Employment update | Top three in 3 minutes

Written on 5 Nov 2019

1. Workplace relationships in the #metoo era: What should employers do? 

News that the CEO of a global fast food giant has been fired for engaging in a relationship with a colleague has hit media headlines. Despite the CEO’s success (he has been credited with doubling the company’s share price since becoming CEO), he reportedly ‘violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee.’ With a zero-tolerance policy to senior managers having relationships with subordinates, the employer did not make any exceptions in this instance – even though this has resulted in a large severance package to bring the employment relationship to an end. Although employees have a right to a private life, that extends into the workplace, in-house relationships can be problematic. Will a senior manager favour the subordinate with whom a relationship has been formed? What will be the impact on productivity? How does the relationship impact on co-workers and how will they react? And will claims of harassment surface if things go sour? 

Action  

With the #Metoo movement focused on non-consensual relationships and actions, we are seeing more employers also introduce or amend relationship policies to set out more clearly the expectations of and boundaries for employees who enter into a consensual relationship with a colleague. These policies are a matter for individual employers with some introducing a total ban on in-house relationships, particularly such as in the instance above, when one person ranks higher than another. However, others are allowing this type of relationship as long as it does not negatively influence an employee’s conduct in the workplace or result in a conflict of interest. The key for employers is to be clear about the issues they want to protect against and set out clear guidelines on what is permissible. 

A policy is not a complete solution when dealing with relationship issues. To avoid unfair dismissal claims, employers must demonstrate a fair reason for any dismissal and follow a fair procedure. A policy may want to reserve the right for employers to look at ways of managing a relationship, such as an internal transfer or change of reporting line. Striking the right balance between protecting the business and showing respect for individual employees is not straightforward, but, without a proportionate approach, relationships are more likely to be concealed. With many employers reviewing their sexual harassment and dignity at work policies – and related training – now is a good time to review or put in place guidelines on relationships at work and appropriate training for managers. 

2. Will the price of settlement agreements be going up? 

Settlement agreements are a commonplace as amechanism to agree a settlement to a dispute with an employee or bring an end to the employment relationship in an amicable way. An employee agrees to waive any claims against their employer in return for a compensation payment. Aside from the inevitable limitations on this waiver, an employee must have received independent legal advice on the terms and the effect of the settlement agreement for the waiver to be valid. Most employers provide a contribution to an employee’s legal fees in this respect – the amount of which varies – and often reflects an employee’s seniority and the complexity of the arrangement, but contributions start from around £250 plus VAT. 

The Employment Appeal Tribunal has recently issued a decision in which it made obiter dicta remarks that a contribution of £500 plus VAT towards a claimant’s legal costs for signing the terms of a settlement agreement was not sufficient where the settlement offer was £50,000. While £500 plus VAT might be enough to cover the “terms and effect” of the proposed settlement agreement, the judge commented that it was “wholly unrealistic” for a solicitor  “to advise on the merits of the claimant’s claim and the likely award of compensation” for that amount. While employers will not –  and should not anticipate that they will – legally be expected bear the costs of legal advice on the merits and compensation on offer, it does demonstrate the potential for a price to be attached to legal advice on the various elements of an agreement. Amid the controversy surrounding the #metoo movement, a spotlight has been thrown on non-disclosure agreements (NDAs) which are commonly incorporated within settlement agreements preventing either party from essentially speaking out in certain situations as part of the settlement terms. The government has proposed legislation on the content of NDA provisions with a requirement for an individual to receive legal advice on any such terms, and a call for employers to “contribute appropriately”. 

Action 

Employers should ensure that they review settlement agreement provisions to reflect current practice and make themselves aware of the best practice guidance set out by the Equality and Human Rights Commission. Whilst it is clear that legal contributions will remain a matter for employer and employee, employers may well see increasing pressure to up their contributions if they include NDAs.

3. Is your intellectual property adequately protected? 

A recent Supreme Court ruling has upheld the right of an employee to receive compensation for an invention that lead to an “outstanding benefit” for his employer entitling him to a fair share of the profit derived from the patents; this amounted to an award of £2 million. This case highlights both the willingness of the courts to give teeth to legislation designed to regard employee creativity and the benefits for employers of putting in place compensation schemes that encourage and reward inventiveness. 

Action

Employers should review their existing intellectual property provision in their employment contracts to ensure that they provide adequate protection and give thought to how to encourage the inventiveness of their employees, by devising appropriate compensation structures for inventions that  benefit the business. Osborne Clarke’s Intellectual Property and Employment teams can help you devise an appropriate scheme.

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