GC focus: Employment law priorities

Employment law priorities for in-house counsel

The link has been copied to your clipboard Okay

Article

15 mins read

Updated on 5 September 2024

Our subject expert
Simon Gilmour

Partner and Head of Employment Law

As the General Counsel (GC) or sole in-house lawyer of a fast-growing business, we understand you are likely juggling responsibilities across multiple disciplines, including employment law. If employment law is not an area you've specialised in or had much experience of, knowing how to manage some of the higher stake employment matters you're likely to encounter will help position you as a key strategic partner to your leadership team. This guide is designed to help empower you in these areas by highlighting the main priorities to consider.

While many tasks that land on your desk are manageable, there will be moments when the complexity or level of risk require specialised expertise. Our employment law solicitors are here to support you in navigating these high-risk situations and help you in your role as a strategic advisor in the leadership team.

Every business has a unique workforce composition, varying in size, location, and staffing models. From traditional employees to contractors and agency workers, understanding your company's workforce structure is essential.

In the UK, staff may have different categories of employment status . This is a fast-changing area, but for now the categories of staff are: employee, worker or self-employed (eg contractors/consultant/freelancer).

Different legal rights apply depending on a staff member's employment status. For example, employees are entitled to the core legal protections, such as the right not to be unfairly dismissed, the right to a statutory redundancy payment, and notice periods. Workers and the self-employed get very few rights in comparison. Employment status also affects how staff are taxed and the liabilities can be costly if you get it wrong.

Strategic priorities:

• Map out your workforce, from senior management to frontline staff, to gain clarity on the different roles, functions, and employment arrangements within your organisation.
• Work with your HR and procurement teams to make sure the right contracts are being used when onboarding new staff.
• Conduct a workforce audit to identify potential employment status misclassification risks, including whether IR35 may apply and implement corrective measures.

Recruitment and legal risks As a GC, you may need to partner with your HR and recruitment teams on different legal issues that can arise when hiring new staff. One of the key considerations for any GC is making sure company recruitment processes comply with the Equality Act 2010 (EqA). The EqA prohibits discrimination related to protected characteristics such as age, gender, race, and disability. This means that job advertisements, interview processes, and hiring decisions must be carefully managed to avoid claims of discrimination.

Additionally, right-to-work checks are a legal requirement in the UK. Employers must verify that all employees have the legal right to work in the UK, and failing to do so can result in substantial fines and damage to the company's reputation. It's also critical to ensure that any pre-employment background checks comply with data protection laws.

Strategic priorities:

• Together with HR teams, develop inclusive recruitment policies . Train staff involved with recruitment on topics such as compliant job advertisements, carrying out background checks and questions to avoid asking candidates during an interview.
• Check current processes around right to work checks. Immigration rules change quickly - our immigration and employment experts work closely together and can provide alerts to you and your HR and recruitment colleagues.

Employment contracts Hiring talented employees comes with enormous benefits, but potential risk too. Depending on their role, employees might be handling commercially sensitive information or creating significant amounts of valuable IP. In a worst-case scenario, they might leave the business for a competitor. A well-drafted employment contract that protects the business from these risks is worth the investment.

Alongside all the basic terms such as start date, job title and remuneration, employment contracts should include certain business protection terms, particularly for senior or key employees. This includes well-drafted notice periods, robust definitions of confidential information, terms and conditions around the vesting of employee-created IP, and post-termination restrictions preventing employees from soliciting or dealing with customers and staff after they leave.

Template employment contracts are great for efficiency. However, take care to ensure that templates are appropriate for the role or level the business is recruiting for. A basic "off the shelf" contract will rarelyprovide the business with sufficient protection when hiring senior or key employees.

Strategic priorities:

• Work with HR and recruitment teams to audit your current HR templates and employment contracts. Work on a system for choosing which template to use in different hiring scenarios. Review templates and make sure they include core protections for the business.
• Review a sample of employment contracts at each level of the business, from senior leadership to early career employees. Identify and remedy potential risks in the contracts (eg lack of post-termination restrictions in senior management contracts).
• Review and update your templates periodically (we recommend annually) so they stay up to date with legal developments. We expect a significant raft of changes in employment law in the coming year and can advise you on the most efficient way to update your documents.

Equality laws and discrimination As stated above, the EqA protects employees and workers against discrimination related to protected characteristic such as race, gender, pregnancy and disability. This includes protection against direct and indirect discrimination, harassment, and victimisation. While GCs may not be involved in every people-related decision, it is crucial for them to ensure that company policies and practices are inclusive and non-discriminatory, particularly in areas such as performance management, disciplinaries and grievance, promotion and reward decisions, and employee terminations.

As a GC, we understand that your role isn't just about managing individual cases, but about overseeing the bigger picture. This involves monitoring patterns and trends in complaints, grievances, and claims to identify any systemic issues that might indicate underlying cultural problems within the organisation. By fostering collaboration between legal, HR, and senior management, you can help create a workplace culture that promotes inclusivity and minimises the risk of discrimination claims.

Failing to address these broader issues can lead to discrimination claims in an employment tribunal, which carry significant financial risks and can become public, potentially damaging the company's reputation. This means it's essential for GCs to take a proactive approach, ensuring that the organisation not only complies with the law but also strives to build a fair and inclusive work environment.

Strategic priorities:

• Monitor trends in staff grievances, exit interviews and claims to identify any patterns or trends that may indicate systemic issues or areas where the company's policies may not be as inclusive as intended.
• Partner with HR to ensure that all company policies, particularly those related to performance management, disciplinary actions, grievances, promotions and terminations, comply with the Equality Act 2010 and promote inclusivity.
• Support HR in a programme of training people managers and all staff on equality and diversity, ensuring that everyone is aware of their responsibilities and the importance of maintaining a non-discriminatory workplace.
• Engage with senior leadership to discuss the importance of an inclusive culture and the potential risks of discrimination claims.

Managing executive terminations Dismissing senior executives and business critical employees can be some of the most sensitive and risky people issues you can be involved in as a GC. Alongside legal risks, senior exits often come with significant financial and operational risk, meaning a strategic approach to implementing these exits is needed from the outset.

In the UK, senior executives are often employed by the business under detailed employment contracts known as service agreements. These include key terms around notice periods, garden leave, confidentiality, intellectual property, restrictive covenants and remuneration, sometimes including high value benefits such as bonuses and LTIPs, which will all be relevant when dismissing a senior employee. If the senior executive is also a statutory director of the company, the service agreement will include terms relating to their duties as a director, but you will need to approach directorships from a corporate governance perspective too.

Before implementing an exit of a senior executive, it's critical the Board is aware of all termination payments and other benefits to which the executive may be entitled on termination. Some businesses may need shareholder approval before making these payments or have market disclosure requirements. A thorough review of the service agreement and accompanying bonus and share plan rules should inform the contractual entitlements.
. click apply for full job details