Employment

Frequently Asked Questions

Q. How can I prevent my employees leaving and setting up in competition?

I am the CEO of a financial sales company. Last week 5 key senior employees left the company and have set up a business in direct competition to us. My new HR manager tells me that we need to ensure that all current employees sign up to a stringent post termination restrictive covenant agreement to give us some legal comeback if this happens again and to prevent them leaving to join the new company. However, I am not convinced that they will all sign up - can I force them to do so?

A. How can I prevent my employees leaving and setting up in competition?

An employer cannot force an employee to agree to a change in their terms and conditions of employment. However, if there is a sound business reason for the employer to request the change and the change being requested is a reasonable one, refusal to agree by the employee can give an employer a potentially fair reason to dismiss an employee.

Based on the information you have provided, it would seem that you have a fair reason to request that existing employees agree to enter into written restrictive covenants with the company. However, should you wish to consider dismissing any of the employees that will not give their consent to the changes, you must ensure that (a) the restrictive covenants proposed are reasonable and (b) you follow a fair and reasonable procedure in both seeking the employees' consent and dismissing them if they do not give it.

Remember however that whilst employed by you all your employees owe the company a duty of fidelity and confidentiality and these duties can be considered implied terms of their employment contracts. In addition, the more senior the employees, the more stringently the Courts will enforce these implied terms against your employees. The implied term of fidelity prevents an employee from poaching your customers and employees and entertaining offers from customers whilst working for you. Similarly, the implied term of confidentiality prevents an employee from copying or memorising your confidential information whilst at work with a view to using it to their own benefit or the benefit of a competitor or from using the company's trade secrets to their own benefit.

It is however still a good idea to require senior employees to enter into written restrictive covenants with the company not least because the implied duties of fidelity and confidentiality will not continue to bind the employees after their employment with the company has ended. In order to be enforceable restrictive covenants must be drafted very carefully and only be as wide as is necessary to protect the legitimate business interests of the company. Once drafted, you must give the employees adequate time to consider them carefully and seek legal advice should they wish to do so. Finally, if they do refuse to enter into the restrictive covenants and you want to dismiss them, you should make sure you follow a fair process when doing so.

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Q. How can I treat an employee on maternity leave fairly during a redundancy procedure?

I am the HR manager of a marketing company. The Board has recently commissioned a report from a firm of management consultants which has recommended that the business is restructured to reduce the number of sales managers from 10 to 6. One of the sales managers is currently on maternity leave and is due back to work in 4 months time. Should we include her in the pool of potentially redundant employees and, if so, how should we ensure that she doesn't suffer any disadvantage during the procedure because she is on maternity leave?

A. How can I treat an employee on maternity leave fairly during a redundancy procedure?

The employee on maternity leave should be included in the pool of potentially redundant employees. In order to ensure that she doesn't suffer any disadvantage during the procedure you must make sure that she is kept just as informed as the rest of the employees about the redundancy process. So if, for example, you think it might be difficult for her to come into the office for a consultation meeting, you should try and arrange a meeting at a time and place that is convenient for her if at all possible. Remember also that she may not have access to her work email or internal post, or may not check her work email as regularly as she would if at work. If she were to suffer a detriment because she was on maternity leave she may be eligible to bring a claim for sex discrimination against you as well as unfair dismissal.

You must also ensure that the selection criteria you use to select those for redundancy are not applied in a way that places the employee on maternity leave at a disadvantage because of her maternity leave. For example, if one of the criteria used was income from sales generated by the sales managers for the last 12 months, the employee on maternity leave is likely to score lower and therefore be placed at a disadvantage.

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Q. When can I terminate the employment of an employee on long term sick?

I have an employee that has been off work for 6 months now and it doesn't look like she will be returning anytime soon. Can I terminate her contract of employment?

A. When can I terminate the employment of an employee on long term sick leave?

Potentially yes but in any case where you are considering terminating the employment of an employee who is on long term sick leave you need to be wary of two legal pitfalls: unfair dismissal and disability discrimination.

There are six potentially fair reasons to dismiss an employee, one relates to the capability (or lack thereof) of an employee to perform work of the kind they were employed to do. Dismissal because of long term sickness absence is potentially a fair reason to dismiss your employee, but you must ensure that you follow a fair and thorough procedure prior to reaching the decision to dismiss to protect yourself against a finding of unfair dismissal.

Firstly, you need to find out all you can about your employee's condition and whether it really will prevent her from carrying out her job for the foreseeable future. We would recommend that you obtain with her consent, a report from her GP or specialist or by asking her to be examined by a doctor appointed by the company. You should ask the doctor to identify your employee's symptoms and give their opinion on how long she may be unfit to return to work. Once you have an accurate picture of the state of her health and the prognosis, you should consider, amongst other things, previous sickness absences, the needs of the business, whether there is anything you can do to assist the employee's return to work and, if she could not return to her own job, whether suitable alternative employment could be offered which would enable her to return to work.

In particular, in light of the fact that she has been absent for an extended period of time, we would recommend careful consideration of whether she has a disability as defined in the Disability Discrimination Act 1995 and if she does, whether there are any reasonable adjustments you could make to avoid terminating her employment. Depending upon the nature of your employee's illness, you may find that if you made some changes to her working environment or the type of work she is required to do, it might be possible for her to return, perhaps initially on a reduced hours basis.

If, having done all of the above, you decide that there are reasonable grounds to consider dismissing your employee, you then need to follow a fair procedure which is compliant with the statutory dismissal procedures before reaching the decision to dismiss so as to avoid a claim for Unfair Dismissal by the employee.

This is a complicated area of the law and we would recommend that you take specialist advice from us at an early stage in the process.

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Q. Do I have to agree to a request for flexible working?

One of my employees has just returned from maternity leave and told me she would like to work one day a week from home in future. Do I have to agree?

A. Do I have to agree to a request for flexible working?

No, but you do need to carefully consider her request. Parents of children and others with responsibility for the upbringing under 6 years of age (or age 18 or under if disabled and carers and adults) have the right to make a written request for flexible working, provided they have been employed for 6 months or more. Any employee who makes a request to work flexibly can request changes to the hours they work, the times or days they work, to work from home or any other change or condition which would help them balance their childcare responsibilities and career.

Upon receipt of a written request an employer is under a legal duty to consider the request seriously, discuss it at a meeting with the employee and only refuse it if their reason falls within one of the statutory reasons entitling an employer to refuse a request. Therefore, you will need to consider very carefully the impact on the business of the employee working from home one day a week and in the absence of a sound business reason entitling you to refuse that request you should agree to it.

There is a set statutory procedure which both an employee and employer must follow where an employee makes a request for flexible working and you should make sure you adhere to this procedure. Further details can be obtained from the DBRR website www.berr.gov.uk. If your employee considers that you have unreasonably refused her request for flexible working, she has the right to refer the matter to an Employment Tribunal. If her complaint is upheld the Employment Tribunal could order you to reconsider the application and may award compensation of up to eight weeks' pay.

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Q. Does my business need written employment contracts?

I have just started up my own company and am about to take on 10 staff. I have already agreed their hours and salary with them orally. Do I need to put this in writing as well?

A. Does my business need written employment contracts?

Legally, there is no requirement to give employees a written contract of employment but there is a legal requirement to give an employee certain information about the terms of their employment in writing within two months of the commencement of their employment.

This must include, for example, terms relating to pay, hours of work, holiday, sickness absence and notice periods. Failure to provide an employee with this information in writing entitles them to refer the matter to an Employment Tribunal and you could be required to pay them compensation of up to 4 week's pay (subject to the statutory cap, currently £330 per week).

As a matter of good practice we would always advise employers to give their employees written contracts of employment. By incorporating an employee's terms of employment into a written contract there is more certainty for both parties as to what those terms actually are which inevitably means fewer disputes between the employer and employee down the line. Having a written contract also gives you the opportunity to include terms to protect your business such as confidentiality clauses and post termination restrictive covenants. In our experience, we would always recommend a well drafted employment contract is entered into with each employee as this is likely to save you a lot of time and money in the long run. We would suggest we provide you with a precedent that you can then use for all existing and future new employees.

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Q. Do I have to take down calendars in the office that a female employee considers offensive?

I am the Managing Partner of a small web-hosting company and the majority of my employees are male, although I recently took on a female marketing manager. There are some calendars around the office of female models and I have just received an e-mail from the new marketing manager telling me she feels uncomfortable about the posters and asking if I can get them taken down. No-one else has a problem with them so I don't see why I should. What do you advise?

A. Do I have to take down calendars in the office that a female employee considers offensive?

You need to be careful as leaving the posters up could be considered to be harassment under the definition set out in the Sex Discrimination Act 1975.

Harassment is defined as either:

  • unwanted conduct on the grounds of the recipient's sex; or
  • unwanted verbal, non-verbal or physical conduct of a sexual nature.

In either case the conduct must have the purpose, or the effect of violating the recipient's dignity, or of creating an intimidating, hostile, degrading, humiliating or offensive environment for the recipient.

The posters combined with the effect that they may be having on your new marketing manager could leave you open to a claim for sex discrimination by her.

In addition, it would appear that your new marketing manager has now raised a statutory grievance about the posters. You are therefore under a duty to comply with the statutory grievance procedure (and if you have an internal grievance procedure you should ensure that you comply with that too).

We would therefore suggest that you take the posters down straight away and then invite her to a meeting to check there is nothing else she is unhappy with.

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