tweaking your business for success in 2014
TRANSCRIPT
10 FEBRUARY 2014
Tweaking your
business for success
in 2014
DAVID WILLIAMS, KATHRYN
DOOKS AND MICHAEL CASHMAN
Strategic exits – taking advantage of the legal framework;
Tactical promotions and demotions - changing duties and
responsibilities and reporting structures;
Performance management – process and practice, including ways of
cutting to the chase;
OrgVue – a practical perspective;
Incentives – bonus and stock options – an overview of relevant
considerations; and
Dealing with the competitor threat – anti-poaching and protecting the
crown jewels.
Today’s session:
Strategic exits – taking
advantage of the legal
framework
Unfair dismissal rights – 2 years’ service
– if so, potentially fair reason or reasons – something to rely on
– implications of following the process:
- time
- impact on other staff/business/client relationships
- potential outcomes/risks
Contractual considerations
– right to terminate with immediate effect
– standard notice/garden leave
– PILON/restrictive covenants - Société Générale, London Branch v Geys [2012]
– exit arrangements – enhanced redundancy terms
– incentive arrangements – bonus, options, shares etc
– Expect the unexpected – discrimination, whistleblowing etc
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Strategic exits – taking advantage of the legal framework
Hard considerations
Soft considerations – what is the employee like, how will they react and what
motivates them?
Redundancy
– Diminished requirement for work of a particular kind/in a particular place, with employee
being consulted on:
reason for the proposal
ways of avoiding it
potential for “pooling”
potential for “bumping”
if appropriate, selection process and criteria
potential for alternative roles
Caution: TUPE/discrimination implications/maternity leave/collective consultation
obligations
– Business reorganisation – SOSR
Capability
Conduct
Some other substantial reason
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Potentially fair reasons for dismissal – having a story to tell
Personality clashes
– redeployment
– changing work patterns
– potential for mediation
Perkin v St Georges Healthcare NHS Trust [2005]
Pressure from third parties
– reason for the request is irrelevant
– but employer must consider injustice to the employee
Reputational risk
Leach v The Office of Communications (OFCOM) [2012]
Breakdown in trust and confidence
– the employee is responsible for the breakdown
– the position cannot be retrieved
Handshake Ltd v Summers [2012]
_6
Some other substantial reason
Performance without the
palaver
Standard protracted process
– clear warning of potential outcome
– reasonable targets
– reasonable review period
– reasonable support and mentoring etc
Abbreviated process
– negligence
– senior/specialist employees who should know better
Strategic considerations
– potential for process to be successful – inherent risks
– time considerations and management commitment
– cutting to the chase:
- when to offer a deal - at outset or during the process (having given it a go)
- how to approach the offer - protected conversation or traditional approach
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Performance without the palaver
Cutting to the chase and
common mistakes
Protected conversations – a dangerous animal
– apply where no existing dispute
– but only:
- in relation to unfair dismissal claims
- where there is no improper behaviour
- the employee has a reasonable period to consider the offer
Traditional without prejudice rule
– require existing dispute
– genuine attempt to settle that dispute
– no “unambiguous impropriety” – such as blackmail, fraud, physical violence or unlawful
discrimination
Encouraging the employee to come to you
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Avoiding the process – a surgical approach
Failing to have a properly considered strategy from the outset:
– potentially fair reason
– approach to process
– potential for discrimination, whistleblowing issues, etc
– applicable contractual considerations
Open conversation (or email trail) inferring dismissal has been determined from the outset
Potentially fair reason falling over
Without prejudice status being undermined
Unintentionally breaching employment contract
– suspending without contract right
– making notice payment without PILON
Facing the bite of collective consultation obligations
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Common mistakes
Tactical promotions and
demotions and change to
terms and conditions
Consent to change by employees
Express agreement
Implied agreement
– employee continues to work without objection to the change
– provided that the change has immediate impact – Aparau v Iceland Frozen Foods Plc
[1996]
Right to make changes without employee consent
Changes expressly authorised by the contract:
– flexibility clauses are given a restrictive interpretation by the courts
– the implied terms of trust of an employment contract may curtail the operation of the
term - United Bank v Akhtar [1989]
Unilateral imposition of change
….which may provoke the following responses:
– employee working under protest
– employee resigns and claims constructive dismissal
– employee refusing to accept the revised terms
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Ways of changing arrangements
SOSR
employee needs sound business reason for the change
the advantages to the employer of making the change must outweigh the disadvantages to
the employee of the dismissal, taking into account: – the employer's motives for introducing the changes;
– the employees' reasons for rejecting the changes;
– whether the employees were given reasonable warning of the proposed changes;
– whether the changes and full effect of those changes have been sufficiently and clearly explained to the employees;
– whether the employer has undertaken an assessment of the impact of the changes on employees and whether it has
considered alternatives to any changes;
– whether the employer has attempted to obtain the employees' voluntary agreement to any of the changes;
– whether a reasonable and genuine consultation process with the affected employees has taken place;
– whether a majority of the employees affected have accepted the changes; and
– whether any recognised trade union recommended or objected to the changes.
Redundancy
Potential to make staff redundant and offer new roles as alternatives
- demotions – potential new role above existing role
- enforcing changes by shifting location of function
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Terminating employment and offering new terms
Failing to adopt a clear strategy from the outset taking into account:
– the potential impact of the change on the role – viewed objectively
– how the change will be viewed subjectively
– how the change will be presented, by whom and how
– the potential to persuade the employee to accept the change
– if the employee is not prepared to accept the change:
- ways that it can be made more palatable – such as dotted reporting lines
- the strategy for implementing the change
- employee consent – always best
- relying on contractual right to make change
- enforcing the change
The potential for collective consultation obligations to bite
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Common mistakes
JUNE 2012
FEBRUARY 2013
Introduction to OrgVue
OrgVue revolutionizes organization management by combining many capabilities in a single product
OrgVue capabilities
1 BUSINESS INTELLIGENCE
Database, data
warehouse and data
cubes
Linking multiple
systems
Data visualisation
HR specific IP and HR
analytics
2 ORG CHARTS AND WORKFORCE PLANNING
Org Charts
Matrix reporting
What-if and scenario analysis
Spans and depth reporting
4 PROCESS DESIGN AND COSTING
Process definition,
mapping and costing
Accountability matrix
mapping (RACI)
Mapping processes to
customers and Cost-to-
Serve
3 TALENT MANAGEMENT
Succession planning
9-box grid
Competency mapping
Objective mapping
Flight risk analysis
PLUS ORG DESIGN AND MODELING
Org Design Revolutionary
modelling
PLUS POWERFUL DATA TOOLS
Drag-and-drop
data cleansing
Surveys and
web forms
Incentives
Main types of incentive
Salary
Bonus /
commission
Pensions
Life Assurance
PHI &
medical
insurance
Shares /
share
options
“Soft”
benefits
Incentives
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Contractual or discretionary?
– Exercise of discretion
– Honestly and in good faith
– Not arbitrarily, capriciously or irrationally
– Implied duty of trust and confidence
– Custom and practice
Nil bonuses
Ability to amend/withdraw the scheme
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Financial incentives: contractual or discretionary?
Entitlements of “Atypical” staff
What happens on termination?
Salary sacrifice
NB: FCA Remuneration Code/bonus cap
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Financial incentives: other considerations
Defined benefit or defined contribution?
Pensions auto-enrolment:
– Staging date
– Do your current arrangements suffice?
– Scheme
– Contributions
– Communications with staff
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Pensions
Ability to amend/withdraw the scheme
Don’t over-commit
PHI drawbacks
Alternatives:
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Benefits in kind: considerations
Vouchers Gym Duvet
days
Company
choir Working
from home Phone/laptop
Vouchers
Why incentivise employees with shares or share options?
Is it better to issue shares or establish a share option plan?
EMI Plans – are very flexible and designed for growing companies
EMI Plans are also very tax efficient:
– No tax on exercise of options
– Capital gains tax when the shares are sold
– Entrepreneurs relief is available
– Tax deduction for the company
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Shares/share options
Dealing with the competitor
threat
Automatically vest in the
employer if created during
the course of employment
NB: contractors / workers /
self-employed
Contact lists?
Software code?
Website “look and feel”?
Intellectual Property
IP
Patents
Copyright
Trade marks Designs
Databases,
domain names
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Type of information Protection available at law
Trade secrets Implied duty during and after employment
Confidential Information Implied duty not to use / disclose during employment
Employee’s skill and
knowledge
If owned by the employee, they can use it
Public information Cannot be protected
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Confidential information
Do your contracts include express provisions to protect Confidential Information after
employment?
Do they clearly define what Confidential Information is?
Are you policies and procedures consistent with this?
Protecting confidential information and customer connections
Void unless:
– Go no further than is necessary to protect legitimate business interest
Ensure narrowly defined:
– Geographical scope
– By reference to employee’s duties
– Duration
Matrix of application to different levels of staff
What happens on a TUPE transfer?
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Restrictive covenants
Employment Team
David Williams
Head of Employment
020 7710 16041
Kathryn Dooks
Employment Partner
020 7710 1660
Virginia Allen
Senior Employment
Associate 020 7710 1654
Elizabeth Kirk
Employment Associate
020 7710 1616
Anna Byford
Employment Associate
020 7710 1665
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Amy Douthwaite
Employment Associate
020 7710 1622