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Common Issues
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You have been with the company for more than a year. When you joined the company you brought several large customers. You have just been given a service agreement to sign. However, it contains some clauses which would restrict you from taking customers with you if you left the company. Do you have to sign?
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You have received a service agreement from the outset. Despite this, there may be references to these restrictions in your offer letter or other documentation. You may be entitled to refuse to sign and it may also be reasonable for the company to have some protection depending on the nature of the business. We could advise you on this and help you negotiate more appropriate restrictions.
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You hold a senior position within a large company. Your career progression has been rapid and you have been identified as the successor to a senior director who will retire in six months. However, your new boss, who was appointed four weeks ago has told you that he will not promote you as you do not have the right skills for the job. What can you do?
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We need to identify what has been promised and what conditions are attached. Often, decisions of this kind are arbitrary and subjective and can be challenged through the grievance procedure. There are a range of possible outcomes, from promotion to constructive dismissal. We can help you achieve the best possible
outcome.
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Following a recent merger you have been told that you are redundant. You have been offered a significant redundancy payment. How has it been calculated? Are you entitled to more? Is the company dealing with you properly? What happens next?
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Often, particularly with senior staff, companies choose not to follow proper procedures. Instead, they offer an element of compensation for unfair dismissal and/or breach of contract. The calculation can be quite involved, taking into account all benefits, including shares, pension and tax issues and also your prospects of finding alternative work. We can negotiate with the company on your behalf to maximise the value of the severance agreement.
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You have given notice to leave the company. Your bonus, which is due, has not been paid. Your boss says that payment is discretionary but your colleagues have all been paid. Is that right? What happens to your share options in these circumstances?
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Bonus arrangements are often described as discretionary but once targets are agreed and an employee starts to achieve those targets then the bonus will usually become contractual and therefore enforceable. The fact that colleagues have received bonus payments strengthens your position because when your company exercises discretion it must do so fairly between employees. However, there may be conditions to the bonus, such as a requirement that you are still in employment on the date the bonus becomes payable or you have not given notice. Share option rights are usually set out in specific agreements. Rights will vary but you may lose options once notice has been served particularly where options have not vested. You should take advice before you give notice.
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You have been headhunted to work for a competitor. There are three pages in your service agreement with the company concerned with restrictions on working for your competitors, dealing with customers and offering jobs to members of your old team. Precisely what are you not permitted to do? You have received a threatening letter from the company’s solicitors. Where does this leave you? Does this mean you could end up in court?
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Many service agreements contain these ‘restrictive covenants’. They can be difficult to enforce because they have the effect of restricting individuals rights to move freely within the labour market. Courts will only uphold these restrictions where they are very carefully drafted therefore they can be very complicated. Many clauses, if tested in court, would fail entirely or partly. Court proceedings can also be risky and very expensive. For these reasons it is relatively rare for cases to get to court but where they do the stakes can be high – the livelihood of an individual against the protection of a company’s business. It is vital that your advisers understand all of these issues and have substantial experience of dealing with them. Averta solicitors have a wealth of knowledge and experience in this area.
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Note that these examples are illustrative only and Averta accepts no liability for reliance on these examples. If you have concerns on which you require advice, please contact us.
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