What motivates you at work? For some, it is their salary, for others getting on with work colleagues. A recent survey held the biggest single motivator is people’s enjoyment of their role. However, that same survey carried out by the Institute of Leadership and Management, revealed that 25% of employees think their appraisals are performed poorly by management. Appraisals and performance reviews are an important part of your professional development. Recognition for work done and constructive, supportive feedback on improving performance can be key motivators. If you feel that that you are failing to meet the standards required but you are not being helped to achieve them, you are likely to feel demotivated very quickly. Equally, if you work hard and perform well you will feel frustrated if your efforts are never recognised or rewarded. When things aren’t going well at work and you are struggling to meet expectations but feel unsupported you need to know what to do to turn things around. You need to know where to turn if you feel that management is failing to properly manage your performance and motivate you in your role. Your employer should draw your attention to areas of concern and help you improve. It should not keep frustrations with your performance simmering below the surface and then suddenly criticise you without warning during your performance review. Your review should be a consolidation of your performance and should not contain surprises. If your employer decides that a more formal performance management is necessary then it should set clear goals for improvement and a time scale for you to achieve them by. If you feel that targets set are unrealistic and you are being set up to fail you should seek advice and speak to your employer. It is always best to try and resolve problems at work informally in the first instance. You may be surprised how your employer responds if you voice your concerns. However, if you continue to feel that you are being badly managed at work and you have not been able to resolve the matter informally or through performance reviews then you may want to consider raising a grievance and/or appeal against any performance review rating. Your employment contract or handbook should outline your employer’s grievance procedure. Your employer should deal with your grievance promptly. You should have the right to be accompanied at any grievance hearing and if your grievance is not upheld you should have the right to appeal. Hopefully, you are the one of the one in four who feels that your appraisals are well managed. It is important to remember that when you attend your appraisal it should be an opportunity for you to ask questions, seek guidance and clarify issues and your employer should conduct it fairly. Slater & Gordon have offices across England, Scotland & Wales.
New York City for Employment Law—Individuals and for Litigation—Labor & Employment. In addition, Partner Darnley D. Stewart has been selected as 2018 New York City Employment Law - Individuals "Lawyer of the Year". Partners Wayne N. Outten, Adam T. Klein, Laurence S. Moy, Justin M. Swartz, Wendi S. Lazar, Tammy Marzigliano, Rachel Bien, Darnley D. Stewart, and David Lopez have been recognized by Best Lawyers®, along with the firm's Senior Counsel, Lewis Steel. "Being listed by Best Lawyers means that our peers recognize that we are serving our clients' interests with excellence and integrity, which is our goal," said Mr. Outten, the managing partner at Outten & Golden, the largest employee-side employment law firm in the United States. The U.S.News – Best Lawyers® "Best Law Firms" rankings are based on a rigorous evaluation process that includes client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms. Outten & Golden LLP focuses on advising and representing individuals in employment, partnership, and related workplace matters both domestically and internationally. The firm counsels individuals on employment and severance agreements; handles complex compensation and benefits issues (including bonuses, commissions, and stock/ option agreements); and advises professionals (including doctors and lawyers) on contractual issues. It also represents employees with a wide variety of claims, including discrimination and harassment based on sex, sexual orientation, gender identity and expression, race, disability, national origin, religion, and age, as well as retaliation, whistleblower, and contract claims. The firm handles class actions involving a wide range of employment issues, including economic exploitation, gender- and race-based discrimination, wage-and-hour violations, violations of the WARN Act, and other systemic workers' rights issues. Outten & Golden has nine practice groups: Executives & Professionals, Financial Services, Sexual Harassment & Sex Discrimination, Family Responsibilities & Disabilities Discrimination, Lesbian Gay Bisexual Transgender & Queer Workplace Rights, Discrimination & Retaliation, Whistleblower Retaliation, Class & Collective Actions, and WARN Act. Outten & Golden has offices in New York, Chicago, and San Francisco, and Washington, DC.has been selected once again in multiple categories in U.S. News & World Report's Best Lawyers, a US-based peer review. For 2018, the firm is ranked Tier 1 nationally for Litigation—Labor & Employment, and Tier 1 in
“I believe I was promised a bigger bonus than I was actually paid. How do I go about claiming what I believe I was promised?” What can you do if you believe your bonus was not as you had been led to believe? It is not always something easy to prove but will depend on the nature of the bonus, how you were promised the bonus and what was said. You may have a claim for breach of contract or your lack of bonus may be linked to a discrimination or whistleblowing claim. We have set out below some advice our top ten tips on how to make your challenge your bonus:
- If your bonus is contractual check whether it been paid in accordance with the formula. Has the bonus been paid in accordance with the formula? Get the wording checked if you are not sure – it is not always clear and may be open to interpretation.
- If your bonus is described as discretionary it may still give rise to contractual rights – this will depend on the relevant wording in the contract or handbook. In order to be contractual the bonus must be sufficiently certain and there must be an intention to create legal relations. A good example of this was seen in the recent case of Attrill and others v Dresdner Kleinwort Ltd and Commerzbank AG where the High Court upheld bonus claims where bankers had been promised a bonus pool of €400million verbally during a meeting in a town hall, showing that it is no always the case that a commitment must be made in writing. The bankers were successful in bringing claims for breach of contract.
- Is there a right to a bonus if there has been a custom and practice of paying bonuses? If bonuses have been paid on a regular basis, your employer’s discretion to withdraw the payment of bonuses may be limited, even if the scheme itself is discretionary.
- Have performance conditions been met? If you have achieved your performance conditions your employer may be obliged to award the bonus. Your employer may have discretion in deciding whether your targets have been met but must normally act in good faith.
- Has discretion been exercised in good faith? If your bonus is discretionary, employers have an obligation not to exercise that discretion “irrationally or perversely.” An employer should be asked to give reasons for the exercise of discretion to pay or withhold a bonus. An internal grievance lodged with your employer, under the grievance procedures, can serve to usefully air your issue and can sometimes achieve success, depending on the facts.
- Is there a clawback provision that can be challenged? Clawbacks can sometimes be challenged on the basis they are penalty clauses (broadly speaking they operate as deterrents, rather than genuine pre-estimates of loss) and therefore unenforceable. Clawbacks can also be challenged if a clawback follows as a result of the employee breaching a post-termination restriction, such as not competing with the employer. If the restriction is found to be unenforceable, it is likely that the clawback that follows will also be unenforceable. If your employer is seeking to claw back your bonus, seek advice on the nature of the clawback as this is a complex legal area.
- Have you been discriminated against? If your employer has paid higher bonuses to other employees by reason of a protected characteristic such as age, race, sex or pregnancy/maternity, you may have a discrimination claim which can result in compensation for the difference in payment. If the difference is due to gender and the bonus is contractual, you may also have a claim for equal pay which can allow you to claim damages for the past 6 years. There is no cap on the amount you could receive under equal pay or discrimination legislation.
- Have you been dismissed just before your bonus was due to be paid? If you have been dismissed without notice and there is no right for the employer to pay you in lieu of notice, you could claim your bonus payment as part of a wrongful dismissal claim for your notice entitlement, provided there is no clause stating that the bonus will only be payable if you are in employment. If there is a clause entitling your employer to pay you in lieu of notice clause, which is not limited to basic salary only, again you may have a claim for your bonus payment. The wording needs to be carefully checked. If you have a claim for unfair or constructive dismissal your bonus entitlement may form part of your compensation, although the compensatory award will be capped at the lower of £74,200 or one years’ salary.
- Are you a fixed term or part-time worker? If you fall under either category you have a right not to be treated less favourably unless that treatment can be objectively justified. It is a high threshold for employers to show justification and claims for proper bonus entitlements are often successful in such cases.
- Negotiate at the outset – as with all disputes, the best advice is to negotiate the terms of the contract before signing. Take legal advice on the provisions to ensure that the bonus clause is as tightly worded as possible.
We will soon have the birth of another Royal baby, but while The Duchess of Cambridge won't need to worry about how her new arrival is likely to impact on her career, millions of women across the UK are still facing archaic attitudes and policies from the workplace during and post pregnancy. More than a quarter of mothers feel they have been actively discriminated against in the workplace whilst pregnant or on their return to work after having a baby, while two-thirds of mothers would advise pregnant women to wait until the last possible moment to tell their bosses they are expecting. New research we have released questioned mothers on how they were treated both pre and post the birth of their children in the workplace and saw more than half of women say their boss's attitude towards them changed when they got pregnant. Almost a third say they weren't treated well by their work during pregnancy and maternity leave, while almost half were overlooked for a promotion. Almost a fifth were demoted, while more than a third had responsibility taken off them. The report by Slater & Gordon saw close to 60% of mothers agree that they felt like their pregnancy was a problem for their workplace, while more than a quarter felt under pressure to return to work earlier than they wanted to. On their return, however, a third have found it impossible to climb the career ladder after having a child. The stats reveal a distressing picture:
- More than a fifth feel they can't go for a promotion because of their commitments as a mother
- One in five don't feel as valued in their role as they were before becoming pregnant
- Almost a quarter feel out of the loop about what's going on
- More than one in eight not feeling as much a part of the team as they used to
- Half of those surveyed feel that they are left out or not taken seriously at work since having children
- Over 40% saying younger people with no children are more supported and given more encouragement than them.
- However, despite these widespread issues, 70% of mothers have never made a formal complaint about unfair treatment.
Samantha Mangwana Employment Solicitor
For employees who work in or have connections with several different countries, it can be difficult to figure out which country’s laws and courts offer protection in an employment dispute. In some cases, the employee may even have a choice between different jurisdictions. This factsheet summarizes the key issues involved in deciding what rights or claims an international employee may have in the United States (US). Please note that while many aspects of US employment law are governed by federal laws, many important aspects vary considerably state-by-state. Thus, an employee’s overall position will often depend on the state of employment. Introduction In the US, federal, state, and local statutes regulate the employment relationship, as well as common law principles that govern issues related to contracts, torts, and fiduciary duties. The extent to which anemployee can bring a claim or have legal protection in the US will depend on the type of claim involved and where the claim is being brought. Claims related to contract, torts, and fiduciary duties are governed by US common law, which is based onprecedent rather than statute. Claims related to restrictive covenants fall into this category. A “statutory” claim is one that comes from legislation enacted by the governments, such as claims of discrimination or retaliation. 1. Legal Claims in the US Generally The US has no special tribunals for employment disputes, unlike many other countries. Instead, most such disputes are litigated in federal or state civil courts. Contract claims cannot proceed in federal court unless each party is from a different state or country and the person bringing the claim is asking for at least $75,000 in money damages. Federal statutory claims can be brought in federal court without regard to these factors because they arise under federal law. Some disputes are handled by specialized administrative agencies of federal, state, or local governments relating to specific statutory rights. In addition, unlike many countries, many employment disputes in the US are resolved through arbitration, typically as a result of employer-imposed arbitration agreements. Each type of claim available in the US has a window of time in which it must be filed, which period often varies by state. Some relevant time limits will be specified below. 2. Contract Claims US employers do not have to enter into employment contracts with their employees. In most states, the employment relationship is presumed to be "at-will," which means that the relationship can be terminated for any reason (other than an unlawful reason), with or without cause or notice (except in the event of a mass layoff), at any time by the employee or the employer. Some employees (typically executives and other senior employees) working for US companies negotiate employment agreements that alter the typical at-will employment relationship or that provide protections (such as a notice period and severance pay) in the event of termination. a. Executive Contract Terms If a material contract term is breached, an employee can bring a contract claim in state or federal court (assuming diversity of citizenship with respect to the latter). Often, employees coming from abroad to work in the US will enter into a written contract specifying the following non-exhaustive list of material terms:
- Duration of the employment period
- Location, title, and reporting chain
- Salary, bonus, deferred compensation, and benefits
- Relocation benefits for the move to the host country and upon return to the home country
- Expatriate benefits during the employment period and for a limited time after
- Circumstances constituting termination for cause and triggering severance benefits
- Restrictive covenants
- Title VII of the Civil Rights Act of 1964. This law prohibits discrimination against an employee on the basis of race, color, sex, national origin, religion or pregnancy. It applies to private and public employers with 15 or more employees.
- The Americans with Disabilities Act (ADA). This statute prohibits public and private employers from discriminating against persons with physical or mental disabilities.
- The Age Discrimination in Employment Act (ADEA). This prohibits discrimination on the basis of age against employees aged 40 or older.
- The Equal Pay Act of 1963. This law provides for equal pay for equal work performed by both sexes working in the same establishment.
- The Genetic Information and Non-Discrimination Act (GINA). This prohibits employers from discriminating against employees based on genetic information.
- For employers with 15-100 employees, the limit is $50,000.
- For employers with 101-200 employees, the limit is $100,000.
- For employers with 201-500 employees, the limit is $200,000.
- For employers with more than 500 employees, the limit is $300,000.
When you leave a job in difficult circumstances, it can come as a huge relief to be out of a stressful situation. But that relief can be short-lived when you come to applying for a new job and are worried about what will happen when your prospective employer asks for a reference. We set out some guidance that may help you handle the situation. These days it is very common for an employer to give a basic reference covering job title and dates of employment, whether things end amicably or otherwise. These are so common that a reference like this is unlikely to harm your chances of finding a new job. The bigger the organisation, the more likely that they will have a policy of just giving this sort of reference. So however badly things ended, you might not get the negative reference you are worried about after all. There's no obligation on an employer to give a reference, but if they do then the reference should be true, accurate and not misleading. In practice, that's not tremendously helpful; employers rarely lie, they just say "we think they were useless" or similar. That's their opinion and it's difficult to say it's false. Commonly, the problem is not with the written reference, which may be bland, but if someone telephones your previous employer they may get more information in the call and it is very difficult to get evidence about this. Again, the bigger your former employer, the less likely this is to be a problem; the call is more likely to get directed to HR, who won't know you personally and who will be less likely to expand on the written reference. It can be tempting to try to avoid the problem by leaving the job off your CV entirely. The problem with omitting something from your CV is that if it's your most recent job this will leave a gap in your employment history that you will almost certainly be asked to explain. Lying on your CV or in a job interview to cover this up is obviously not a good idea and can give your new employer grounds to sack you if they subsequently find out that you have lied. If there is a good chance you will get just a basic reference, not a negative one at all, then the best course of action might be just to include the position on your CV and not necessarily mention the problems you had. You might feel very sure that you are going to get a bad reference, perhaps you are aware that previous job offers have been withdrawn because of it. In that case, it would probably still be advisable to include the position on your CV, but to tackle the matter head-on at your interview and put across your side of the story. Similarly, if you are asked specific questions at an interview about why you left your previous position, you will need to address the matter. It's worth practising what you are going to say in advance. This is not your opportunity to get everything off your chest about how badly you were treated. You need to stick up for yourself, but launching into a tirade about a former manager is not going to go down well. It's a good idea to take legal advice when leaving an employer for this reason. Our employment lawyers often advise on settling employment disputes by reaching a compromise agreement. This agreement would cover the settlement of any potential employment claims, but would also include provisions for references and confidentiality, to help make sure that you can draw a line under the matter and move on with the next stage of your career.
Due to their role as alter ego of the employer, in Italy, executives are subject to different and less protective statutory rules compared to regular employees. This difference is quite evident in the legislation about dismissals. In fact, while Italian statutory law generally provides that in order to dismiss an employee the employers must prove that they have fair reason to dismiss them, - when it comes to executives the employer is not obliged to provide proof of just cause. This means that, as a rule, executives can be dismissed freely (otherwise referred to as an ad nutum dismissal). Moreover, if the dismissal is based on a very serious reason which is able to break the “bond of trust” between the employer and the executive (in Italian this concept is referred to as ‘giusta causa’ or ‘just cause’) then the employer is exempt from giving the executive a period of notice and is also exempt with paying the executive a sum in lieu of notice. In these types of cases, the executive will lose any contractually agreed sums for the notice period. However, they will be entitled to a TFR – Trattamento Fine Rapporto, a ‘treatment at the end of the relationship’ payment (more details below) as well as access to an unemployment benefit called ASPI.
The Concept of Unjustified Dismissal in the Collective AgreementsWhile executives remain rather unprotected under Italian statutory law, national collective agreements for executives fill the gap. In fact, national collective agreements provide that the dismissal of executives shall be at least justified. The concept of justification has been elaborated upon by Italian case law and, broadly speaking, it means that the dismissal shall not be completely arbitrary. For instance, it will be considered justified the dismissal of the executive whose performance is not as high as expected. Italian case law, however, has recently been trying to extend the protection of executives. Today the dismissal of executives can be considered unjustified when, in case of disciplinary or conduct dismissals, the employer fails to follow the relevant dismissal procedures or to carry them out correctly. In fact, a fair process is needed to be followed in order for a disciplinary dismissal to be considered legal and must include matters such as a reasonable consultation with the employee. This procedure applies to both regular employees and executives. Compensation If the dismissal will be deemed ‘not justified’ by the Employment Tribunal - then the executive will be compensated with a sum called “supplementary indemnity” which can be equal to as much as 18 months of wages for an executive operating in the industrial sector. For executives operating in the commercial sector, this sum can be up to 22 months of wages. The supplementary indemnity is to be added to the payment of regular notice monies, to the TFR, and also to the unemployment benefit that in Italy is called ASPI. It is worth noting that executives that have been unfairly dismissed will never be reinstated in employment by a court order. Time Limit Italian statutory law is silent on this matter and it is widely accepted that any claim to obtain a supplementary indemnity payment is subject to a 10 year limitation period which is set out in the Italian civil code.
Oral Dismissals on Discrimination GroundsThere are only two instances where the dismissal of an executive is regulated by the same Italian statutory laws which govern all employees: If the dismissal is given orally; or If the dismissal is based on discrimination grounds - for example, race, nationality or national origins, sex, age, sexual orientation, disability, religion, and belief or non-belief. Compensation In the two cases above, the sanction will always be reinstatement into the previous position of employment in addition to a financial compensation for wages lost since the day of dismissal until the day of reinstatement. Time Limit A dismissal inflicted orally or on discrimination grounds must be challenged, by means of a written notice, within 60 days from the date of dismissal. The challenge, however, becomes without effect if in the subsequent 180 days the legal action is not filed.
End of Employment IndemnitiesTFR – Trattamento Fine Rapporto The TFR is an end-of-employment indemnity provided for by Italian statutory law. In particular, TFR is a part of the salary set aside by the employer every year and that every employee, including executives, will collect at the end of the employment relationship. It is calculated according to the formula of a year’s salary divided by 13.5, plus 1.5 % for each year of service plus compensation for inflation. It is important to note that Italian statutory law has also provided for a guaranteed fund to protect all workers who are unable to collect their TFR due to the bankruptcy of their employer. ASPI ASPI - Assicurazione Sociale per l’Impiego (in English ‘Social Insurance for Employees’) is an unemployment benefit that is available to all employees, including executives, who lose their job involuntarily due to reasons beyond their control. The amount of this benefit is usually in the region of 12 months of salary.
Currently, Italian Law provides for two very different ways of calculating severance payments for agents. The first method is governed by the Italian Civil Code and the second method is regulated by National Italian Economic Collective Agreements. The first calculation method, which is governed by the Italian Civil Code, is outlined in Article 1751 – which has been modified by EU Directive 653/1968. This article stipulates that at the moment the employment/agency relation is terminated – the employer must pay the agent/sales representative an indemnity if the following circumstances exist:
- the agent has provided new customers to the employer or has noticeably developed business with already existing customers in a way that the employer will continue to profit or take advantage of this business after the employment relationship is terminated
- the payment should be fair, considering the loss of commissions the agent will suffer.
The indemnity amount cannot exceed an amount equivalent to the annual allowance calculated on the agent’s / sales representative’s average annual remuneration collected during his / her last 5 years of work, if the contract is less than five years old then the amount must be calculated considering the period in question.The second method, which is governed by National Italian Economic Collective Agreements, focuses on the length of the agency relationship and on collected commissions for calculating the severance payments. Indemnities under this system fall into three different compensation categories:
- The FIRR - Fondo Indennità di Risoluzione Rapporto ( in English the ‘Indemnity Fund for Termination of Employment’) payment - and consists of a sum of money assigned to the agent/sales representative independent from his / her merits. This fund is managed by ENASARCO – the Italian National Association of Assistance for Agents;
- A Supplementary Indemnity, which is calculated by applying a rate somewhere between 3% and 4% on the commissions and fees acquired during the employment relationship;
- A Merit Indemnity (introduced into the Italian National Economic Collective Agreements with Article No. 12 of February 26th, 2002) which looks at the increase in customers the agent achieved during the working relationship. Merit Indemnity increases must never be more than the difference between the amount provided for by Article 1751 of the Civil Code and the addition of other two components: the Termination of Employment Indemnity (the FIRR) and the Supplementary Indemnity.
“Provisions within the National Italian Economic Collective Agreements of February 26th, 2002, for the termination of employment indemnity, are not applicable since collective bargaining cannot always be in favour of the agent in comparison to the regulation in the Article 1751 of the Italian Civil Code.”Sentence No. 857 from Court of Appeals in Venice, made on March 12th, 2012, adds to the debate by applying the rules of the Italian National Economic Collective Agreement considering it more favorable. In this sentence, the Judge has decided to apply the collective regulations as an alternative to the guidelines dictated by Article 1751 of the Italian Civil Code in order to have a more favourable trial for agents who, under European Union regulations, would never have received any severance payment.
Cristiano Cominotto Founding Partner AL Assistenza Legale
Marta Battaglia AL Assistenza Legale
When does Italian law govern an employment relationship? When will the Italian courts have the power to hear your employment claim? The first issue is to consider what the applicable law of your contract is. This is often set out in your employment contract. Generally, the parties to a contract have the freedom to choose the applicable law, but in reality, it will be the employer that often chooses. That choice will often be the country’s laws that are most favourable and convenient to the employer. The employer’s choice is not the end of the matter though. Employees working in countries that are signatories to the Rome Convention may apply to override the parties' choice, under this Convention, including where Italian rules cannot be contracted out of or they are enshrined in statute or case law, such as minimum notice rights. In the absence of choice by the parties - international laws provide, broadly speaking, that it is the country with which the contract is most closely connected which shall govern the contract or the law of the place where the party performing the service has their normal residence. The relevant law in play is not the only issue though. The second issue is to consider if the contract can be enforced in Italy (whichever law applies to the contract). Note, for example, that Italian law does not need to be the applicable law for the Italian courts to have the power to rule on a case. In other words, the Italian courts can decide on a dispute governed by Russian law for example. The Brussels Regulation applies where the employer (whatever their nationality) is based in any EU member state. The Brussels Regulation states that the employee may sue their employer in the Italian courts if the employer is “domiciled” (or sufficiently based) here. Generally, an employer who has a branch, agency, or other establishment in Italy, is “domiciled” in Italy. For employees in countries outside of the EU, wishing to bring a claim in Italy the position is more complex and depends on which country they are based in, amongst other factors. In such cases, employees should seek specific advice.
International executives and employees who work in, or have connections with, a number of different countries may have difficulties understanding which nations’ laws and courts will offer them the correct protection in case there is an employment dispute. In some instances, international executives and employees may even have parallel legal protection in a number of different legal jurisdictions simultaneously. If you travel frequently for your work or are regularly engaged in overseas business – your employment relationship may not be limited to your country of residence. Instead, it may also be tied to the countries where you conduct business as well as to the nation where your employer is headquartered.
Sources of Employment LawIn Italy, the employment relationship is governed by four sources of law:
- Italian statutory law;
- National and local collective agreements;
- Case law; and
- The individual employment contract.
TribunalsEmployment claims are always to be brought before the Employment Tribunal (in Italian it is called the ‘Giudice del Lavoro’) which is the only competent tribunal which can decide on employment cases – no matter what their value or whatever source of law which has been breached: statutory law, collective agreements, case law, or individual contracts. Proceedings before the Employment Tribunal are faster and are also subject to less formal procedural rules compared to ordinary civil proceedings. It is important to note that settlement agreements in Italian employment disputes shall always be signed in a protected location - meaning that either a judicial authority or a trade union shall supervise the agreement. Executives in Italy have their own separate trade unions.
CostsWhen an executive wins an employment case against his employer or former employer, the court usually requests that the losing party covers the legal costs, within reason, of the executive. This sum is usually paid directly to the executives legal counsel. In addition, the executive will also usually enter into a success fee agreement with their legal counsel – whereby a percentage of the final settlement will be paid to their legal representatives with the successful conclusion of a legal case.
Bonuses have become a very important element of how many international executives are paid. Some are guaranteed and paid across the board to all staff; others are discretionary and based on individual performance. Problems can arise when the criteria for payment of UK bonuses lack transparency or are discriminatory. For international executives who have a sufficient connection with the UK, the UK discrimination laws are there to protect you from detrimental treatment by your employer.
How Can Discrimination Occur?If your bonus is based on individual performance, it can be directly related to the amount of profit or business that you create. However, you could be prevented from earning that profit or business because of discriminatory treatment by your employer. This could involve being excluded from marketing events with clients or important meetings; being excluded from communications; not being passed new opportunities etc. Under the UK's Equality Act 2010, if this treatment is because of your sex, pregnancy or maternity, gender assignment, marriage or civil partnership, race, age, disability, religion or belief or sexual orientation and you receive a bonus payment which is lower than that paid to a comparable employee (or they received a bonus and you do not), you could have a claim.
Sex DiscriminationThe majority of cases brought in the Employment Tribunals in the UK concern sex discrimination, where a woman has been paid a lower bonus than that of a male comparator. This may be because the woman is less favourably treated for being a woman, because she is pregnant, or because of her absence on maternity leave.
Direct Sex DiscriminationIt is direct sex discrimination to pay a woman a lower bonus than a comparable man, where the employer has no explanation for doing so. There have been numerous cases, particularly in the City of London – the UK’s centre of finance and banking, concerning discretionary bonuses which lacked transparency. Since the employers had no written records for awarding bonuses, it was very difficult for them to explain why female employees had been awarded less than male employees.
PregnancyIf a woman is awarded a lower bonus than colleagues and can show that this was due to being pregnant, or seeking/taking maternity leave, then this will be direct discrimination. In such a case, the woman would not have to show a male comparator.
Age DiscriminationThe Equality Act 2010 makes it unlawful to discriminate against a person because of age. Protection extends to both younger and older workers. Where a bonus is awarded after reaching a certain length of service, this may be indirectly age discriminatory, because the older a person is, the more likely he or she is to have longer service. However, a fixed bonus earned by five years service or less is exempt. If the bonus is paid after reaching more than five years service, an employer must justify its payment. They need to show the benefit is used to reflect the higher level of experience of the employee, or encourage the loyalty or motivation of employees, or to fulfill another legitimate business need. If an employer pays a bonus to an employee of one particular age, but not to another of a different age, the employee who is disadvantaged may well be able to claim age discrimination. In this case, an employer would have to show that such a difference in treatment is a ‘proportionate means of achieving a legitimate aim.' The employer would have to produce evidence to support such an argument. Please note that strict time limits for bringing a claim apply – usually three months less one day from the date of the discriminatory bonus decision. You should, therefore, take prompt legal advice if you think you may have a claim.
Many international executives will be asked to sign settlement or release agreements when their employment terminates in order to receive any enhanced severance pay. Even if you are not based in the UK, you may be asked to sign a compromise agreement waiving any claims in the UK, and you will, therefore, need to take advice from a UK lawyer. This information will assist you if you are leaving or have left employment and you have been asked to sign an agreement to cover the terms of your departure.
What is a Compromise Agreement?A compromise agreement is a legally binding settlement agreement between an employer and an employee. Usually, the employee accepts a sum of money in return for agreeing not to bring certain legal claims against the employer. In this way, the employees’ rights are ‘compromised.' Agreements between employers and their employees, in which the employees agree not to sue the employer, are very common. However, to protect employees who may be unaware of their legal rights, the law says that agreements of that kind are not legally enforceable unless they are proper ‘compromise’ agreements which meet certain requirements. The principle behind a compromise agreement is that the employee has received independent legal advice before signing the agreement and therefore he or she understands the terms of the agreement and its effect upon his or her ability to present a complaint to an Employment Tribunal. To explain the effect of a compromise agreement, we must first explain the three main sets of rights available to an employee under UK law. Some or all of these rights may be available to you as an international executive but the employer will want you to waive all of them in order to ensure you have no claims you could pursue in the UK courts or tribunals.
Different Employment RightsContractual rights - These are those rights set out in your contract of employment, such as your job title, your holiday entitlement, your notice period and your right to be paid salary and other benefits. Common law rights - These are those rights that derive from the general law in relation to your treatment by your employer, such as negligence, personal injury or defamation. These types of claims can normally be pursued only in the UK's High Court or County Court. Statutory rights - These are those additional rights that derive from UK statute. These types of claim can normally be pursued only in the Employment Tribunal. There are a great number of them, including:
- The right not to be unfairly dismissed (usually only available to those with more than one year’s service; two years’ service required if employment began on or after 6 April 2012);
- The right to a statutory redundancy payment (only available to those with more than two year’s service);
- The right not to suffer unauthorised deductions from your wages;
- The right not to be discriminated against on certain prohibited grounds such as gender, marital status, racial origin, national origin, disability, sexual orientation, religion/belief, trade union membership, and age;
- The right to receive the minimum wage; and
- Various maternity and paternity rights.
Waiving Your Employment RightsEmployees can ‘waive’ (i.e. sign away) many of their contractual rights or common law rights merely by setting this out in a document and signing it. This is why employees have to be careful that they do not inadvertently prejudice their position by signing documents without taking legal advice, for example when an employer proposes to change terms and conditions of employment. However, the law seeks to prevent unscrupulous employers from removing the statutory rights of employees who might not appreciate the value of those rights they are being invited to sign away. This is why you need to take independent legal advice from a UK lawyer before the agreement is valid.
What Is the Effect of a Valid Compromise Agreement?The law sets out very specific requirements which must be met if a compromise agreement is to waive an employee’s statutory rights validly and effectively. These are:
- It must be in writing;
- It must relate to a particular complaint(s) or proceedings;
- It must be signed by the employee;
- The employee must have received independent legal advice;
- The legal adviser must be identified;
- The legal adviser must be insured; and
- The agreement must record that the requirements regulating the compromise agreement have been satisfied.
Why Do You Need to See a Lawyer?The role of the lawyer according to the legislation is a narrow and specific one: to explain to the employee the terms and effect of the agreement. It is usual for the lawyer to sign a form or a certificate confirming that the advice has been given. In particular, the lawyer must confirm that he or she has a policy of insurance that covers the risk of a claim for negligent advice being made by an employee he or she has advised.
Is the Compromise Agreement a ‘Good Deal’ for You?Technically, in order to comply with the statutory minimum requirements for a valid compromise agreement, the lawyer is not required to advise the employee on the merits of any potential legal claims against the employer, i.e. whether the agreement represents a good deal or a bad deal. Similarly, the lawyer is not required to help the employee negotiate the wording of the agreement. We can, of course, provide that advice to you or negotiate as to the wording of the agreement if you request us to do so. It is normally a good idea to discuss this with your lawyer, as it hopefully prevents any later misunderstandings or regrets. Such advice or negotiation may, however, fall outside the scope of the advice for which the employer is prepared to pay (see further under ‘costs’ below). As UK lawyers, we will not be in a position to advise on any potential legal claims arising under the laws of any other country where you have worked or with which you may have a connection. Generally speaking, there is merit in signing a compromise agreement where the proposed termination payment exceeds your minimum contractual entitlement and buys out a reasonable assessment of the likely value of your legal claims when taking account of the cost of pursuing them. It is not always straightforward to determine whether a termination payment is a reasonable sum as it can be difficult to evaluate the merit of these legal claims if your employment has not actually ended yet. Also, it can be difficult to evaluate the likely compensation you would receive if those legal claims succeed. Compensation is primarily based on lost earnings, and it may not be easy to predict at this stage what those lost earnings could be. You may find another job quickly or you may face a lengthy period of unemployment. It can also be difficult to predict legal costs if we do not know what kind of allegations your employer might make about you in the context of a legal dispute. These disputes can sometimes escalate in unforeseen ways. However, we will try our best to give you as much information as possible, so that you can make an informed decision about whether or not to sign the compromise agreement, or alternatively what amendments are needed before you will sign it.
What If You Do Not Sign?If you decide not to sign the compromise agreement, we will advise you of the consequences, which may include the termination of your employment. You should also be aware that your employer will not make a contribution to your legal fees if you do not sign. In that case, you will be responsible for all of our legal fees. If you decide not to sign the compromise agreement, the time limits with which you must comply in order to pursue your legal claims are normally three months less one day from the date your employment terminated, but you may need to lodge a claim more quickly where, for example, you complain of unlawful discrimination before your employment ended.
CostsThe employer benefits from the legal advice provided to the employee in relation to the compromise agreement, in the sense that the independent legal advice validates the compromise agreement and thereby secures a successful ‘compromise’ of the employee's legal claims. It is therefore conventional for the employer to offer to pay a contribution towards the legal costs incurred by the employee in taking advice on the terms and effect of the agreement, although the employer is not required by law to make such a contribution. Factors that may increase your costs above the contribution are:
- You ask us to advise you on whether or not the agreement represents a good deal (see above);
- You ask us to negotiate directly with your employer or its solicitors regarding the amount of money on offer or the wording of the agreement;
- You ask us to advise on any additional rights you may have, such as under share option schemes. In those circumstances, we will need to see the terms of the scheme to be able to properly advise; and
- Even if you accept the amount of money on offer, you ask us to negotiate directly with your employer or its solicitors regarding the drafting of the agreement itself.