Monday 6 April 2020
Thursday 13 February 2020
Restictive Covenants: What you need to know
Restrictive covenants
Similarly to starting a
relationship or entering into a marriage, an employee enters into an employment
contract governing their relationship with their employer, more often than not
without having considered how or why that relationship may end and on what
terms. It is only on breakdown of the relationship with their employer that the
employee questions their rights and freedoms in respect of new and prospective
employment opportunities. Many people find themselves bound by certain terms in
their contract, namely restrictive covenants, which limit where or with whom
they make seek future work.
Whilst restrictive covenants are
certainly a necessity to an employer, they may also present a colossal burden
to an employee.
It is not uncommon for an
employee, who thought nothing of the restriction at the time of entering into
the relationship, to suddenly panic when they are hit with the stark reality
that their opportunities are in fact limited. This prospect often leads employees
to turn to employment solicitors questioning the enforceability of such terms.
We, at Gamlins Law, are often approached by frantic employees who have already
secured new employment but later realise they are contractually forbidden from
taking up their new role.
Restrictive covenants can take
various forms and there is no one-size-fits-all term to protect all interests
an employer requires. For this reason, most employment contracts contain
various terms which each, individually, constitute a restrictive
covenant.
So, let’s take a look at the most
common types of covenant.
Non-compete
clauses
These are the clauses contained in
an employment contract whose purpose is to restrict an employee’s ability to
start up a competing business similar to that of their employer’s or to join an
employer’s competitor. These covenants are often confined in their geographical
reach so as to still allow the employee some freedom.
By way of an example, an employee
who leaves their employment whether at a garden centre or a Michelin star
restaurant, could not, by virtue of the covenant, then start up their own
garden centre or Michelin star restaurant next door. However, depending on the
wording of the covenant and the radius in which it extends, that employee may
be at liberty to set up that business 10 miles down the road.
Restrictive covenants which cover
an exceptional and unreadable radius may not be enforceable and this is
something we will consider.
Non-solicitation
and non-dealing clauses
These clauses act to prohibit an
employee from “soliciting” or put more simply, attempting to draw their
ex-employer’s customers or supplies away from them. These terms essentially
protect the business or empire that an ex-employer has worked hard to build
from being whittled down to nothing by an ex-employee.
Generally, for non-solicitation
and non-dealing clauses to be enforceable they must be limited in scope to
customers or suppliers that that employee communicated or engaged with during
their employment.
Non-poaching clauses
Finally, non-poaching clauses act
similarly to non-solicitation or non-dealing clauses though they relate only to
other employees of the ex-employer. Therefore, an employee who wishes to move
jobs or start up their own business cannot and should not attempt to encourage
or persuade their colleagues at the previous employer to also jump ship and
join them on their new voyage.
Enforceability
and reasonableness
The questions that we, as
employment lawyers, have to consider when determining the validity and
enforceability of restrictive covenants are, on the face of it, simple. Terms
constituting restrictive covenants essentially must not go any further, in time
and in scope, than what is reasonably necessary to protect the employer’s
legitimate interests.
A restrictive covenant must be
time-limited. They cannot be infinite and typically last for between 6 and 12
months. Generally a restrictive covenant lasting over 12 months would be
difficult to justify. This time limit must be reasonable and what constitutes
reasonable depends on the nature of the employer’s business and the individual
circumstances surrounding the employment relationship.
In terms of being limited in
geographical scope, a local bakery including restrictive covenants in an employee’s
contract preventing them from setting up their own or working within a
competing bakery anywhere in the whole of England and Wales would clearly be
unreasonable in its geographical reach. However, a 10 mile radius in which that
employee cannot set up said bakery is more likely to be justifiable.
It is therefore, as you would
imagine, impossible to have a blanket approach to restrictive covenants. Each
case must be judged on its own facts and where a question regarding the
enforceability of a restrictive covenant arises it is strongly advisable to
seek independent legal advice.
If
you need advice on whether or not a restrictive covenant is enforceable, call a
member of our Employment Team on 01745 343 500 today.
Wednesday 31 July 2019
Childcare during the holidays: Bring your kid to work day?
Childcare during the holidays: Bring your kid to work day?
If you work full time in the UK, you are entitled
to at least 28 days of paid annual leave, including the eight bank holidays.
However, for parents of school-age children, the numbers don’t quite add up. First
of all, there are all of those weeks at half-term. Next, there are the Easter
and Christmas holidays. And then, of course, there’s the ‘big one’ - summer
holidays lasting a full six weeks.
Parents are forced to choose between expensive
childcare or relying on friends and family members to look after the children
when they aren’t able to. Babysitters can get ill, go on holiday or simply be
unreliable. Funds may not be able to stretch to cover childcare. So, what
can you do?
What the law says
The law says that employers must offer some form of
flexibility when it comes to their employees’ emergency childcare needs. This
usually comes in one of two forms:
- Offering 1-2 days of unpaid dependent leave
- If practical, offering the chance to work from home
However, sometimes, there’s no choice for parents
but to bring their children to work. But is there any legislation around doing
this, or are the parameters decided by your employer?
It’s fundamentally down to your employer
If you work somewhere like a factory line or
hospital, it is very unlikely that you will be able to bring your children into
work. However, some spaces may be more suitable, such as offices or schools. The
ultimate decision is down to your employer.
If you are allowed to bring your child into work
If your employer decides that you are allowed to
bring your children into work, it is critical that both employer and employee
are aware of the risks involved:
- Children may not be able to read workplace warning signs and signals. They must therefore be supervised at all times to avoid any incidents.
- Noise and disturbance to other colleagues. In an open-plan office, the presence of children may disturb other members of the team. Is there a separate area, e.g. a meeting room that could be used?
- Ordinary equipment may become dangerous. A photocopier or filing cabinet may seem a perfectly innocent item to an adult, but to a child, pulling or pushing in the wrong place can cause injury. Tampering with electrical connections can also put children at risk.
- Fire safety. Has the safe passage of children been factored into your fire risk assessment, along with the extra hazards they bring?
In order to negate these risks, employers should
consider putting in place:
- Uniform rules for all staff. It is not fair to allow one person to bring their children in, but not another.
- Health and safety revisions. The workplace must be comprehensively risk assessed with the safety of both children and staff in mind, including fire risk checklists and evacuation plans.
- Limitations. Is there an upper limit to the age of children allowed? Is there a limit to the number of days permitted? Are there specific hours or days to avoid?
- Notification. Employers must set up a full procedure that allows workers to request permission for their children to come into work, and timely notifications for relevant employees as to when it may or may not be appropriate.
- Facilities. Will children stay within a meeting room or other separated area for the majority of the day? Which bathrooms and kitchens will they use?
Other options
The idea of a creche in the workplace is not a new
idea. In fact, it was way back in 2003 when Goldman Sachs brought London’s
first on-site creche to the workplace. It offers its employees with children 20
free creche days per year, followed by paid use, allowing them to maintain a
better work/life balance without having to leave the office.
Offering such facilities is usually expected to
create an initial drop in productivity, but in fact, the opposite is the case.
The ability to leave your kid somewhere close by and safe while you get on with
your working day transitions into an increase in staff loyalty and retention,
both of which dramatically improve productivity levels overall. However,
running an on-site creche is far from cheap, meaning currently, only a few
large companies (Google, Addison Lee and BookingGo for example) can explore
this option easily.
If you need advice on whether you can bring your children
into work, or if you’re an employer and are looking for advice on the matter, call 01745 343 500 and ask for Elissa Thursfield or a member of the Employment Team.
Friday 18 January 2019
Equality takes centre stage for employers
Equality takes centre stage for employers
The #TimesUp campaign has captured headlines
with its push for greater diversity and equality in Hollywood and the
entertainment sector, but these shifting attitudes are mirrored in legislative
changes in the UK which will affect employers in the coming months.
In a series of developments, companies are expected to
demonstrate an increasing commitment to an equal, inclusive and supportive
workplace and are being encouraged to take steps towards the scheduled and
anticipated changes, which will demand a shift in both process and culture.
Last year saw the introduction of Gender pay gap reporting. Under
the Equality Act 2010 (Gender Pay Gap Information) Regulations, all private
sector organisations with more than 250 employees must publish details of their
gender pay gap, for both basic pay and any bonus payments. The first reporting had to be submitted by 4
April last year, with a requirement on organisations to provide updated
information annually in future, meaning deadlines for the second round of
reports are fast approaching.
Alongside, the Government is moving to require reporting for
both executive level and ethnic pay gaps, both of which will require data
capture in good time to meet future reporting requirements.
First will be the requirements on Executive pay gap reporting, with rules now in force that require UK
quoted companies with more than 250 employees to set out the ratio of the CEO’s
pay and benefits compared with that of employees. It applies to financial years commencing on or
after 1 January 2019, and the first reporting will be due in 2020. As well as
the reporting submission, the information must be included in future directors’
remuneration reports.
Hard on its heels is the prospect of mandatory Ethnic pay gap reporting, which is
likely to pose many challenges for data collection, depending on the final
requirements established. The issue was
put out for consultation, which has now closed, and while it is expected by
many commentators to be confined to organisations with over 250 employees, in
line with other pay gap reporting, there have been calls to include smaller
organisations of 50+ employees.
The consultation has explored which employers should be
involved, the ethnicity pay data to be reported and what supporting information
employers may be asked to provide, such as an action plan to tackle any
identified bias. But whatever the final
requirements, they are expected to be challenging to implement. Employment law expert Elissa Thursfield explained: “The consultation has looked at
the challenges of collecting, analysing and reporting ethnicity pay information
if it is to be meaningful. One of the
problems is that there is no legal obligation for employers to collect
information on ethnicity and even where they try to do so, an individual can
choose not to disclose their ethnic group.”
Alongside, organisations are likely to find themselves
having to explain how they are supporting parents and other carers in their
workforce, with the Government exploring the possibility of a new law requiring
employers with more than 250 employees to publish details of their
family-friendly policies.
One such policy is for bereaved parents. The new Parental
Bereavement Leave and Pay Act will give all employed parents the right to take
two weeks off work if they lose a child under the age of 18 or suffer a
stillbirth from 24 weeks of pregnancy. The entitlement will have no minimum
service requirement and the parent will have 56 weeks from their child’s death
to take the leave. Those parents who
have been in continuous employment for 26 weeks with their employer will be
able to claim pay for the leave.
“While the new right is not expected to come into force until
April 2020, employers will need to start preparing now, and may wish to
consider introducing their own bereavement leave policy, if they don’t already
have one, particularly with the focus on demonstrating good practice that we
are seeing,” added Elissa.
“Last year’s Oscar winner Frances McDormand captured headlines
with her calls for an ‘inclusion rider’ in movie contracts, so as to achieve certain
diversity and inclusion thresholds in future, but we are seeing a significant
shift in attitudes across the sectors.
Certainly, for employers in the UK, there are increasingly tough
requirements to act responsibly and inclusively.
“And while employers do not have any obligation to provide any
narrative around their gender pay gap, or to do more than fulfil their legal
requirements, being open and up front with explanations and future plans may
help to limit any reputational damage as comparisons will be made and progress
expected, in this and all other aspects of equality.”
Monday 19 November 2018
Another blow to the gig economy
Another blow to the gig economy
Following
the recent landmark tribunal rulings for Uber and Hermes drivers, London Taxi
company Addison Lee now face a £39 million bill as their taxi workers are once
again classed as workers rather than self-employed.
The Employment Appeal Tribunal upheld a
previous decision classing the company’s taxi drivers as workers rather than
self-employed contractors. The GMB Union have said the ruling is ‘another huge
win for workers rights.’’
Following the Uber and Hermes drivers
rulings, the employment tribunal have yet again decided that the company’s
drivers are legally entitled to certain employment rights including national
minimum wage and holiday pay. The company has around 4,000 drivers and is now
being called upon to extend employment rights to all their drivers.
According to the union’s solicitors,
Leigh Day the decision could cost Addison Lee up to £10,285 per driver in
making good unpaid holiday pay and ensuring wages were up to national minimum
wage standard over the past 2 years.
Sue Harris, GMB union's legal director,
said 'Other employers should take note - GMB will not stop pursuing these
exploitative companies on behalf of our members.'
Liana Wood, solicitor at Leigh Day who
represented the drivers of Addison Leigh stated 'We hope that Addison Lee will
accept this decision; drivers shouldn't have to continue to work very long
hours, often in excess of 60 hours per week, to earn just enough to meet their
basic living costs.'
The taxi firm Uber has been involved in
a similar legal battle for the last few years. In 2016 2 drivers won at
tribunal over paid holiday, arguing they were in effect employees. But last
month at the Court of Appeal Uber argued that the previous decision had 'erred
in law' by ignoring its contracts, and that the relationship between the
company and its drivers is 'typical of the private hire industry' and had been
used for years. The decision is awaited with interest.
Hermes lost its battle with 65 drivers
in another blow for businesses who have thrived thanks to the gig economy which
employs more than 5million people in the UK. A tribunal has ruled that the 65 people who
brought claims should be treated as staff with perks including sick and holiday
pay and paid breaks while delivering packages for customers.
What do these rulings mean for
Employers?
Classing an individual as a ‘worker’ entitles them
to certain employment rights such as the national living wage, paid holiday and sick leave which
evidently means increased costs for employers. It is for each an employer to
consider its own situation carefully with an eye on the law as falling foul may
entitle staff to retrospective compensation.
A useful guide can to determine
employment status can be found following the link below.
If you require further assistance contact
one of our experienced staff at our Employment team.
Friday 2 November 2018
New employment rights raise another red flag for employers
New employment rights raise another red flag for employers
Who’s who on the
payroll is an ongoing challenge for employers in the run up to new payslip
requirements
New payslip
requirements are set to come into force, requiring itemised calculations for
variable rates of pay and hours worked. Alongside, the requirement for payslips
will be extended to include workers, not just employees.
The two amendments to the 1996 Employment Rights Act will
come into force on April 6 2019. From
that date, employees and workers, including those under casual or zero hours
contracts, must receive correctly detailed written, printed or electronic
payslips.
The greater transparency is designed to help employees
understand their pay and see if they are being paid correctly. Also, it is hoped that it will make it easier
to identify if employers are meeting their
obligations under the National Minimum Wage and National Living Wage and that holiday
entitlements are correctly applied.
But while the change itself is straightforward, new payroll
procedures and alternative software may be needed to satisfy the new
requirements.
Alongside, a more complex question for many companies when
it comes to implementing the new requirements will be whether someone is an
employee, a worker or a self-employed contractor.
Many organisations
do not recognise that even where someone is not an employee, they may still be
categorised as a ‘worker’ and be entitled to certain rights such as the national living wage, paid
holiday and sick leave. An employee may
also be a ‘worker’, but with extra employment rights and responsibilities.
And the boundaries as to who is a worker and who is
self-employed are increasingly difficult to pin down following high-profile cases involving Uber and other
so-called gig economy companies, with individuals winning the right to be
treated as a worker, rather
than a self-employed contractor.
“Many employers are not meeting legal minimum requirements because
they do not understand their employment law obligations when it comes to
workers. It’s hoped that this new
process will be one step towards improved awareness,” explained Employment expert Elissa Thursfield.
“The distinctions
between an employee, a worker and a self-employed contractor may not be clear
cut for some organisations, so it’s important to keep abreast of what’s
going on in employment law and what legislative changes are coming up. That way you can keep ahead of the deadlines
and make sure you’re facing up to issues that may otherwise pose difficulties
later.”
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What needs to be included in the
written statement of wages
· the amount of gross wages or
salary
· for any part that varies
according to time worked, the total number of hours worked and the rate of
pay, either as a single aggregate figure or separately for each type of work
or rate of pay
· the amounts of any deductions
and what they relate to
· the net amount of wages or
salary payable
· if paid in parts, the amount
and payment method for each part
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