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.

The EA has been in force for roughly one month and it is already experiencing some turbulence.  Not from Duncan Bannatyne’s rantings in the Daily Mail but from the effect of some sloppy drafting.  The problem concerns the drafting of s.147(5) of the Act, which deals with compromise agreements.

The offending section says;

“ none of the following is an independent adviser in relation to a qualifying compromise contract:

(a) a person who is a party to the contract or the complaint; and

(d) a person who is acting for a person within paragraph (a) in

relation to the contract or the complaint . . .”

The problem is that this clause precludes the solicitor who acted for the Complainant prior to the drafting of the compromise agreement advising the employee on the terms of the agreement and thus, crucially, preventing him/her from signing the adviser’s certificate that is required to make it a legally binding agreement.  Even a solicitor who advises solely on the terms of the agreement is unable to validly sign the adviser’s certificate, according to advice the Law Society has received from Counsel.  The Law Society is seeking an urgent meeting with the Government Equalities Office (who don’t see a problem existing) to try and resolve the issue.

So what?  Is this just a nice lawyer’s argument or is it a real problem? It’s the latter: this has very significant implications for the settlement of disputes under the EA, particularly for employers.  If disputes can’t be settled by the parties entering into a compromise agreement then it leaves only two other options: one is to fight the case all the way at an Employment Tribunal so that a finding is made or, secondly, ET proceedings are commenced and settled via ACAS under its COT3 procedure.  The first option is catastrophic in terms of the costs and time that would be wasted if the parties were minded to settle and the second is better, but not greatly.

Without a legally binding compromise agreement, employers dare not settle claims because there would be nothing to stop an employee from taking the money and then still suing the employer.  Possibly a warranty could be included in the agreement to say that the employee would not do that, but that is not a formal waiver and the warranty will be fairly worthless if the employee has already spent the money.

For employees the issue is more one of frustration: disputes won’t settle and thus the aggro and inconvenience of the dispute will continue.

Let’s hope the Government sees sense and the draftsman of s.147 is hanged drawn and quartered (ok, a bit harsh, perhaps commute that to a stiff telling off?)

STOP PRESS – 3rd November 2010

For a very useful follow-up on the above points and why actually all may not be lost, read this article by Martin Searle Solicitors.  It contains a summary of the advice given by Robin Searle QC of Cloisters Chambers and also Daniel Barnett (another barrister, from 1 Temple Gardens) on why, with caution, compromise agreements may still be used.  Undoubtedly though the whole situation is uncertain and needs to be clarified as soon as possible.

Related posts:

1. The Equality Act 2010: Genuine Occupational Requirements and Other Stories #3
2. What Should Employers do About Third Party Harassment: Equality Act 2010 #4
3. The Equality Act 2010: 24 Days and Counting #1

The Equality Act 2010: Law Society Seeks Urgent Consultation originally appeared on Jobsworth by Michael Scutt on 01/11/2010.

Ok, imagine the scenario.  You’re told on Friday morning at 9.35 a.m to go to the 7^th floor and meet Siobhan, your HR generalist.  Only HR live on the 7^th floor, not real people.  You go into a meeting room with her and there is Charles, your line manager or maybe Fiona, who is really quite senior in HR but not usually seen during the hours of daylight.  You’re handed a lengthy letter and told that your role is at risk of redundancy.  What do you do?

Answer: try and get as much information out of Siobhan and Charles/Fiona as you can.  What to ask?

1. What is the company doing?  Is it a restructure/rationalization/other reason.
2. Why you?  Crucial – why is your role in the organization no longer needed? 
3. What will happen to your work once you’ve gone?  Will it be divided up amongst remaining people/sent to Bangalore/no longer needed because the business is getting out of that sector?
4. Who else is at risk?  If your role is a unique one and a layer of management is being stripped out of the organisation, this is less relevant.  But, see next one down. What is the selection criteria they are using? 
5. What is the selection criteria they are using? If there are ten in your team and five are being put at risk, how has the company decided you should be placed at risk, but not Tony who sits next to you?  Selection criteria must be objective as far as possible.
6. What is your score against the criteria?
7. How did your comparators score?  Usually HR won’t give you this information because of confidentiality reasons, but you can ask to be given it on an anonymised basis.
8. How many people in your “establishment” are being placed at risk?  If more than 20 or 100 then time limits for consultation apply.  Get suspicious if HR won’t tell you.
9.  What other roles are available?  Redundancy should be the last resort.  Employers should try and exhaust all other possibilities before dismissing you.  Have they thought of pay-cuts or unpaid leave, or could they redeploy you to another part of the business, making use of your transferable skills?
10. What is the timescale for the process?  When will the decision be made?  When will we have the next meeting?

Finally, the 11^th question: where can I get some good legal advice on my rights?  Answer: here.

I can help you with all these issues, or advise you if you’ve been given a compromise agreement.  Please call me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk.

Related posts:

1. Just been made redundant? Don’t forget …
2. I'm being made redundant – what do I do?
3. It's Christmas – I'm being made redundant!

10 questions to ask if you’re made redundant originally appeared on Jobsworth by Michael Scutt on 08/10/2009.

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.

Judging from the traffic on this site, redundancy is the big employment law issue at the moment and not surprisingly given the current climate. 1,000 job losses announced this week at Nomura, 650 at Credit Suisse and that on top of the losses at Goldman Sachs and Lehman Brothers. In my day job I am seeing plenty of people from investment banks and beyond, all with concerns and queries about either being told they’ve been selected for redundancy or are at risk. If you’re one of those people what do you need to know?

1. Are you an employee? Most employment protection legislation (apart from that involving discrimination issues) only covers employees and not self-employed people, for instance.

2. How long have you been continuously employed by your employer? To be able to claim a redundancy payment you need two years continuous employment experience. If you have this then you are entitled to be paid a “statutory redundancy payment” (SRP) in addition to your notice monies. SRP is not generous – £330 per complete year of service if you’re between 22-41 and £495 if you’re over 41. Your notice entitlement will be as set out in your contract of employment or as stipulated by the Employment Rights Act 1996 – basically 1 week per year of service up to a maximum of twelve weeks (four weeks notice minimum to be given by the employer once the employee has one month’s service).

3. If you have more than one year’s continuous employment experience then you have acquired the right not to be unfairly dismissed. This is a big topic but, in brief, it may allow you to argue that your selection for redundancy was unfair.

4. Have you been discriminated against? There are six main grounds for discrimination – race, sex, age, disability, religious belief and sexual orientation in addition to other grouds such as being subject to less favourable treatment because of being a fixed time or part-time worker. In addition whistleblowing is another type of claim that might be available. Remember it is your role that needs to be redundant, not you. What will happen to the work you do once you’ve left?

5. Most of the employees I see have been given a compromise agreement by their employer and they need an independent solicitor to advise them on their legal rights under the agreement. I have written elsewhere in this blog on compromise agreements and the issues they raise – see the page headed “compromise agreements” on the tab at the head of this blog for more information. One main reason why employers offer compromise agreements is that they want the employee to waive their rights to sue for unfair dismissal, discrimination, breach of contract etc. This is particularly the case if the employer is offering an enhanced package (in the City this is often, but not always, one month’s full pay per year of service).

6. If you have been given a compromise agreement then you will need to have it reviewed by a solicitor; give me a call if you want me to help. If you are unhappy about your selection or want further advice, get to see a solicitor and get some advice.

7. It is always helpful when seeing a new client to see the contract of employment, all correspondence relating to the redundancy situation and, of course, the compromise agreement.

Please call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk if I can help you at all.

Related posts:

1. What is the cost of redundancy?
2. Redundancy or Pay Cut?
3. Redundancy Selection: Now Harder for Employees to Challenge?

Redundancy – know your rights! originally appeared on Jobsworth by Michael Scutt on 06/12/2008.