I’ve noticed a disturbing tendency recently for some employers to tell redundant employees that they will only contribute to their legal costs incurred by a third party solicitor reviewing the compromise agreement if the employee uses the firm of solicitor nominated by the company.  If the employee wants to go to a solicitor of their own choice they will have to pay all the legal costs associated with the advice they receive, without any contribution from the employer.  Remember that it is a legal requirement that a compromise agreement be reviewed by an independent solicitor in order to make the agreement legally binding.

The employer wants the security that the employee has waived his/her legal rights to bring any claims arising out of their employment or termination thereof and thus is usually prepared to pay a contribution toward those legal fees to give them that peace of mind.  Although the employee technically remains free to instruct a solicitor of their choice, in many cases the employee will go to where their costs will be paid (or contributed to at least); that’s an understandable reaction by the individual. But, is it ethical for a law firm to be party to such an arrangement?

Consider Rule 1 of the 2007 Code of Conduct (shortly to be replaced by the new SRA Handbook from 6^th October next).  Rule 1 sets out the Core Duties on a solicitor, which include,

1.02 You must act with integrity

1.03 You must not allow your independence to be compromised

1.04 You must act in the best interests of each client

1.06 You must not act in a way that is likely to diminish the trust the public places in you or the legal profession

The SRA Handbook repeats these Core Duties as Principles. Arguably all of these Core Duties/Principles could be infringed by this type of arrangement.

It’s a common practice for HR departments to give departing employees a list of local or suitably experienced solicitors to review their compromise agreements they hand out.  That makes sense because an employee probably isn’t going to get meaningful advice on the terms of a compromise agreement from a solicitor who specialises in conveyancing. But, if an individual wants to seek advice from a solicitor of their own choice (and that conveyancer might just be a damned good employment lawyer as well) that is their prerogative.

Bear in mind that the relationship between the employer and the law firm advising on the compromise agreement is an odd one.  The employer is not the client of the law firm in this situation: the employee is.  The solicitor owes his/her duty to the employee, yet there must be a temptation not to want to rock the boat with the employer, especially if large numbers of employees are being made redundant and walking through your front door seeking advice.

I can see some good reasons why an employer might want to ensure that their own lawyers or HR people don’t get bogged down in spurious issues or claims raised by lawyers dabbling in employment law. I can also see that employers might want to ensure that their employees get the proper advice to keep the employee’s own legal costs down, thus avoiding requests for the contribution to be raised. Fine. By all means provide a list of specialist solicitors or refer the employee to The Law Society website search engine,  but to say that the employee will only be entitled to have the contribution to their legal costs paid if they use the nominated firm(s) seems like a step too far for me.

For those firms of solicitors agreeing to accept instructions on this basis, aren’t they compromised?

Let me be clear, I am not accusing anyone (law firm, solicitor or employer) of giving improper advice, but let’s also remember that justice not only has to be done, but be seen to be done.

Related posts:

1. Coulson’s Compromise Agreement: So What?

Compromised Agreement? originally appeared on Jobsworth by Michael Scutt on 23/09/2011.

I’ve been away in France for a couple of weeks, hence the silence on this blog.  It’s now time to burn off those calories with some serious typing and what better start than on a story that Robert Peston ran on his BBC blog on the 22^nd August (apologies if this is staler than yesterday’s croissant)?  Under a headline “Coulson got hundreds of thousands of pounds from News International”, Mr. Peston reported that Andy Coulson (yes, the one late of News International (NI) and News of the World) received several hundred thousand pounds in respect of

“contractual leaving pay … in instalments until the end of 2007 – which means he continued to be financially linked to News International for several months of his tenure as David Cameron’s main media adviser”.

The Guardian reported that the payments included a company car and health insurance for three years (I’m not sure if this means he received health insurance and the car for three years or just the insurance).

Mr Coulson is supposed to have received these payments as part of a severance package signed off with a compromise agreement.  The Guardian also reported that Tom Watson MP had said the money could be considered an “undeclared donation” to the Conservative Party and the Electoral Commission was asked to investigate.  It apparently intends not to do so, but Mr Watson has asked the Parliamentary Standards Commissioner to investigate why the payments were not declared in “a register of passholders”.

Before everyone starts jumping around too much, stand back and consider the allegation made. Coulson is said to have received the payments as part of a severance package after he left NI in January 2007.  He joined the Tories in July of that year. If these payments were merely payments of his contractual entitlements from NI then I think it would be hard to make any criticism.   If his contract of employment ever comes to light then it will be interesting to check this.  The payments look generous but he was a very senior executive in a massive organization, so perhaps it is not surprising he was well remunerated.  Had NI refused to honour Coulson’s contract, he would have had a claim against them for breach of contract. It is perhaps unusual for a company of the size of NI to stagger the payments over a period of time, but not that uncommon.  Cashflow is not likely to have been the reason; more like NI wanted to ensure Coulson kept his head down for several months and what better way than to withhold payment for several months? That is speculation though. In the cold light of one of the most bitter and far reaching political scandals of recent times it certainly doesn’t look good.

However, what if he was not contractually entitled to (all) these monies and, instead, the parties came to a deal, as any employer-employee can do?  That muddies the water but it isn’t evidence of illegality or wrong-doing without more background.  It could have been a reward for his loyal and effective service during his tenure.  Of course, it could have been a payment for something more sinister, but without hard evidence of that it can only be speculation.  There is nothing in Peston’s story that allows us to go further than this. On balance this is a bit of a non-story – fuelling the media frenzy on this subject without actually illuminating any of the main issues or revealing any wrongdoing.

The real story here though is whether Coulson disclosed these payments to his new employers when he joined the Tories.  Why should he?  For most employees, any payments received from a former employer have no relevance in their new job, provided that there is no conflict of interest in the two roles or there has been no illegality.  MPs are under very onerous duties of disclosure; whether that applies to advisers I don’t know, but if I was David Cameron I would have wanted to know about the payments, if for no other reason than to avoid being ambushed by it becoming common knowledge at some point in the future.  If Coulson was required to disclose the payments under Parliamentary (or other) rules and did not then that is a different matter.

Related posts:

1. Compromised Agreement?

Coulson’s Compromise Agreement: So What? originally appeared on Jobsworth by Michael Scutt on 05/09/2011.

If your employment has just ended,  not just for redundancy but for any reason, did you sign a compromise agreement? Perhaps you entered into a COT3 via ACAS to settle the dispute?

If you did there’s a good chance you will have signed up to a clause that says;

“You shall not at any time after the termination of your employment represent yourself as  being interested in or employed by or in any way connected with [name of ex-employer]”

Or something similar.  They are very common in properly drafted compromise agreements, as well as contracts of employment, and were probably first drafted to prevent any reputational damage or third party liabilities arising or being caused to the former employer by a disgruntled departee, or from claiming that they were still employed to assist a job application.

Before social network platforms developed it would probably have needed a definite act by the former employee to infringe such a clause.  However, with individuals “dipping their toes” into social media and setting up an account here or a profile there, these types of clauses can be unwittingly infringed simply by omission.

Take the obvious example: Linked In. It acts in many cases as nothing more than an online c.v (although there is far more that you can do with it). Many people, including the somewhat Luddite Mrs Jobsworth, set up a profile and then do nothing with it.  Probably in many cases they have forgotten they set the account up at all, meaning that when they do move employers the individual is potentially at risk of action from the former employer for holding themselves out as still being employed,especially if there has been any unpleasantness between the parties.

I’ve not yet had a case of this type of clause being enforced against an employee but it’s only a matter of time.  So, Jobsworth’s Helpful Hint #1 for today is check all your social networking profiles when you leave a job (for whatever reason) and update them, even if it means that your profile shows you are not working at that particular time.    That is preferable to being in breach of a compromise agreement.

Related posts:

1. 10 questions to ask if you’re made redundant
2. It's Christmas – I'm being made redundant!
3. I'm being made redundant – what do I do?

Just been made redundant? Don’t forget … originally appeared on Jobsworth by Michael Scutt on 13/04/2011.

Employment Law is a fairly staid and unglamourous area of the law most of the time.  Yes, some of the facts giving rise to disputes can be quite amusing but, in the main, practitioners are bogged down in a mire of statutes, regulations and reported cases. For instance, Laurie Anstis’s blog at Work/Life/Law has just highlighted a major drafting error in s.147(5) (a) of the Equality Act that makes it technically impossible for any solicitor to advise an employee with a compromise agreement settling a claim under the Equality Act.  In Laurie’s words

“a literal interpretation of these provisions leads only to one conclusion – that a lawyer acting for an employee cannot be a “independent adviser” for the purposes of advising on a compromise agreement under the Equality Act.”

The Courts and Tribunals will have to ignore the precise wording of the Act otherwise chaos will ensue.  As Laurie points out, ACAS can hardly be expected to deal with every dispute that involves discrimination under its COT3 procedure that would otherwise have been dealt with by a compromise agreement.

For employment lawyers this is fairly hot stuff but, it has to be said, it doesn’t really get the pulse racing.

However, last week, the blood was stirred by a public spat on Twitter between Darren Newman, respected legal journalist and Duncan Bannatyne (yes, that one).  DB wrote an article in the Daily Mail entitled “What on earth made a Tory-led Government enact Labour’s most lunatic legislation?”.  You may gather that he is not a fan.  Darren Newman replied on Twitter pointing out that Mr Bannatyne’s article was misleading and the Dragon spewed forth fire and brimstone in response.  See here for Darren Newman’s account of what occurred, plus some very good comments on what the Equality Act actually says and here for the exchange itself on Twitter.  The exchange seems to have concluded thus

Related posts:

1. Compromise Agreements: what are they?
2. Unfair Dismissal Rights to be Restricted?
3. The Equality Act 2010: Genuine Occupational Requirements and Other Stories #3

Compromise Agreements and The Equality Act originally appeared on Jobsworth by Michael Scutt on 11/10/2010.

This is a fairly common question.   Basically a compromise agreement (aka termination or settlement agreement) is a legally binding contract between employer and employee whereby the employee accepts a financial package (usual elements include: compensation for loss of employment, notice monies, outplacement services provision, release of stock etc) in return for agreeing not to sue the employer for breach of contract, or unfair dismissal or for any discrimination related reason. The employee will also commonly agree to keep the agreement itself confidential and to say nothing about the employer’s trade secrets and affairs, amongst other requirements.  In order to be legally binding the employee needs to take independent legal advice on the terms of the agreement from a qualified legal adviser – usually a solicitor.  The employer will usually pay a contribution towards the cost of that advice to encourage the employee to get the advice.

 If you find yourself in this situation, it is important to seek advice from a solicitor that regularly deals with employment law regularly so that advice can be given to you on whether the offer should be accepted at all (i.e. do you have reasonable prospects of success with a claim for unfair dismissal) and, if the advice is to accept the offer in the agreement, are the terms of the agreement reasonable, or do they place too onerous a burden on the employee? Some compromise agreements I come across contain clauses that are illegal or, at least, unfair, and in many cases are too ambiguous. 

Usually the terms of the agreements can be renegotiated quickly and with a minimum of expense.  Overall, a compromise agreement is a very good way of settling legal disputes and they are not limited to use in redundancy situations, although that is where we most commonly some across them. 

Please click here to see a previous post on the same subject.

Please click here to see my most recent post.

Related posts:

1. Compromise Agreements and The Equality Act
2. Coulson’s Compromise Agreement: So What?

Compromise Agreements: what are they? originally appeared on Jobsworth by Michael Scutt on 31/07/2009.

In my day job I am a Partner in the above firm. We have recently relaunched our website and have started a Dale Langley blog.  Initial comments have been favourable.  I have just posted an article on a case concerning compromise agreements and why you should not delay in negotiating the terms or signing off.  Please click here to go to the article.

I have also written on compromise agreements and what they are before – click here  to read more.

As ever, if you would like me to help please contact me at michaelscutt@dalelangley.co.uk

Related posts:

1. Compromise Agreements: what are they?
2. Redundancy – know your rights!
3. The Equality Act 2010: Law Society Seeks Urgent Consultation

Dale Langley & Co originally appeared on Jobsworth by Michael Scutt on 29/07/2009.