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Top tips for surviving redundancy

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Redundancies have always been a way of life in the City, but in the current economic climate, when many organisations are merging, some have recruitment freezes and many others are considering relocating, being at risk of redundancy can be especially worrying.

Follow our top tips for redundancy to ensure you get the best chance of keeping your role, and the best compensation if you do not.

Our ‘Top Tips’ for redundancy scenarios

1. Do your homework

Check what your contract, company policies, and any relevant collective agreement says about redundancy. They might refer to a right to enhanced redundancy pay (over and above the statutory entitlement) or fixed consultation procedures. If so, make sure that your employer is doing what they are supposed to do. Enhanced redundancy terms for City employees are common and range from a multiple of 2 weeks per complete year of service upwards. Law firms tend to have less generous enhanced terms whereas the traditional banks with unionised workforces tend to be more generous. Also, check bonus, LTIP and share schemes – they might incorporate “good leaver” terms if you are dismissed for redundancy.

2. Phone a friend

Most employers allow employees to be accompanied at redundancy “at risk” or consultation meetings by a colleague or trade union representative although there is no legal obligation to do so, it’s good practice. If you aren’t told that you can be accompanied at an “at risk” meeting, then ask. If your employer’s notes are inconsistent with your own (or your companion’s), ask your employer to put a copy of your notes on file.

3. Question time

In order to fairly dismiss for redundancy, your employer should individually consult with you about the redundancy situation, consider alternative ways of saving the role and avoiding the redundancy, enable you to have time to respond, and enable you to apply for different roles within the business. If you have any questions during the consultation process, ask them.
Some key issues to look for (but there are more):
• Have you been told why your role is at risk? Does it make sense?
• Have you been told who else is at risk? Has one of your colleagues been “missed out”?
• Do you think that other people should have been included in the ‘at risk’ pool?
• Do you think that your employer should have considered “bumping” (i.e. removing others from their roles so that you can fill their vacancy)?
• If you are going through a competitive application process for roles, do you know the selection criteria and what other factors (such as past appraisals) are being taken into consideration?
• Do any selection criteria disadvantage you due to your particular circumstances e.g. disability or pregnancy/maternity leave?
• Have you been told about all existing vacancies (including roles that are junior/senior to yours)? Have you been given a fair opportunity to apply for those roles?
• Have you seen the selection criteria for alternative roles? Do you think they are fair?
• Is there a job vacancy that you haven’t been told about?

4. It’s a numbers game

If your employer is proposing to make 20 or more employees redundant in a period of 90 days, they have additional collective consultation obligations. If they fail to comply with these obligations, you may have an additional claim for up to 90 days’ pay.

5. Is there another reason?

Employers often view “redundancy” as the easiest way to eject an employee and retain the employees they really want. For that reason, a redundancy process can be used to cloak more sinister acts (even discrimination or the repercussions of whistleblowing). If this is the case, you may have additional, more valuable claims against your employer beyond a claim of unfair dismissal. If you suspect discrimination or other unlawful acts, or you think that redundancy is being used to “mask” another reason for your exit, make a careful note of anything that is said or done which supports your allegation. This can be used as evidence later down the line.

6. Appeal

As part of the redundancy process you should be given a right of appeal. Exercise your right to do so. Make sure your appeal is submitted in time and identifies the specific issues you have with the redundancy process and the decision.

7. Protected conversations and settlement agreements

In the City, a likely route is for your employer to circumvent the above procedures and offer you a settlement agreement on a confidential basis and ask you to seek independent legal advice on its terms. The written agreement will set out terms that will seek to buy you out of any contractual, statutory and other claims you may have (such as unfair dismissal ), by offering you compensation. The settlement agreement will ask you to waive any claims in return for signing the agreement. A standard contribution to legal fees for you to obtain advice on the terms and effect of the agreement is usual. Any negotiations on the terms of the agreement will be confidential and are unlikely to be admissible in any proceedings, unless your employer behaves in a particularly improper manner towards you during the protected discussions.

Brahams Dutt Badrick French LLP are a leading specialist employment law firm based in the City, Canary Wharf and Mayfair. We are experienced in advising on severance packages arising from redundancy processes and getting clients the best deals whilst protecting their reputations. If you would like any further advice on redundancy and the topics discussed in this article please contact us on 020 3828 0350 or at info@bdbf.co.uk.

 
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Employment law lessons from Hillary Clinton

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There can be little doubt that Donald Trump’s victory was assisted by the scandal surrounding Hillary Clinton’s use of personal email for work purposes.

It will have been a learning experience for Hillary Clinton but this is also a story that has relevance for our own working lives in the UK. Conflating work and personal communications could be career-defining, as it was for Hillary.

You should think carefully before doing as Hillary did and using personal email for work-related purposes. That one spreadsheet that you forward to your Gmail address could cause you significant problems.

This is because sending a document such as that to your personal account is likely to place you in breach of at least one of your employer’s rules, if not more. Most employers will have policies stating that company information must be stored in a secure way (remember the high-profile cases of suitcases containing confidential information being left on trains?). Your employer is also likely to have a rule that says the privacy of client information is paramount.

When you transfer a work-related document to your Gmail account, you are taking it outside of the server that your employer controls. Whilst email is an inherently insecure form of communication, employers are often irked when one of their documents is transferred to a server which they no longer control or monitor. Sometimes sending emails containing confidential information to a third party can trigger a red flag notification to your employer’s IT department leading to monitoring of your email.

It is not unknown for an employer with a particular agenda to search an employee’s Sent Items to see if they have ever sent documents to their personal email address – and then use that as a basis to mount disciplinary proceedings to achieve a dismissal.

Using your employer’s email account as a tool for social interaction is also risky. Your employer is very likely to have the ability to monitor the emails you send and receive and you would be surprised at the amount of email monitoring that takes place. Circulating your comments on a “viral” email that a friend sends to you could land you in hot water – as happened to the technical director of Leeds United in 2013, who went on to bring, and lose, a £140,000 High Court claim as a result.

One of the most commonly-committed employment “offences” is seeking work during your employer’s working time. Strictly speaking, the law requires you to look for a new job (and attend interviews) outside of your employer’s working time. Bear in mind that if you use the mobile telephone that your employer gives you to search out and speak to potential new employers, it will be very easy for your employer to establish if you have acted in breach of your duty not to look for new employment during your normal working hours. Even WhatsApp messages could be disclosable in a court case, provided their content is relevant.

The safest course of action is to keep work-related correspondence on work devices and personal correspondence on your personal devices. Perhaps if Hillary Clinton had followed this advice, she could have been the 45th President of the United States of America.

Paul McAleavey, Senior Associate at Brahams Dutt Badrick French LLP

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Uber drivers are workers, not self-employed

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Uber drivers in London have been found to be workers of the company rather than self-employed contractors. The Employment Tribunal judgment, which was overtly critical of Uber’s approach to the employment status of its drivers, was released on Friday.

A number of Uber’s drivers in London brought claims against the company arguing that they had been underpaid the national minimum wage and denied rights under working time legislation. The company’s position was that the drivers were self-employed contractors with no entitlements to such rights. In looking at the specific cases of two drivers, Mr Aslam and Mr Farrar, the Employment Tribunal concluded that the drivers were indeed workers with the associated rights and entitlements.

The Employment Tribunal held that the contractual documentation between drivers and Uber “bears no relation to reality” and was not “a contract at arm’s length between two independent business undertakings”. Uber claimed that it acted as a kind of agent or introductory service which gave drivers introductions to clients, whereas the reality was that the drivers worked ‘for’, not ‘with’ the company.

The Employment Tribunal pointed to a number of features of Uber’s relationship with the drivers. At the outset, drivers were selected and interviewed by Uber in something comparable to a recruitment process. Though drivers would supply their own cars, Uber only accepted certain makes and models and stated a preference as to colour (black or silver, incidentally). Once selected, drivers were given an induction and a welcome pack including ‘star tips’ on how to provide a quality service.

Whilst it is true to say that drivers were not obliged to turn on the app at any particular time, the Tribunal held that once they did, they were subjected to several controls imposed by Uber. Uber controlled the information the drivers were given, including the passenger’s identity and the final destination. Its technology also set a route for the drivers to follow – whilst a driver could divert from that route, they could be reprimanded for doing so if a customer complained. They were obliged to follow a cancellation procedure and would be locked out of the app for 10 minutes if they declined 3 pick-up requests in a row.

Many of the procedures outlined in the contractual documentation were held by the Tribunal to be relabelled versions of standard employment policies. For example, drivers falling below a 4.4 star rating would be subject to a series of ‘quality interventions’ and their accounts could be deactivated if they failed to improve. The Tribunal saw this as a form of performance management procedure which could culminate in dismissal.

Fundamentally, the Tribunal took the view that “the notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous”.

Whilst this is only a first instance decision which is set to be appealed, it serves as a cautionary tale for businesses forming part of the ‘gig economy’. Similar cases involving couriers and Deliveroo drivers are coming up and could be decided in a similar way.

With that in mind, all businesses may want to take the opportunity to review their contractual arrangements with contractors and ensure that they are a true reflection of the working relationship. If not, the best course is to update and amend contracts at an early stage to minimise the risk of litigation and tax liabilities.

Mr Y Aslam, Mr J Farrar and others v Uber BV, Uber London Ltd & Uber Britannia Ltd 2202551/2015

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A view from the Chair of the Employment Lawyers Association

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I write this column in the aftermath of the political conference season. If a year ago, I had asked you to guess the political party of the person who said, ‘Existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am Prime Minister … We’re going to see workers’ rights not eroded, and not just protected, but enhanced under this Government,’ you may not have said Conservative. But this is a new world, and the Tories now claim to be the party of the workers.

Of course, the one thing we did not get from the speech was any policy announcements and time will tell whether words will become actions. After all, George W Bush claimed to be a compassionate conservative.

Theresa May says that tackling injustice is her passion in life. If her conference speech is not to be empty rhetoric, then that surely means not just changes to employment law but addressing impediments to access to justice.

You know where I am going – employment tribunal fees are a block to justice, and certainly when they are so high and are not automatically recoverable when a claim succeeds and the remission process remains obstructive. But it does not stop there either; the Jackson reforms effectively keep the vast majority of employees and a good number of employers locked out of the civil justice system when it comes to the enforcement of employment rights heard in the civil courts.

But we also have our own part to play. Ask yourself this: if you were fired, could you (as probably one of the more affluent employees in this wealthy country) afford to instruct a competent lawyer to take the case through to a trial? If you were not an employment lawyer, could you really do it without representation? For many of us, the answer is no. How have we let justice become so unaffordable?

Hospital doctors complain about managers stopping them performing a complex, innovative operation or telling them they need to get a patient out of his hospital bed within 24 hours when they know the patient would benefit from a longer stay. However, hospital managers would say that while a doctor is focused on his patient in the operating theatre, they have a wider responsibility to all patients. They may add that in striving to offer top-quality treatment to one patient, the doctor is depriving many others, given that resources are limited.

Are we not like the hospital doctor? Lauding a system and our part in it that generally delivers just results to the litigants who appear before the employment tribunal, who are usually accepting of the result because they know it has been considered with diligence and impartiality by skilled judges. Yes, the system is good at delivering just results for those who use it but, for it to work, it needs a lot of lawyers concentrating on just a few litigants, and it means that much of the rest of the populace is priced out of legal assistance and justice.

Every once in a while, someone comes up with an initiative that could offer a path to quicker, cheaper justice for the many, inevitably at the price of purity. Take Brian Doyle’s Judicial Assessment procedure, under which an employment judge will, with the consent of the parties, following a case management hearing, opine on the merits of a case.

Many will question the value of such judicial thoughts being voiced before disclosure and witness statements, expert cross-examination and the like. And, of course, if outcomes are achieved as a result, that will in some ways be rougher justice.

But is not impure justice for all better than purer outcomes for an elite of high net worth individuals, employers who can afford to take a principled stance, union members and those with insurance?
Let’s play our part and really give this initiative a chance .

Gareth Brahams

Gareth is Managing Partner of Brahams Dutt Badrick French LLP and Chair of the Employment Lawyers Association, www.elaweb.org.uk.

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“Overqualified” or too old for the job?

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It’s common knowledge that some employers try to recruit in their own image (whether lawful or not). Job advertisements and person specifications can be used to pinpoint particular demographics, and in particular, certain age groups. Advertising for a candidate who is active, energetic and computer-savvy? Chances are, you’re looking to hire someone young.

An employer’s decision to say in clear terms that they want someone with “youthful enthusiasm” (McCoy v James McGregor & Sons Limited 00237/07IT) or a “younger, entrepreneurial profile” (Beck v Canadian Imperial Bank of Commerce ET/2328832/08) will at the least raise a presumption that the employer has directly discriminated on the basis of age.

A less obvious way in which age discrimination can creep into recruitment is via the imposition of experience requirements. Asking for someone with at least 10 years’ experience will probably exclude candidates in their 20s. Equally, saying that candidates should have 5 years’ experience or less will make it more difficult for older candidates to comply. Such requirements are likely to be indirectly discriminatory on age grounds unless they are objectively justified.

An example of a non-discriminatory experience requirement can be found in Jones Care UK Clinical Services Ltd ET/3302973/2015. Mr Jones (who was 51) had applied for the role of marketing services executive, which reported into the marketing services manager. The person specification asked for at least 2 years’ experience and a relevant degree. The company decided that Mr Jones would not be the best candidate and offered the job to someone else (who was aged 29). Mr Jones claimed he had been discriminated against on grounds of his age. The company denied this, stating that his age played no part in the selection process and that his responses in interview suggested that his skills were beyond what was needed. His expectations were also higher than the constraints of the role could permit.

The employment tribunal dismissed the claim, finding that Mr Jones’ “previous senior roles, high-level qualifications and extensive experience might unbalance the marketing team and undermine other team members whose qualifications and experience were of a much lesser order”. It also found that there was a risk of Mr Jones becoming frustrated in the role, particularly given the lack of scope for career progression.

On the other hand, in Rainbow v Milton Keynes Council 1200104/2007, a role which specified that it “would suit candidates in the first five years of their career” was discriminatory. The tribunal had no problem finding that the requirement put older applicants at a particular disadvantage, given that applicants in their 60s (Ms Rainbow included) were more likely to have lots of experience. The employer’s reason for wanting someone younger – which was that they were cheaper to employ – was not sufficient justification.

Essentially, the safer course for employers is to only ask for what you need from a candidate. Where a quality (or particular level of experience) is necessary and relevant to whether a candidate can do the job properly, you are entitled to ask for it. However, if you find yourself writing the words like “younger”, “older” or “youthful” in your job advertisement, the best advice will always be… don’t.

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Regulators provide much-needed clarity around new regulatory references regime

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If you work in a senior role in banking or insurance the chances are that you will be familiar by now with at least some of the principles of the senior managers’ regulatory regimes, introduced earlier this year.

The major parts of the new regimes, aimed at raising individuals’ accountability for personal or institutional failings, came into force in March. However, the Financial Conduct Authority and Prudential Regulation Authority had held off from introducing an important component – the new rules on regulatory references – whilst feedback arising from public consultation was taken into account.

This changed at the end of September when the regulators issued policy statements setting out the final detail of the new rules and providing some much-needed clarity. The rules are extremely important in the new regulatory landscape because regulatory references are considered to be key tools in a prospective employer’s ability to assess an individual’s fitness and propriety when they are hiring. This is obviously crucial to anyone who wants to work in a relevant role.

In summary:

•  The hiring firm will have to seek regulatory references for candidates being recruited into various types of senior function, and other key functions, in the business. This includes certain non-executive directorships;
•  The hiring firm has to seek regulatory references going back six years from the current employer and all former employers of the candidate where the person carried out a relevant function. In the case of overseas employers, this means the hiring firm having to take reasonable steps to obtain the regulatory reference;
•  The current/former firm giving the regulatory reference should do so as soon as reasonably practicable – the FCA suggests within six weeks of the request;
•  Certain roles, such as those that are controlled functions, need pre-approval of the regulator before they can be offered by the hiring firm. This remains the case but regulatory references also have to be obtained by the hiring firm – ideally before the application for pre-approval is submitted. Where the current employer is listed, meaning it has legal obligations to make announcements to the relevant stock exchange within what can be tight timeframes, there are relaxations around the timing for the hiring firm having to obtain regulatory references;
•  The reference must follow a prescribed template. The firm giving the reference must include information where ‘disciplinary action’ was taken against the individual that relates to something they did or failed to do that amounts to a breach of individual conduct rules. ‘Disciplinary action’ has a wide meaning, and includes not only obvious matters such as the dismissal of the individual for misconduct or gross misconduct, or the issuing of a final written warning, or where the individual’s variable compensation was reduced or clawed back due to a conduct breach, but also where the individual was suspended (except where the investigation was still pending);
•  The prescribed template also has a section where the firm giving the reference should provide all other information which it reasonably considers to be relevant to the hiring firm’s assessment of whether the candidate is fit and proper, including for example if there is information about mitigating circumstances that go some (or indeed all) of the way to explaining why a person behaved as they did;
•  The obligation to give the reference arises irrespective of any terms restricting confidentiality or the making of derogatory statements contained, for example, in a settlement agreement.

You do not need legal training to see that the candidate’s current or former employer is potentially in a position of some power, given its obligations and rights to provide the regulatory reference to the prospective employer under the new rules. A lot could stand and fall for the individual, depending on what is said in the reference, and how it is said.

We are regularly instructed by individual clients, in a wide range of circumstances, who do not trust their current or former employer to present alleged conduct issues in a balanced way in a reference. It is true that it is often the case that where there has been alleged or actual misconduct by an individual, institutions have their own reputations to protect – and their own agendas.

One of the most perplexing parts of the proposed new regulatory references regime for the individual has been the lack of an appeal against a negative or imbalanced regulatory reference.

Whilst there are often other levers that can be pulled in any given scenario, and whilst the individual does have common law rights to have the reference prepared with due skill and care, and for it to be true, accurate and fair, based on documented fact, and not be defamatory, this lack of explicit control by the individual over the process has been a concern.

With that in mind, the regulators’ policy statements are helpful as they identify that fairness will normally require the firm giving the reference to first give the individual an opportunity to comment on prejudicial information in it. This is not the same as a right of the individual to edit the reference. However, the guidance is clear that, if the firm has not provided the employee with any opportunity to comment on the information, it must do so, and before the reference is given. The firm must then take the individual’s comments into account when considering whether something should be disclosed, and how the disclosure is drafted, in the reference.

The new regulatory reference rules will come into effect on 7 March 2017, until when transitional arrangements remain in effect.

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Being a whistleblowing champion

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Is employment law due an upgrade?

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Arpita Dutt and Paul McAleavey take a look at the state of employment law following Deliveroo’s recent pay rows.

It’s not just the characters in Downton Abbey that have servants at their beck and call. We all know in a few clicks or swipes you can have a cleaner (Handy), a driver (Uber) or a meal (Deliveroo) at your door. The growth of Uber in London has put almost 13,000 additional private hire vehicles on London’s roads.
Is it right, therefore, that this exciting, on-demand industry is still regulated by laws which largely date from twenty years ago in the Nokia age, when mobile phones were owned by just 16% of the population?
Deliveroo founder William Shu thinks not, criticising UK employment law as being based on “laws drawn up years ago” that may be “less relevant for today’s economy”. His comments came in the midst of Deliveroo’s highly-publicised spat with its delivery drivers, who objected to new employment terms that could see them paid less than the minimum wage.

When is a contractor not a contractor?

The hidden cost of relying solely on self-employed contractors is the lack of legal protection for those individuals. Businesses may also be exposed to legal claims if the true situation is that the business has in fact engaged workers or employees. Self-employed contractors have no protection from unfair dismissal, have no entitlement to the national minimum wage or living wage and are rarely paid during holidays or periods of illness. Individuals working for Uber have launched legal claims, backed by the GMB trade union, to change all that and attain worker status based on the reality of their relationship.
Tech startups who seek to rely on cheap and efficient methods by engaging self-employed contractors need to be aware of the risks. Failing to distinguish between an employee and a truly freelance contractor can be one of the most expensive but easy mistakes a business makes. The question of what makes an employee is one the courts have grappled with for many years. As unbelievable as it may be, the courts and HMRC do not have an agreed definition of what defines an employee.

The terms of the contract between a startup and the contractors will only be part of the picture. An employment tribunal will look at the reality of the situation – if it is the case that the individual is an easily-exploited servant at the beck and call of a master (think of the Uber model), the likelihood is that they will be judged to be a worker or employee. To top it all off, the tech startup would be exposed financially. Not only would it face recovery of underpaid tax and national insurance contributions from HMRC (which can go back six years), they could face claims from the newly-established employee for non-payment of the national minimum wage or holiday pay and perhaps an unexpected claim for compensation for unfair dismissal if they are found to be an employee.

Achieving an agile business with a flexible workforce is not the holy grail

It is not surprising that some companies view employment law as inflexible, costly, burdensome and stifling for growth and innovation. However, the UK employment market is one of the least regulated in Europe and the law here is certainly more employer-friendly than the equivalent workplace laws in France, Germany or Italy. Every employee in Britain is on a probationary period for the first two years of their employment – as it is only once they reach that stage that they acquire unfair dismissal rights. Up to that point, an employer can dismiss any employee for any reason (provided it is not due to discrimination, whistleblowing, or a small number of exotic reasons). All the employer needs to do is give the employee the right amount of notice. Even when employees reach two years of service and attain unfair dismissal rights, the prospect of them successfully suing their employer is now more remote than ever. The requirement to pay fees totalling £1,200 to bring an unfair dismissal claim has deterred many would-be litigious employees, with the number of claims being handled by the employment tribunal dropping by 80%.

Protecting businesses – the important of the bespoke service or employment contract

London’s tech firms could do worse than move their gaze away from the Silicon Roundabout and look at how financial services firms in the City, Mayfair and Canary Wharf have overseen a period of growth and increasing profits by relying on employment or partnership employment and remuneration models as a means to engage their staff. The much-vaunted John Lewis model, in which employees own a stake in the business and share in its profits, has been rolled out to other industries. The law firm at which I work, Brahams Dutt Badrick French LLP, operates a firm-wide points-based profit-sharing scheme for employees. There is no reason why an innovative tech startup could not follow a similar path.

The cost of getting it wrong

Tech startups should keep an eye on the legal claims brought against Uber and Addison Lee. If the judgements are in favour of the drivers, this could open the floodgates to many other claims from the estimated 1 in 7 of the UK workforce who are currently categorised as “self-employed”. While Deliveroo sought to avoid this by amending their drivers’ contracts to include a promise not to sue the company, these types of clauses are automatically void.
The number of models of ‘employment’ that UK employment law enables, coupled with a basic understanding of rights and obligations means that tech companies can still retain an agile workforce that suits their strategy and business model. To use a tech analogy, I would say that employment law is more like the iPhone 6 than the Nokia 3310, although some still hark back to the Nokia age.

A version of this article first appeared in Tech City News (www.techcitynews.com) in September 2016.

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Jumping ship: Partners and fee earners first!

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There are few matters that are more likely to make your Managing Partner wake up in a cold sweat than their key fee earners being poached (or, to use the less emotive term, being “laterally hired”). The loss of a vital partner to a competitor, with their valuable client connections, would be bad, but when the entire team jumps ship with that rainmaker, the impact for the losing firm can be enormous.

Firstly, there’s the obvious impact on the fee income. But also the former firm must ensure that client relationships are maintained and the ship is steadied. The firm will be particularly keen to send a strong message, not only to warn the departing team off breaching their obligations, but to send a message to the remaining partners and fee earners so they don’t follow suit.

English law allows employers to restrain their departing employees’ abilities to earn a living, but only in a way which goes no further than to protect the former employer’s legitimate commercial interests. It is an area ripe for litigation and a rogue word in a contractual restriction is enough to make it held to be an unenforceable restraint of trade by the court. And who in the world is more likely to want to argue about the minutiae of contract wording than two rival law firms?

At the heart of these disputes are the post-termination restrictions that the departing team owe their former law firm. If their employment contracts were not kept up to date, there is a strong chance that the non-compete and non-soliciting restrictions contained therein are now unenforceable.

In addition, if the partner was a “traditional” partner in a “traditional” partnership (not an LLP), they will have owed fiduciary duties to their former firm. These include the duty not to let their own career interests conflict with the firm’s commercial interest – perhaps by encouraging their team to leave.

Poaching firms will also be understandably concerned. Despite the best will in the world from the partner they have just hired, there will inevitably have been some breaches of their duties evidenced by one or two emails or text messages. WhatsApp messages are not immune either – and any evidence that the poached partner tried to coax their team to join them will be potentially discoverable and definitely disclosable. That team being distracted by a High Court action from their former firm will be the last thing the poaching firm wants.

As a result, a commercial discussion commonly follows the threatening of or issuing of such a claim. Such agreements can provide for settlement terms as imaginative as the parties want and can include early release (where the poached team or partner are released early from their garden leave periods, allowing their former firm a period of calm to preserve relationships with clients), run-off (where the old firm retains entitled to receive the fees earned by the team before their move), split-off (where the team’s client list is hived up between the firms) and profit-sharing, where the poaching firm agrees to split the profits they make from the new partner or team for a fixed period of time.

Paul McAleavey

A version of this article originally appeared in Solicitors Journal on 5th October 2016.

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Professional relationships: how close is too close?

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EY recently made headlines when they came under scrutiny from the US Securities Exchange Commission (SEC) for allegedly breaching auditor independence rules, which require a degree of separation between auditors and the companies they audit. Gregory Bednar, a partner at EY, had, according to the SEC, sent hundreds of personal messages to the CFO of its client and they had travelled together with family members for no valid business purpose. Significant fines resulted. These headlines raise an interesting question as to some of the legal, regulatory and employment law issues that can arise when professional relationships with clients or colleagues become personal.

Rolleen McDonnell and Paul McAleavey

A version of this article firsted appeared on Economia http://economia.icaew.com/business/september-2016/professional-relationships-how-closeis-too-close

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I’ve been appointed as a Whistleblowing Champion – Help!

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In light of the strength of public and political concern regarding misconduct scandals in banking and financial services, the regulators were determined to ensure that there was a stronger whistleblowing culture within the sector. The whistleblowing champion is to ensure accountability at the most senior level for the way whistleblowing is handled and how whistleblowers are treated.

What will I have to do?

Quite a lot. It is your role to ensure the implementation, integrity, independence and effectiveness of a firm’s policies and procedures on whistleblowing by 7 September 2016. The buck stops with you as part of your statement of responsibilities, and any failures in implementing these processes will lie at your door. It is a heavy burden of responsibility. It’s made heavier still because individuals working for financial firms may be reluctant to speak out about wrongdoing for fear of suffering personally. Mechanisms within firms to encourage people to voice concerns – by, for example, offering confidentiality to those speaking out – can provide comfort to whistleblowers.

It will be important for you to create a culture of confidence for employees to report those concerns, enable the escalation of concerns to an appropriate regulator or law enforcement agency, track the outcome of whistleblowing reports, provide feedback to whistleblowers and take reasonable steps to protect whistleblowers from victimisation. Whilst there is no regulatory duty on staff to blow the whistle or a regulatory duty to investigate whistleblowing disclosures, ignoring whistleblowing reports may well be perilous.

Your duties entail:

• overseeing internal processes to ensure all colleagues’ disclosures are handled properly. This process should also deal with disclosures by secondees, interns, volunteers, contractors, customers, agency staff, suppliers and even employees of competitors;
• informing UK-based workers about the FCA’s and PRA’s whistleblowing services, and ensuring they know they can approach the regulator directly without first raising a concern within the firm;
• oversight of the provision of appropriate training for UK-based employees and managers;
• reporting to the regulator if the firm loses an Employment Tribunal claim for whistleblowing (where the finding relates to a claim that the whistleblower was victimised); and
• presenting an annual report to the board and making it available to the regulator.

How do I know if a concern amounts to whistleblowing?

Whistleblowing disclosures can contain a breach of any regulatory rule, failure to comply with a firm’s policies or procedures and any behaviour that harms or is likely to harm the firm’s reputation or financial wellbeing. So, carte blanche really. Not all reported concerns will fall within whistleblowing law but you should take them seriously.

You may be relieved to know that it will not be for you to judge whether a particular whistleblowing disclosure is genuine or not. The process and training of managers should be robust enough to sift out and prioritise the concerns that are raised and how they should be dealt with. It will be your responsibility to stress test the processes. This will mean working closely with business units to implement the new regime, and receiving regular updates and reports on the progress of implementation in the coming months.

Where can I look to for support?

Although the FCA and PRA have set out their own requirements, the Department for Business Innovation and Skills has published guidance for employers and a code of practice on whistleblowing. The charity, Public Concern At Work also provides examples of good practice.

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Hiring and Firing the Board

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