ISSUES FOR EMPLOYEES
1. Why do I need to see a Solicitor anyway?
We don't actually need to meet, if that doesn't suit you. What matters is that you are properly advised, and face to face meetings are good but not essential.
What is essential is that a legally qualified independent adviser, who is insured for the advice given, must advise you and countersign the agreement. Otherwise the agreement will not be valid, and your employer will not accept it. Signing a compromise agreement is a one off chance to sort out any employment problems or work-related claims so you need to get it right. Guy Thompson & Co can advise you on your options.
You might have legal employment rights you did not know about, or contractual entitlements you had forgotten. If you sign a compromise agreement it will be impossible to raise these claims later. An experienced employment law solicitor will ensure you can sign a compromise agreement quickly and confidently.
2. When should I take advice?
You can call us (with no obligation) as soon as you think an employment
situation is developing that might lead to your redundancy, or you are
leaving your job after a dispute. If you think there might 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 as part of 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. Do I have to leave work at once?
Your contract may include what is often called a "gardening leave" clause, and if it does you will have to comply. 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 any "payment in lieu of notice" will probably 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 is there a clause 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, while 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 might change
in future. Therefore all Compromise Agreements say 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, but as mentioned earlier is not essential, especially if you need to sign a compromise agreement fast. If you cannot come to our meeting rooms in London EC2M 1RQ we can either meet elsewhere, or go through your agreement on the telephone.
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 do 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. (This the most important document of course, but the following ones can be useful and are sometimes vital in arguing for your rights).
2. Your contract of employment, and the letter of appointment if you still have it.
3. All documents about your benefits. These might be set out in a company handbook, and/or documents about share options, bonuses, commissions, death in service benefit, permanent health insurance, or pensions.
4. All correspondence, whether
by e-mail or letter, explaining why you are being asked to sign a
Compromise Agreement.
8. Can the sum offered by the employer ever be increased?
Signing a compromise agreement means agreeing a contract, and the terms of any contract can always be discussed. In the right circumstances, we have succeeded in getting 300 - 400% increases over an original offer..
When an employer is concerned about facing a claim, perhaps based on a convincing allegation of unfair dismissal or discrimination, an increased offer is very often possible. If your employer has done something that is clearly not allowed by your contract we will have a good chance of arguing for a better settlement.
On the other hand, an employer who has a fixed budget for dealing with a redundancy plan will probably refuse to negotiate on the financial bottom line, but there could be other things that are valuable to you where your employer could be flexible. We should be able to get a reference to a new employer, or how your departure will be announced to the company, set out in exhibits to the agreement. Maybe some benefits could be extended after you leave.
9. What is the role of the Guy Thompson & Co?
It is important 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.
The added value we can offer, over and above any other employment solicitors firm in London is that Guy Thompson's direct hands on experience at data vendors, software developers, brokers, and City law firms is that we know the issues experienced by employees in the London financial markets. You have nothing to lose by calling us, and much to gain.
10. Do I have to sign the agreement?
No: a compromise agreement is a contract, which you can reject if you want, 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 might threaten to withdraw the offer. Whether it carries out that threat will depend on how strong it thinks your case is, and whether it believes you are prepared to make the commitment needed to take a case to the employment tribunal.
Most employers offer a premium over what they believe a workplace claim is actually worth to encourage employees to settle. Therefore your employer will have to be persuaded to upgrade its original view of the merits of your claim. This could be something we could attempt when negotiating the terms of your compromise agreement.
In cases where employers have committed gross breaches of employment rights we have recently succeeded in obtaining settlements that were three or even four times more than the initial proposals in draft compromise agreements.
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 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, employers might say our costs have gone beyond approving a draft agreement. We always argue that all costs must be paid by the employer, and usually succeed in this. We never incur costs for you to pay unless we have obtained your agreement first.
Any more questions? Call now on 020 7274 6874 or 07 775 944 363 without obligation or write to us at contact@citycompromiseagreements.com .