Although it may not be immediately obvious to the commercial client, one such stone may be a legal review of commercial and business agreements. An adviser, in conjunction with the client, should be looking for any possible strategies which may allow the client to renegotiate the terms, such as the price, or to exit from an unprofitable agreement without incurring the cost of litigation. This checklist deals with the legal issues which might be raised with a contracting party, but should be used with an eye on the commercial realities.

Do You Have Business Contracts in Place?

The review should include supply and purchase terms with key customers and suppliers. In addition, arrangements and business contracts across back-office functions, such as purchasing and outsourcing arrangements, facilities management, logistics, IT support and maintenance contracts should all be scrutinised.

1. How can savings be achieved?

Reviewing business contracts can highlight the potential for achieving savings in a number of ways. These include:

• Making use of existing provisions in the agreements, for example, benchmarking, continuous improvement, exclusivity and minimum purchase obligations.
• Renegotiating individual terms, such as the price, or the scope, of the goods or services.
• Terminating the relationship as a whole.
• Negotiating an exit.

Making cost savings is the aim of the exercise; it should not jeopardise or damage what may otherwise be a sound commercial relationship or lead to litigation.

2. What constitutes the agreement and its terms?

Although a written agreement signed by the parties will generally be evidence of the contract terms, not all contracts are documented. The terms of the relationship may arise from various arrangements, so gather the facts and understand the commercial reality. In particular, consider:

• Signed agreements.
• Any course of dealing between businesses over a period of time. In particular, consider the case of Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274, in which the court held that there were no grounds for implying a contract even though the parties had been in a trading relationship for 30 years, because they had deliberately not entered into an express contract to preserve maximum flexibility in their trading arrangements.
• Exchanges of correspondence, including e-mails.
• Implied terms. For example, even if there are no service level agreements or key performance indicators, the Supply of Goods and Services Act 1982 requires the service provider to use reasonable care and skill.
• Invitations to tender (ITTs), responses to tender and unfinished agreements.

Considerations for customers

Consider using the contract terms to commercial advantage. If, for example, the contract does not specify exclusivity, and there is no requirement to buy a minimum amount from that particular supplier, consider dual sourcing from a cheaper supplier.

Can competition law be used to challenge restrictions or exclusive purchasing arrangements?

Termination as a means of negotiation?

It may be helpful to consider a client’s rights to terminate, and use them if appropriate. However, care needs to be taken to ensure that any action does not give the other party grounds to claim damages for wrongful termination. Termination clauses should be reviewed carefully:

• Is partial termination an option?
• Check for any minimum notice periods.
• Adhere to the notice provisions when exercising any rights to terminate, especially where the form and date of such notice is prescribed by the agreement.
• If terminating for material breach, you must be able to prove that there has been such a breach and that it has not been waived.
• Be aware that certain contracts come with enhanced rights, which may not be reflected in the documentation. For example, commercial agents have rights to minimum notice, and, potentially, to exit payments as a result of the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053).
• In unwritten arrangements, consider whether reasonable notice is required.
• Consider rights to terminate if the supplier or purchaser is at risk of becoming insolvent. Be aware that the clause may be drafted to be available early in the insolvency process. For more information, see Article, Exiting unprofitable or unsuitable contracts.
• A change of control may be a useful trigger for termination; in an economic downturn changes of control may be more likely to happen, for example in refinancing scenarios.

3. Post-termination

If the strategy involves terminating an arrangement, then consider the impact on the client’s business and the relationship.

• Is an exit plan required? If so, must this be negotiated?
• Who bears the costs of the exit?
• Scrutinise indemnities and cost-underwriting clauses to analyse the impact on termination.
• Consider the impact of employment issues, see Employment issues on termination.
• Consider if any intellectual property rights need to be asserted.
• Check any hand-over clauses, for example, for documents or for business processes.
• Consider which clauses survive termination and the impact of these.

4. Employment issues on termination

One of the main issues arising from termination in an outsourcing arrangement, which may not arise in a simple supply arrangement, can be the impact of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/0246) (TUPE). The effect of TUPE may be to transfer dedicated employees back in-house, or to the new supplier being appointed. Consider whether this has an impact on the cost of appointing a new supplier or bringing the arrangements back in-house. In particular:

• The consultation obligations mean that the risk of TUPE is likely to rest with the incumbent and the new supplier, but check any indemnities given.
• Does the contract contain specific provisions dealing with employees and protection under TUPE?
• Check non-solicitation clauses regarding employees.
• What is the impact on the new supplier and can they benefit, under the Contracts (Rights of Third Parties) Act 1999, from any indemnities?

5. Pricing structure/adjustment

• Agreements to agree pricing are just that: if the parties fail to agree then no new price should apply.
• If the price of any rebates or discounts depend on a particular volume of purchases, have these been met?
• The currency of the payment and application of exchange rates: have these been catered for and, if so, are these now a useful tool?
• Price increases: for example, is there a maximum amount by which the price can increase, and has this been applied correctly and consistently? Failing to comply with such a provision may constitute a waiver if, for example, you allow the supplier to increase the price by a greater amount than the contract allows. It may constitute a waiver of your rights to rely on such a clause.
• Is the customer entitled to bulk or group discounts, and have these been accounted for?
• Is the price linked to an external factor, for example, Retail Prices Index? Industry indices can go down as well as up. Can the clause be applied so that the price can decrease?
• Auditing rights: can the client require access to financial records to check figures, particularly in relation to the calculation of royalties, pass-through of costs, or attributing overheads.

6. Best value/most favoured nation/benchmarking

Other clauses which may be of assistance when renegotiating the contract include:

• Best value clauses: as favoured by public sector organisations so that they meet best value criteria. Consider if this can be used to the client’s advantage.
• Benchmarking : consider who bears the costs and how the clause deals in practice with the outcome of benchmarking. Must the supplier match the price and/or the quality?
• Most favoured nations clauses : these are contractual provisions that enable one party to receive the most favourable price or terms and conditions offered by the other party. Is the clause appropriately drafted to meet competition law requirements? Is it being complied with?
• Continuous improvement provisions: these provisions act as a guarantee to the recipient that the supplier will try to improve the services and its terms. Can improved services therefore be required without extra charge?

Considerations for suppliers

A supplier may wish to consider the following:

• Review credit limits with existing customers as well as undertaking credit searches against new customers to ensure that the level of credit is appropriate to the financial standing of the customer. In these tougher times, such credit limits need constant review. Bear in mind that the information received may be out of date.
• Where appropriate, include a retention of title clause, or ensure that your current clause works effectively. If your customer becomes insolvent, an effective retention of title clause may be the only way that you will realistically recover, or part-recover, the debt or your goods.
• Insist on a guarantee from the directors or the parent company if there is concern over any new customer’s credit rating. If the customer becomes insolvent, you can seek recovery from the guarantor. However, ensure that all available checks are carried out against such would-be guarantors, otherwise the guarantees may not be worth the paper they are written on.
• Consider entering into a factoring agreement or taking out credit insurance to improve your client’s cash flow, especially as many customers are paying their suppliers late to improve their own cash flow positions.
• Check invoicing and payment terms and put in place a strategy to enforce them. Seek to negotiate more favourable terms and then enforce them.
• Check your rights to terminate or suspend the arrangement, if, for example, the customer becomes insolvent or fails to pay on time, or at all.

Law is a management tool but other tools are needed. We are delighted to have secured a guest blog from Alan Dring of the Mad Approach Ltd. Alan runs his own sales and marketing consultancy.

As many of you will know we run practical workshops and training courses of course but also publish occasional blogs from friends of the firm.

This month we have two blogs from Alan and in this first part Alan looks at growth and sustainability issues for MD or business owners. In the second part he will look at action planning for survival.

Never before have business owners and MD’s needed the virtue of HONESTY

The growth and sustainability of a business depends on the TALENT of its people and how prepared and motivated they are when facing an increasingly competitive environment.

80% of businesses have not done a business SWOT in the last 12 months …is yours one? No business SWOT usually means no personal SWOT’s …so do you really know how good (or bad) your team are?

70%of businesses do not have a business action plan; known to all the business…does yours have one?

80% of businesses who have done SWOT’s highlight COMMUNICATION (internal and external) as their major weakness…if asked would your staff say your internal communication was good?

Businesses with between 10-100 staff rarely seek the views of an external resource to give another perspective believing that their internal resource is adequate….is yours?

If those stats strike a chord it is worth giving some consideration to the following 5 aspects of a suggested action plan…. be honest

Identifying Target Markets

• What does your database look like?
• How do you use it?
• Where are you going? Who is going to help you get there?

Developing Relationships

• Your existing client base
• What do they contribute to your growth?
• The basis of your business and marketing plans

Developing Partnership Business Model

• Ensuring “selling” is an integral part of your culture
• The strength of your brand.  How can it be improved?
• Recruitment – Hunters or Farmers?
• Training

Promoting Your Business Objectives

• How do you currently measure the value to the business?
• Benefits to be derived from breakfast meetings, Chambers of Commerce etc.
• Networking and how to develop your technique

Building & Gaining Internal Commitment

• Do you have people with a natural flair for innovation to deliver your targets? Do you recruit the “right” staff?
• Do your current rewards and incentives work?
• Are they understood by all?
• How can they be improved to drive growth?

17 bullet points = 17 ticks and you are on the right road to growth.

Anything less or If my comments give you food for thought ring for a chat

Alan Dring – M: 07528 201244  E: alan.dring@themadapproach.com

About Bennett’s Legal.

Bennett’s Legal are employment, commercial and professional regulation solicitors. We are available to discuss your needs on 0844 472 2378 and are based at our Shrewsbury office but offer advice UK wide to clients. We act for employers and employees.

If you need an employment law or professional regulation solicitor why not call our award winning team (UK Small Law Firm of the Year 2011) on 0844 472 2378 or email us help@bennettslegal.co.uk for advice on employment, professional regulation, sports and business law and compromise agreements.

Our employment law and professional regulation solicitors advise regularly in the following geographical areas Shrewsbury, Telford, Oswestry, London, the City, London City, Birmingham, Manchester, Leeds, Southampton, Wrexham, Chester, Wolverhampton, Swindon, Winchester, Alderely Edge, Southampton, Newcastle, Stole on Trent, the Midlands, Shropshire, Cheshire, North Wales and our employment law solicitors can advise UK wide on all aspects of employment law by Skype, telephone conference, email and of course in person.

Our employment law expertise includes wrongful dismissal, unfair dismissal, and discrimination at work, discipline and grievance matters, restrictive covenant disputes and compromise agreements.

Our current shareholder dispute and shareholder agreement work includes matters in London, Bristol, Shrewsbury, Southampton and across the Midlands. We are also guiding national companies on other shareholder issues from across the UK.

Our professional regulation expertise includes General Medical Council, Nursing and Midwifery Council and Health Professions Council Fitness to Practice hearings, Interim Orders Panels and guidance on being employed and leaving employment in the regulated sectors. We also act for Solicitors before the Solicitors Disciplinary Tribunal, Accountants before the ACCA and finance professionals in relation to Financial Services Authority regulatory matters.

As a boutique law firm our solicitors regularly see matters that your average High Street law firm simply rarely see. In part due to our specialism and in part due our UK wide coverage.  Please contact us:

0844 472 2378

Here at Bennett’s Legal Limited we have a useful checklist which provides an insight into the fundamental issues in relation to negotiating contracts on behalf of your business. Please call or email now to obtain your free contract negotiations checklist.

Our contract negotiations checklist offers an insight into the process and gives a helpful guide on the key points which you should consider.

It is vital in contract negotiations that you seek expert legal advice so that you are aware of the risks associated with the agreement. Here at Bennett’s Legal Limited, we have a team of highly skilled commercial lawyers who are ready to assist you and your business. We will offer expert legal advice tailored to your businesses specific needs. Unlike many legal advisers, we are solution driven and are proactive in ensuring we obtain the best possible outcome for our clients.

Bennett’s Legal Limited are an award winning firm having won Small Law Firm of the Year 2011 (as voted for by Corporate Global) We are a small boutique firm specialising in commercial and employment law.  As a boutique law firm, our solicitors regularly see matters that your average High Street law firm simply rarely see in part due to our specialism and in part due our UK wide coverage.

Our solicitors advise regularly in the following geographical areas: Shrewsbury, Telford, Oswestry, London, the City, London City, Birmingham, Manchester, Leeds, Southampton, Wrexham, Chester, Wolverhampton, Swindon, Winchester, Alderely Edge, Southampton, Newcastle, Stole on Trent, the Midlands, Shropshire, Cheshire, North Wales and our solicitors can advise UK wide on all aspects of commercial law by Skype, telephone conference, email and of course in person.

Please call or email now to obtain your free contract negotiations checklist.

0844 472 2378 or email help@bennettslegal.co.uk

• Your current employment law compliance.
• The suitability of your contracts, policies, procedures and handbooks for your business legal compliance.
• Your employment tribunal risk.
• Your health and safety and other red tape risks.
• HM Revenue and Customs Risk in relation to freelancers and consultants.

We usually charge £500 plus VAT for this service but until the 31 May 2012 we are offering the service for free.

Why is it free?

The service is free because recent employment law changes mean that many business who are otherwise well run, stable and secure have out of date employment law documents and don’t consider the risks that their businesses face.  We know that if we can work with businesses then we can reduce their Tribunal claim risk.  We can reduce their compliance costs. As a consequence we have decided to offer a limited number of sessions for free between now and the end of May.  In total we are offering 30 of the reviews for free.  This offer is based on a first come first serve basis.

To book your free Employment Law and Human Resources MOT telephone our offices on 0844 472 2378 or e-mail help@bennettslegal.co.uk.

If you need an employment law or professional regulation solicitor why not call our award winning team (UK Small Law Firm of the Year 2011) on 0844 472 2378 or email us help@bennettslegal.co.uk for advice on employment, professional regulation, sports and business law and compromise agreements.

Our employment law and professional regulation solicitors advise regularly in the following geographical areas Shrewsbury, Telford, Oswestry, London, the City, London City, Birmingham, Manchester, Leeds, Southampton, Wrexham, Chester, Wolverhampton, Swindon, Winchester, Alderely Edge, Southampton, Newcastle, Stole on Trent, the Midlands, Shropshire, Cheshire, North Wales and our employment law solicitors can advise UK wide on all aspects of employment law by Skype, telephone conference, email and of course in person.

Our employment law expertise includes wrongful dismissal, unfair dismissal, and discrimination at work, discipline and grievance matters, restrictive covenant disputes and compromise agreements.

Our professional regulation expertise includes General Medical Council, Nursing and Midwifery Council and Health Professions Council Fitness to Practice hearings, Interim Orders Panels and guidance on being employed and leaving employment in the regulated sectors. We also act for Solicitors before the Solicitors Disciplinary Tribunal, Accountants before the ACCA and finance professionals in relation to Financial Services Authority regulatory matters.

As specialist employment and professional regulation lawyers we act in numerous high value cases and offer clients expert lawyers in respect of all issues.

As a boutique law firm our solicitors regularly see matters that your average High Street law firm simply rarely see. In part due to our specialism and in part due our UK wide coverage.  Please call now to protect your professional status:

0844 472 2378

In this Bennett’s Legal Blog we look at whether or not you should allow employees to rescind their resignation.

Generally, once notice of termination has been given, it cannot be unilaterally withdrawn.  This means that both the employer and the employee need to think carefully about when termination might be appropriate.  Once they have given each other notice, they can only rescind that notice with the consent of the other person.

Employers not being able to rescind a notice may mean that technical mistakes when trying to dismiss somebody can give rise to a claim before an Employment Tribunal.  For an employee, it may mean that they are stuck with a resignation which they subsequently regret.

Heat of the moment dismissals may be withdrawn but they are the exception to the basic rule and not the norm.

In a recent case before the Employment Appeals Tribunal, the Tribunal was asked to consider a situation where an employee’s claim for unfair dismissal was time barred because of her resignation.  The employee agreed that she could rescind the resignation and whilst she did not complete any work in the intervening period, the affects of the additional time period meant that the effective date of termination (the date when the termination became live) was delayed for a period of over one year and in doing so, this facilitated the opportunity for the former employee to bring a claim.

Lessons for employers

The most fundamental lesson remains that the actions and the reasons should be documented carefully.

In this case, the documentation having not been considered carefully, led to a claim existing against them.  Here at Bennett’s Legal, one of the fundamental services we offer on our employer’s helpline is the preparation of those documents and notes and correspondence which avoid situations like this.  At Bennett’s Legal we do this for a small monthly fixed fee.

For a free no obligation quotation, please contact our office on 0844 472 2378.

Solicitors in Shrewsbury – local offices – nationally recognised.

If you need a Solicitor In Shrewsbury why not call our award winning team (UK Small Law Firm of the Year 2011) on 0844 472 2378 or email us help@bennettslegal.co.uk for advice on employment and business law and compromise agreements.

We are based on Battlefield in Shrewsbury but have regular employment law clinics in Shrewsbury; Telford; Oswestry; London (the City); Birmingham and Manchester.

If you need an employment law or professional regulation solicitor why not call our award winning team (UK Small Law Firm of the Year 2011) on 0844 472 2378 or email us help@bennettslegal.co.uk for advice on employment, professional regulation, sports and business law and compromise agreements.

Our employment law and professional regulation solicitors advise regularly in the following geographical areas Shrewsbury, Telford, Oswestry, London, the City, London City, Birmingham, Manchester, Leeds, Southampton, Wrexham, Chester, Wolverhampton, Swindon, Winchester, Alderely Edge, Southampton, Newcastle, Stole on Trent, the Midlands, Shropshire, Cheshire, North Wales and our employment law solicitors can advise UK wide on all aspects of employment law by Skype, telephone conference, email and of course in person.

Our employment law expertise includes wrongful dismissal, unfair dismissal, and discrimination at work, discipline and grievance matters, restrictive covenant disputes and compromise agreements.

Our professional regulation expertise includes General Medical Council, Nursing and Midwifery Council and Health Professions Council Fitness to Practice hearings, Interim Orders Panels and guidance on being employed and leaving employment in the regulated sectors. We also act for Solicitors before the Solicitors Disciplinary Tribunal, Accountants before the ACCA and finance professionals in relation to Financial Services Authority regulatory matters.

As specialist employment and professional regulation lawyers we act in numerous high value cases and offer clients expert lawyers in respect of all issues.

As a boutique law firm our solicitors regularly see matters that your average High Street law firm simply rarely see. In part due to our specialism and in part due our UK wide coverage.  Please call now to protect your professional status:

0844 472 2378

In this Bennett’s legal blog we take a look at the recent changes that were announced into IR35 and personal service companies.

What’s the issue?

Over a number of years, HM Revenue and Customs and the government have been trying to restrict the ability of freelancers and consultants to limit the tax that they pay by utilising a company.

In a series of recent government scandals, including government officials, the arrangements have been used to reduce the income tax bills of government workers.

In some sectors, particularly IT, the media and the building trade, it is common for individuals to form their own Company and this reduces the tax received by HM Revenue and Customs.

What’s changed?

Until the Budget in March 2012, someone working as a consultant for a range of organisations could legitimately be paid through a personal service company.  The effects of this were that each of the engaging organisations would engage the consultant through their own personal company.

However, under the new rules anyone who is clearly an employee of an organisation or is integral to it will have to pay income tax and national insurance like any other employee or face an investigation.  Therefore, somebody who works for a range of businesses, but undertakes integral work for each of them, may find themselves paying tax and national insurance when they previously thought that the IR 35 rules permitted them to operate in this way.

What’s now high risk?

Firstly, anyone who is an office holder such as a director, company secretary or a controlling person, for example, health and safety consultants, compliance consultants’ or officers, or similar positions, must now be paid through the PAYE system.

The difficulty that we have identified already is that the definitions of these terms remain unclear and ambiguous and there will be a series of cases before the First Tier Tax Tribunal to try and define these new rules and terms.

What should you do?

Firstly, in respect of your consultancy arrangements or your contractual relations with your engaging customers, you should have the agreement professionally drawn up.  We do numerous of these each week.  Here at Bennett’s Legal, we have expertise in identifying whether or not you are caught by the rules or not, although our view is always about helping you manage the risk which will always exist with a evolving client base and/or evolving role within your client businesses.

If you are a company engaging a consultant, similarly we can advise on the appropriate paperwork to manage the risk from the company’s perspective.  Again, we undertake this task on a regular basis and at least three or four times per month.

The next thing that you should do is risk assess the current roles that you have and periodically undertake this process again.  If you instruct us, whether you are the business or the individual, we will guide you on how to do this.

Bennett’s Legal prefers to work for fixed fees on this type of matter and if you call us for a no obligation quotation, Bennett’s Legal will offer you a fixed fee service in respect of reviewing your current position, the risks and drawing up the appropriate documentation.  If you should have any questions or queries, please telephone us for a no obligation discussion.  As with all of our blogs, the blog above is not individual or personalised advise and as a consequence it cannot be legal advice.  If you require legal advice you should contact us to enable us to assist you.

If you need an employment law or professional regulation solicitor why not call our award winning team (UK Small Law Firm of the Year 2011) on 0844 472 2378 or email us help@bennettslegal.co.uk for advice on employment, professional regulation, sports and business law and compromise agreements.

Our employment law and professional regulation solicitors advise regularly in the following geographical areas Shrewsbury, Telford, Oswestry, London, the City, London City, Birmingham, Manchester, Leeds, Southampton, Wrexham, Chester, Wolverhampton, Swindon, Winchester, Alderely Edge, Southampton, Newcastle, Stole on Trent, the Midlands, Shropshire, Cheshire, North Wales and our employment law solicitors can advise UK wide on all aspects of employment law by Skype, telephone conference, email and of course in person.

Our employment law expertise includes wrongful dismissal, unfair dismissal, and discrimination at work, discipline and grievance matters, restrictive covenant disputes and compromise agreements.

Our professional regulation expertise includes General Medical Council, Nursing and Midwifery Council and Health Professions Council Fitness to Practice hearings, Interim Orders Panels and guidance on being employed and leaving employment in the regulated sectors. We also act for Solicitors before the Solicitors Disciplinary Tribunal, Accountants before the ACCA and finance professionals in relation to Financial Services Authority regulatory matters.

As specialist employment and professional regulation lawyers we act in numerous high value cases and offer clients expert lawyers in respect of all issues.

As a boutique law firm our solicitors regularly see matters that your average High Street law firm simply rarely see. In part due to our specialism and in part due our UK wide coverage.  Please call now to protect your professional status:

0844 472 2378

Introduction

Bennetts Legal Limited are one of the UK’s foremost Compromise Agreement advice providers.  We run specialist Compromise Agreement clinics for city workers in banks and financial institutions in the city on a regular basis and also operate the leading Compromise Agreement website www.compromiseagreementadvice.com.

In this blog our Managing Director, Paul Bennett, reviews the recent changes to legislation which may affect Compromise Agreements entered into on or after 6 April 2012.

If you are entering a Compromise Agreement whether as an employer or an employee after 6 April 2012 the one thing that we should point out is that you should take expert independent legal advice.  Whilst this is an obligation on employees under the terms of a valid Compromise Agreement employers often try and save £200 – £300 worth of legal fees when not structuring the settlement effectively for tax costs them far in excess of this.

What Has Changed?

Since the Equality Act 2010 came into force there has been debate in legal circles about Section 147 which sets out the guidelines for an independent advisor within the meaning of the Compromise Agreement and the legislation.  In each and every Compromise Agreement the employee is required to have independent advice from an independent advisor within the meaning of the Equality Act 2010 in order to enter into validly (and therefore be binding) a Compromise Agreement with their former employer or soon to be former employer.

The debate is centred around what is meant by an independent advisor.  Two leading employment QCs have given different opinions.  One to the Government and one to the Law Society of England and Wales.

As a consequence coming into force on 6 April 2012, the Equality Act 2010 (Amendment) Order 2012 clarifies who can be an independent advisor to a Compromise Agreement and it is intended to remove the drafting anomaly created by the wording of Section 147(5) of the Equality Act 2010.  The significance for our clients is that we have been advising each and every person entering a Compromise Agreement about the abnormality and as to whether or not the agreement they are entering into could be invalid in some ways which can have significant consequences i.e. they cannot enforce it if the employer does not pay the monies due under the agreement.

For employers, the anomaly created an unsatisfactory situation whereby if an employee had been liaising with a solicitor prior to the offer of the compromise agreement then that solicitor advising them would not be an independent adviser potentially and the settlement again could be set aside.  No cases have been reported of this occurring but when advising our employer clients we have been pointing out the risk that the settlement is not final and there was this ambiguity to be settled before the courts.  The wording and the structure of a Compromise Agreement has therefore not changed post 6 April 2012.  However, the legal risk moving forward for both employees and employers have radically altered.  The uncertainty has been removed.  Potential to set aside the agreement for either party has been reduced and diminished.  It is now subject to the same contractual protection rules as any other contract rather than having an additional drafting anomaly which may also lead to the setting aside of a contract.  For employers and employees this must be a welcome move because this anomaly was creating uncertainty when the purpose of Compromise Agreements is normally to create certainty.

Who Is Affected?

Both employers and employees were affected by the drafting anomaly.  The changes therefore affect both employers and employees entering compromise agreements on or after 6 April 2012.  Those who are offered a compromise agreement around these dates should try and delay the execution of the document until post 6 April 2012.  For employers who will usually be dating the agreement this simply means holding the agreement awaiting a directors signature and so after the Easter bank holiday period.  If you have a choice between dating it and signing it on or before that date, choose the latter and if that means delaying matters for a couple of days it is a sensible precaution.

The issue has been particularly prevalent in the city of London where Compromise Agreements are commonly used to give a “golden parachute” which helps soften the blow when a city worker moves from one institution to another often with significant restrictions on their activity for a period of months.  In terms of the enforceability issue in the city we have been advising on whether or not the enforceability issue may affect, for example, restrictive covenants entered into on termination of employment and of course we have advised on both sides of the fence so therefore we have an insight on how both parties would wish to deal with matters.

Whilst the central London Compromise Agreement market is unique in terms of the prevalence of city workers financial services Compromise Agreements, city trader Compromise Agreements, and senior executives and senior bankers Compromise Agreements the issue has not been restricted to the large pay-outs prevalent in the city but has been more widespread across the UK and we have encountered some of the most difficult questions to answer in respect of smaller businesses.

About Us

Bennetts Legal Limited are a boutique Employment and Commercial law firm.  We have a small team of solicitors who specialise in Compromise Agreements, high level employment including advising FTSE Directors and employees on all matters about entering employment, treatment whilst employed and termination of employment.

Our Compromise Agreement team offer specialist advice including being one of the few firms to offer a chartered tax adviser as an in-house option to those leaving businesses with pay-outs in excess of £30,000. Structuring the termination payments correctly can have significant business benefit to the employer and can save considerable sums of money for the employee personally.

We operate in London and the city through a series of virtual offices and meeting room centres.  We primarily do this to ensure discretion in that those meeting us generally do not wish to be seen to enter a solicitor’s office when they have known issues at work.  If you would like to access expert employment law advice on the termination of your employment or on entering new employment then contact us for expert employment law advice.

About Us.

Bennett’s Legal are employment and professional regulation solicitors. We are available to discuss your needs on 0844 472 2378 and are based at our Shrewsbury office but offer advice UK wide to clients. We act for employers and employees.

If you need an employment law or professional regulation solicitor why not call our award winning team (UK Small Law Firm of the Year 2011) on 0844 472 2378 or email us help@bennettslegal.co.uk for advice on employment, professional regulation, sports and business law and compromise agreements.

Our employment law and professional regulation solicitors advise regularly in the following geographical areas Shrewsbury, Telford, Oswestry, London, the City, London City, Birmingham, Manchester, Leeds, Southampton, Wrexham, Chester, Wolverhampton, Swindon, Winchester, Alderely Edge, Southampton, Newcastle, Stole on Trent, the Midlands, Shropshire, Cheshire, North Wales and our employment law solicitors can advise UK wide on all aspects of employment law by Skype, telephone conference, email and of course in person.

Our employment law expertise includes wrongful dismissal, unfair dismissal, and discrimination at work, discipline and grievance matters, restrictive covenant disputes and compromise agreements.

Our professional regulation expertise includes General Medical Council, Nursing and Midwifery Council and Health Professions Council Fitness to Practice hearings, Interim Orders Panels and guidance on being employed and leaving employment in the regulated sectors. We also act for Solicitors before the Solicitors Disciplinary Tribunal, Accountants before the ACCA and finance professionals in relation to Financial Services Authority regulatory matters.

As specialist employment and professional regulation lawyers we act in numerous high value cases and offer clients expert lawyers in respect of all issues.

As a boutique law firm our solicitors regularly see matters that your average High Street law firm simply rarely see. In part due to our specialism and in part due our UK wide coverage.  Please call now to protect your professional status:

0844 472 2378

We have recently received a number of enquiries from those in Blue Chip Companies and city institutions reference the proposal to change the name of compromise agreements to settlement agreements.  Bennetts Legal Limited are experts in compromise agreement advice for both employers and employees.

In this blog we examine why the wording is proposed to change and its effects to both employers and employees.

Why the Change?

In November 2011 the Government published its response to the consultation on Employment Tribunal Reform and noted within the consultation response that compromise agreements were more widespread in terms of their usage than previously understood by the Government, in particular by HMRC.  This is clearly going to have a number of practical consequences.

The consultation shows that the term compromise agreement gave the impression that one party was giving in and one party was “winning”.  The move to a more neutral or more widely understood term of settlement agreement was therefore proposed.

The idea was to remove the confusion caused by usage of the word compromise and the feeling of one or both of the parties that the deal reached had been reached by them winning or losing some aspect.

What is Changing?

It originally looked as if the changes of the terminology would come into force from 6 April 2012.  In terms of our own business planning and changes to our documents we began planning for the introduction of the widespread use of the term Settlement Agreement as an alternative to compromise agreement within hours of the consultation response being published.

The Government’s red tape agenda appears however to be delaying this change.  One of the changes proposed was to create a standard wording for compromise agreements or settlement agreements moving forward.  This standard wording is yet to appear.

For the time being the terminology hasn’t changed formally but we are seeing an ever increasing use of the word settlement agreement rather than compromise agreement.

Who We Help?

We act for both employers and employees (although not simultaneously).  We provide expert employment advice to employers who are looking at their termination options and we also offer a pure drafting and a drafting with negotiation service in respect of compromise agreements and settlement agreements.  We offer these services to employers for a fixed fee.

For employees we offer fixed fee advice on compromise agreements on a regular basis.  Whilst many employers will make a contribution towards your legal costs, if you want to examine the taxation position in detail then we have access to our in-house chartered tax adviser who can assist with your five year tax planning strategy.  For many employees moving beyond the mere signing of the agreement for the fee within the proposed compromise agreement is beneficial and if we secure a benefit to our clients then we charge an additional fee for negotiating this benefit.

About Us

We are a boutique employment law firm specialising in compromise agreements, settlement agreements, central London compromise agreements, City of London compromise agreements, City compromise agreements, FTSE 100 compromise agreements, FTSE 250 compromise agreements, ex-patriot compromise agreements and oil and mining industry compromise agreements.

We operate nationwide but run a regular compromise agreement clinic from our Wood Street, London base but also have access to meeting rooms across central London and a concentration of meeting facilities in the City of London and Pall Mall areas.

As a boutique law firm we offer tailored legal solutions and tailored legal advice to those contemplating a compromise agreement solution and those requiring advice on it.  In terms of city compromise agreements our team is led by our Managing Director, Paul Bennett, personally and he usually deals with city clients. Although other members of our team have relevant experience we find that most senior bankers and FTSE directors prefer to deal with our Managing Director.  He can be contacted direct for an informal preliminary discussion on pb@bennettslegal.co.uk.

The changes proposed from 6 April 2012 in terms of terminology changing have yet to come in but our regular blogs will update readers as the issue progresses.

As a boutique law firm our solicitors regularly see matters that your average High Street law firm simply rarely see. In part due to our specialism and in part due our UK wide coverage.  Please call now to protect your professional status:

0844 472 2378

Introduction

In this block we look at the scenario where a share sale or TUPE transfer leads to the question arising of whether or not compromise agreements can be used to have the employees enter into new contracts of employment consensually whilst simultaneously terminating their previous period of employment.

In a TUPE transfer situation employers, particularly the new employers often wish to ring fence their liability risk when taking on potentially hundreds of new employees.  We have had this issue raised with us on a number of occasions recently and summarise the position here not to give individual legal advice but to raise awareness of the issue which we have seen misunderstood and misused by other employers and other law firms.

The Basic Position

The period of continuous employment is determined and governed by statute and in particular the Employment Rights Act 1996.  As a consequence the employer and employee cannot decide that that period of continuous employment has ended if statute states otherwise.  As the situation is governed by statute and not by the private contractual agreement between the employer and the employee then inevitably any attempt to use compromise agreements to ring fence TUPE liabilities and to reduce the continuous employment period is inevitably doomed to failure and challenge. Our advice to employers in these situations is that trying to use a compromise agreement would be both ineffective and expensive in all the circumstances if the employees are properly advised in terms of declining to sign the agreement, or signing them knowing them to be invalid and therefore the business getting no benefit.  There are far more effective solutions which we are happy to advise on if your business is involved in a TUPE transfer and needs some help and guidance.

About Us

We are a boutique employment law firm offering expert employment advice nationwide.  We run projects for employers, we provide human resource helplines (to both those without a human resource function and to support your HR managers and directors) and we offer a national service with a Central London and City emphasis on compromise agreements.

Our team have advised on agreements up to a total value of almost £500,000 as the largest compromise agreement settlement, right down to small settlements of a few thousand pounds with a good reference.  We offer a negotiation service or a drafting only service to assist employers.  All of our services to employers are conducted on a fixed fee basis if the employer wishes to agree a fixed fee in advance of us undertaking the work.

For an informal and no obligation discussion please contact us at contactus@bennettslegal.co.uk or on 0844 472 2378.

In recent months we have been seeing two streams of employees and employers wanting to delay termination but to agree termination terms under a compromise agreement.

As one of the UK’s leading compromise agreement advice providers we see significant levels of agreements and we also therefore see themes emerging.  In this blog we give an overview of the issues, but as always should you have a specific and personalised query, you should contact us for individual legal advice and the general notes within this blog cannot be relied upon as legal advice.

Who is affected?

The two categories where we are seeing this being used are the extremes of the employment spectrum.  The first and primary category is with senior figures in the City, particularly with those who hold commercially sensitive information and whom are terminating their employment on a long term notice.  In effect, the parties are seeking to agree the termination terms but the employee is required to continue their duties for a further 3, 6 and in some cases 12 months under a contractual notice period.

The second category where this is appearing relates to public sector managers particularly in the NHS.  They appear to be motivated by the requirement for security for the employer to know that no claims are forthcoming or whether there have been substantial issues to compensate for those issues so that a clean restart can occur.

How Long?

A period of three months is not that unusual for a delayed termination.  However, anything over and above that is significantly out of kilter with normal employment practices and therefore where this has been required by our employer clients we are advising a split compromise agreement situation whereby in effect there are two lots of compensation and two lots of compromise agreements.  This has the negative impact of creating a dual employment termination situation in terms of some claims are compromised at stage 1 and termination payments made at stage 2.  There is obviously the need for the employee to get legal advice on two occasions as well which increases the costs.  The costs of doing it in this manner however are not particularly significant in terms of legal fees, particularly given the benefits to the employers.

With anything over three months it is advisable to separate out the claims that are being settled at each stage and to settle them in this way in most cases.  Of course, exceptions do occur and the taxation of termination payments then become particularly complex and we would advise that a chartered tax adviser gives guidance on termination payments in these cases.  We are one of the few law firms in the UK which has a chartered tax adviser within our team and he is available to help guide our solicitors when they are drafting such agreements.  We believe this puts us in a unique position in the UK compromise agreement market.

HMRC and Advance Clearance of Termination Payments

Advance clearance from HMRC is available in very limited circumstances.  However, seeking advance clearance in these situations is usually beneficial given that the scope for misinterpretation and challenge is particularly high where there is a delayed termination date and a delayed termination payment (whether in full or in part).

Employers can seek clearance where the payment relates to redundancy under HMRC rules.

HMRC will also guide in relation to other types of payment specifically as follows:-

• Area of material uncertainty arising from new legislation passed in the last four Finance Acts;
• Older legislation where there is a material uncertainty around the tax outcome of an issue of commercial significance for the business;
• Contributions to pension schemes as part of termination arrangements;
• The meaning of disability, lump sums from overseas pension schemes;
• Legal expenses paid under termination settlements;
• Disability and injury compensation sums;
• Foreign service exemptions and reductions;
• Payments made by third parties;
• On cash provisions.

For those contemplating a compromise agreement or entering into a delayed termination package under a compromise agreement, there are significant issues to be considered and we would strongly advise that they seek expert legal advice consisting of both tax law advice and employment law advice.  Clearly, we can only advise one of the parties under a compromise agreement but are happy to talk to either the employer or the employee under such arrangements and to make the arrangements work for the benefit of both parties and to work in a constructive manner with the other party’s advisers for their mutual benefit.  These arrangements commonly occur where the parties have retained a good working relationship but the employee is moving on for personal reasons such as career aspiration or progression, or for personal reasons.

If you would like to discuss your options, please contact our offices on 0844 472 2378 or by email contactus@bennettslegal.co.uk.