the terms and effect of the proposed agreement; and
    • its effect on their ability to pursue any rights before an employment tribunal.
  • The independent adviser must have a current contract of insurance (or professional indemnity insurance) covering the risk of a claim against them by the employee for the advice.
  • The employee’s adviser must be identified.
  • The agreement must state that the conditions regulating settlement agreements have been satisfied.

Possible content of a settlement agreement

Other than the legal requirements listed above, the contents of a settlement agreement are largely at the discretion of the business and the employee involved. Examples of common clauses include:

  • Compensation for loss of employment.
  • Contribution to legal fees.
  • Waiver of claims by the employee, including warranty that the claims listed are the only claims which the employee has against the employer.
  • Re-assertion or modification of existing restrictive covenants.
  • Indemnity from employee in relation to tax and National Insurance Contributions.

Confidential information

Protecting confidential information is usually crucial to a business and therefore settlement agreements often contain confidentiality provisions, for example, the employee agrees:

  • Not to use any confidential information.
  • Not to disclose any confidential information to any person, company or other organisation.
  • To keep the terms and existence of the agreement confidential.
  • To not make any derogatory comments about the employer (or any individuals employed by it) to a third party.

Which types of claim can be settled by a settlement agreement?

A large number of statutory claims can be settled by a settlement agreement, for example claims for:

  • Unfair dismissal.
  • Pregnancy or maternity-related discrimination.
  • Discrimination, victimisation or harassment related to sexual orientation.

Which types of claim cannot be settled by a settlement agreement?

There are a number of statutory claims that cannot be settled by entering into a settlement agreement, including some types of:

  • Personal injury claims.
  • Pension claims.
  • Claims following the transfer of a business.

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