FAQ?s ? EMPLOYEES
1. Why do I need to see a Solicitor?
A legally qualified independent adviser, who is insured for the advice given, must advise you and countersign the agreement for it to be valid. Otherwise your employer will not accept it. Guy Thompson & Co can advise you on your options.
2. When should I take advice?
You can call us (with no obligation) as soon as you think an employment
situation is developing that may lead to your redundancy, or you are
leaving your job after a dispute. If you think there may be an issue or
have any questions please contact us for a free twenty minute confidential legal consultation.
3. If I am offered a settlement will it be tax free?
If a payment is due in accordance with your contract of employment (accrued holiday pay for example) you will almost certainly have to pay tax on it. One-off "ex gratia" payments of up to ?30,000 are generally not taxable. The rules about what is taxable and what is not are complicated and you may have to take advice in difficult cases. The Compromise Agreement will make clear where your employer will deduct tax from the payment to you.
4. My employer says I must go home for my notice period - do I have to comply?
Your contract may include what is often called a "gardening leave" clause, in which case you will have to abide by it. But if your employer has not included such a clause then technically he has no right to tell you not to come to work. In any case, if your contract does not have a gardening leave clause payment in lieu of notice may well be tax free if your gardening leave covers your notice period. If you accept that you will be leaving your employment one way or the other the complicated issues of what payments are taxable, and what you may do after the end of your employment, are best set out in a Compromise Agreement.
5.Why are there clauses in my Compromise Agreement saying I must take the risk of paying tax?
This is
called the ?indemnity clause?. It is hardly ever relevant to an employee, but ultimately
the employee is responsible for his or her personal tax and
the employer is responsible for paying over to Her Majesty's Revenue and
Customs (HMRC) the right amount of PAYE and National Insurance. Your
employer may not know about aspects of your personal situation that
would make payments taxable, or tax law or concessions may change
in future. Therefore all Compromise Agreements provide that where an
employee gets an ex gratia tax free payment it is the employee
who takes the risk of the tax man claiming back tax.
6. Do I have to have a meeting or can I be advised over the telephone?
A meeting is usually a good idea. Certainly you should not sign a Compromise Agreement without first checking it clause by clause. You might find onerous terms that are not strictly relevant to the outline deal you thought you had agreed. We can advise you over the telephone about the terms of the Compromise Agreement if we have seen all of the relevant documents. You will probably find it helpful if we meet and look at the agreement together. New points often come up in meetings that hadn't been considered before.
7. What documents will I need to bring?
1. The draft Compromise Agreement. Many employers provide drafts in electronic form that allow us to make amendments to the draft.
2. Your Contract of Employment and letter of appointment
3. All documents about your benefits. These may be set out in a company handbook and/or documents about share options, bonuses, commissions, death in service benefit, permanent health insurance, and pensions.
4. All correspondence, whether by e-mail or letter, explaining why you are being asked to sign a Compromise Agreement.
5. A pay slip
6. Proof of identity such as a passport or photo drivers licence
7. Proof of your residential address such as a utility bill, a bank or credit card statement (any of these must be less than 3 months old).
8. Can the sum offered by the employer ever be increased?
Well, a Compromise Agreement is a contract and the terms of a contract can always be discussed. An employer that has a fixed budget for concluding employment issues will probably refuse to negotiate. But when an employer is concerned about a claim, perhaps based on allegations of Unfair Dismissal or Discrimination, an increased offer might be possible.
9. What is the role of the Guy Thompson & Co?
It is important that you accept that once you have signed the Compromise Agreement you will no longer able to sue your employer for any breaches of your contract or of your contractual or statutory rights.
Our responsibility is to explain the legal meaning of the agreement, its effect and what rights you may be giving up, and to ensure you are satisfied with the compensation you are being offered.
10. Do I have to sign the agreement?
No: a Compromise Agreement is a contract, which you can reject if you choose, maybe because you think the money on the table is too low, or you might even want to take legal action instead. We can discuss your options. If you decide not to sign the Compromise Agreement, your employer may well withdraw the offer. Remember, most employers offer a premium over what it believes the claim is actually worth to encourage employees to sign. Therefore your employer will need to be persuaded to upgrade its original view of the merits of your possible claim.
11. Will the contribution to legal costs be enough to cover the legal costs?
Most employers offer their employees a contribution to legal fees which is sufficient to ensure that in most cases we can advise at no cost to the employee.
Not all Compromise Agreements are straightforward, however, and in a few cases extensive negotiations may be needed to achieve a settlement. In such case the added costs, which go beyond approving a draft agreement, are often the expense of the employee. We would explain any additional costs and obtain your agreement before they are incurred. As part of the negotiation with the employer, we would try to ensure the employer's contribution to your legal fees is increased.