LEGAL
Surrey’s Premier Lifestyle Magazine
You’re hired!
Sofia Syed, Associate in the Employment Team at Mundays LLP, advises on what to look out for when reviewing your employment contract.
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If employment is likely to continue for more than one month, your employer must provide a written statement setting out certain terms of your employment. This must be given within two months of the start of the employment. The details may be provided in the form of a ‘statement’ or as a letter of engagement or contract of employment.
Contracts are usually drafted by the employer on a standard form which may have been adapted to suit you. Depending on your bargaining position, you may be able to negotiate certain terms and senior employees often seek legal advice prior to signing in order that their lawyers can negotiate the best deal for them. In some cases, the employer may even contribute towards legal fees for obtaining advice on their contract.
If you have recently been hired for a new role, here are some key pointers to look out for in a contract of employment:
Start date: This is usually negotiable. Note, if you do have previous unbroken service with the employer, this should be stated in the contract. Ensure you do not start work for your new employer until the expiry of your previous notice period.
Restrictions from previous employment: Check that you are not under any restrictions from your previous employer; they can get very upset if you breach valid post termination restrictions. If you are under restrictions, it is best to provide your new employer with a copy.
Length of notice: You may prefer a longer notice period as it provides greater protection. Even if the parties are required to give longer periods of notice, you may be able to negotiate an earlier exit and the employer may decide to terminate early by paying you in lieu of notice.
Payment in lieu of notice (PILON): If you don’t have a clause permitting the employer to pay you in lieu of notice, but they do so, it could be more tax advantageous to you. If you do have this clause, it can be more beneficial to you if it is payable in one lump sum and includes elements of pay for benefits and bonus.
Contracts are usually drafted by the employer on a standard form which may have been adapted to suit you. Depending on your bargaining position, you may be able to negotiate certain terms and senior employees often seek legal advice prior to signing in order that their lawyers can negotiate the best deal for them. In some cases, the employer may even contribute towards legal fees for obtaining advice on their contract.
If you have recently been hired for a new role, here are some key pointers to look out for in a contract of employment:
Start date: This is usually negotiable. Note, if you do have previous unbroken service with the employer, this should be stated in the contract. Ensure you do not start work for your new employer until the expiry of your previous notice period.
Restrictions from previous employment: Check that you are not under any restrictions from your previous employer; they can get very upset if you breach valid post termination restrictions. If you are under restrictions, it is best to provide your new employer with a copy.
Length of notice: You may prefer a longer notice period as it provides greater protection. Even if the parties are required to give longer periods of notice, you may be able to negotiate an earlier exit and the employer may decide to terminate early by paying you in lieu of notice.
Payment in lieu of notice (PILON): If you don’t have a clause permitting the employer to pay you in lieu of notice, but they do so, it could be more tax advantageous to you. If you do have this clause, it can be more beneficial to you if it is payable in one lump sum and includes elements of pay for benefits and bonus.
Sofia Syed is an Associate in the Employment Team at Mundays LLP, advising on all aspects of contentious and non-contentious matters. Her work ranges from preventing employment claims by ensuring the correct documentation is in place, through to advising on employee management (disciplinary, grievances, sickness management) as well as advising on termination (re-structuring, dismissal, redundancy procedures, handling tribunal claims) or negotiating settlements agreements and packages.
Sofia has experience in advising employers operating in a variety of business sectors, including healthcare and education. She also has a particular expertise and interest in advising on matters relating to domestic workers and advises on bespoke agreements and solutions tailored to suit individual client arrangements. Sofia is a regular speaker on employment law issues and her articles and contributions are published regularly in national or specialist media.
Sofia can be contacted by telephone on 01932 590581 or by email at sofia.syed@mundays.co.uk.
Bonus: If possible try to have the bonus as a contractual right, not discretionary. Also ensure you are not precluded from receiving a bonus if your employer places you on garden leave, under notice or suspends you. If it is paid on termination, ensure you have a pro-rated entitlement.
Duties/role: Ensure these are specific and the employer can’t change them unilaterally or without your consent.
Place of work: The employer will usually include a mobility clause allowing them to change your place of work within a particular area. You should ensure they need your consent prior to making any changes. Depending on your seniority you may be required to travel, you may wish to insist on a particular mode or class of travel, eg. first class air fares!
Hours of work: You cannot be forced to opt out of the average maximum 48-hour working week or suffer any detriment if you decide not to opt out.
Salary: Try to include a guaranteed salary increase in line with the RPI or at least in line with the average increase of your colleagues.
Pensions: Check when you can join. It may be possible to negotiate additional salary payments to be paid to compensate you for the period before the employer’s pension contributions begin.
Car: Do you have a choice between a company car and cash equivalent? The cash equivalent may be more tax efficient; what you choose may depend on your family situation and the number of your existing cars! If you opt for the company car, ensure you are happy with the make and model, or that it will be commensurate with your position. Consider the usage of the car and fuel costs and negotiate in respect of what the employer will cover.
Duties/role: Ensure these are specific and the employer can’t change them unilaterally or without your consent.
Place of work: The employer will usually include a mobility clause allowing them to change your place of work within a particular area. You should ensure they need your consent prior to making any changes. Depending on your seniority you may be required to travel, you may wish to insist on a particular mode or class of travel, eg. first class air fares!
Hours of work: You cannot be forced to opt out of the average maximum 48-hour working week or suffer any detriment if you decide not to opt out.
Salary: Try to include a guaranteed salary increase in line with the RPI or at least in line with the average increase of your colleagues.
Pensions: Check when you can join. It may be possible to negotiate additional salary payments to be paid to compensate you for the period before the employer’s pension contributions begin.
Car: Do you have a choice between a company car and cash equivalent? The cash equivalent may be more tax efficient; what you choose may depend on your family situation and the number of your existing cars! If you opt for the company car, ensure you are happy with the make and model, or that it will be commensurate with your position. Consider the usage of the car and fuel costs and negotiate in respect of what the employer will cover.
Benefits: Try and obtain coverage for yourself and any dependents as soon as possible. Depending on your bargaining position upon joining, you could negotiate that benefits from your previous employment are at least replicated in the new offering.
Holidays: The statutory full-time minimum entitlement is 28 days, which includes bank holidays. Ensure you can carry over any unused contractual holiday which exceeds your statutory entitlement.
Termination by events of default: You should limit the events which permit your employer to terminate your contract summarily without notice.
Garden leave: If you are a senior employee, the employer is likely to insist on a garden leave clause. This enables them to keep you out of the working sphere, whilst still bound by your contractual terms (including pay) for a set period of time. You should ensure the period is limited to your notice period and that you continue to receive all salary and benefits.
Restrictions: It may be difficult to resist post-termination restrictions being included in the contract, but you can seek to limit their effect either by limiting the scope or duration. If you have these and you are concerned about their limiting effect on your future activities, you should seek legal advice.
Holidays: The statutory full-time minimum entitlement is 28 days, which includes bank holidays. Ensure you can carry over any unused contractual holiday which exceeds your statutory entitlement.
Termination by events of default: You should limit the events which permit your employer to terminate your contract summarily without notice.
Garden leave: If you are a senior employee, the employer is likely to insist on a garden leave clause. This enables them to keep you out of the working sphere, whilst still bound by your contractual terms (including pay) for a set period of time. You should ensure the period is limited to your notice period and that you continue to receive all salary and benefits.
Restrictions: It may be difficult to resist post-termination restrictions being included in the contract, but you can seek to limit their effect either by limiting the scope or duration. If you have these and you are concerned about their limiting effect on your future activities, you should seek legal advice.
You’re fired!
If you are an employer looking to dismiss an employee who has been employed with you for over two years, here are five key points to be aware of:Unfair dismissal: Any dismissal must be both procedurally and substantively fair. The employee may successfully claim unfair dismissal unless the employer can show that the reason (or principal reason) for the dismissal was a potentially fair reason and that you acted reasonably in treating that reason as a sufficient reason for dismissal.
Reason and procedure: There are five potentially fair reasons. These are: (a) capability or qualifications (b) conduct (c) redundancy (d) breach of a statutory duty or restriction and (e) some other substantial reason. Often the facts of a case may mean the employee is dismissed for more than one reason. Different procedures apply to the different reasons and can be carried out concurrently if necessary. To minimise the risk of a successful claim you should follow appropriate procedures.
Notice: Ensure that you give the employee the correct period of notice. Check the contract, but if the contract states less than the statutory notice period, you should give at least the minimum statutory period of notice. Decide whether you wish them to work their notice, go on garden leave or whether you will pay in lieu of notice. Again, check the contract, this will also determine the tax payable.
Holidays: The employee is entitled to be paid for accrued but untaken holiday up to the date of termination. Remember, the employee will have accrued holiday during periods of sickness and maternity leave. The employer cannot claw back any excess holiday taken by the employee unless their contract allows it.
Post termination: If the employee has contractual restrictions, re-state these in the termination letter. If you are going to give a reference, follow your reference policy or play it safe and keep it vanilla! For further tips on ‘Vanilla’ reference or tell it like it is...? select Legal from the Magazine menu at essence-magazine.co.uk this month.
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