As we said we said to assist us in taking instructions from clients in a structured, methodical and cost effective way we use a special checklist. Simon Steen, the principal of Steen & Co Employment Solicitors, has dealt with hundreds of termination package negotiations for senior executives over the last 27 years, obtaining millions of pounds for his clients. Our form grows and grows over the years as it is now on version 29.
If you decide to use our services completion of this form will assist in the process and will save time and expense. Of course, you do not have to complete it as we will be more than happy to discuss these matters over the phone or in a meeting whether during or after office hours. The form itself is a simple and cost effective way of getting instructions from you. Rather than ask you lots of questions in a meeting or on the telephone, at your expense, we simply send the form and ask you to complete it.
It contains five separate notes on different topics that we consider important to raise at the outset. To assist those dealing with terminations we set them out here:
NOTE 1 - Share options and restricted shares.
There are many scheme variations. You need to be aware of them as soon as possible. Issues include when options vest, when vested, when they have to be exercised by, what happens on termination to a) vested but unexercised options and b) unvested options. Do not rely on the letters of grant or even explanatory leaflets given out by the Company – we have experience of these being wrong. It may be that you need to get a copy of the scheme rules for each of the option grants you have. Talk to us about these issues as soon as possible. Provide copies of the grant letters and scheme rules to us as soon as possible. The same issues apply to restricted shares.
NOTE 2 - Dismissals
In many cases, it is important to seek to stay at work, in place and without any announcement being made about your departure. We have raised this point now in order to give early notice of it. Sometimes executives agree heads of terms and then allow the Company to make internal and external announcements of the fact that the Executive has left or will leave. This can remove a lot of negotiating strength and force your hand to accept whatever terms are offered. This note isn’t the appropriate place for specific advice but in general terms we see it as better to stay at work while the negotiations continue and certainly not to allow the Company to make an announcement. In fact, if you are agreeing the heads of your departure ensure that the Company knows that under no circumstances can it make any announcement of your departure until the termination or settlement agreement is signed. The same point about not making an announcement goes for you as well: - don’t tell anyone, not even close colleagues or friends at work that you are leaving until the ink is dry on the agreement. So to repeat ourselves, your negotiating position is usually highest when you are in the office doing your day to day work while no one knows. Clearly, sometimes you can’t affect this but in the majority of negotiated executive departures the Company will want to do a deal quickly if you are in place and still working and this works in your favour. Obviously if you are ordered to leave you must comply. Conversely (!) there are also some cases where being excluded from the Company for some time can work in an executive’s favour as this makes it more difficult for a company to get the person back into the office so as to (pretend) to carry out a fair procedure.
NOTE 3 – Settlement Agreement Warranties
If you are facing dismissal you will be naturally thinking about getting another job. This note concerns the compromise or settlement agreement that you may end up signing with your employer or ex employer. In our experience, most settlement agreements now in use have a clause saying that you ‘warrant’ that you have not got another job or any offer for any position that will bring in any form of income and that you have no immediate expectation of getting such an offer. It is a reasonable clause for a company to impose as no company wants to give departing employee lots of money only to find that they start a new job immediately afterwards. This note therefore serves as a warning. You might be required to sign such a warranty and if you do and are found to have breached it you probably won’t get the money. Our advice is that under no circumstance should you put yourself in the position of having breached a warranty. There is an article on this subject on our website called ‘some issues with settlement agreements’ which we advise that you read. However, that said it is a good idea to record all job search activities you do so that in the rare event of one of our clients ending up in tribunal you will have evidence of what steps you have taken to find alternative employment. Obviously, this record should not be shared with your employer at this stage. The article on our website also deals with the important subject of ‘tax indemnities’ in settlement agreement and explains our thoughts. As we said, we advise reading the entire article if your matter involves a settlement agreement.
NOTE 4 – TIME LIMITS
If your matter involves dismissal or discrimination, then it might end up in an employment tribunal. Almost all cases settle well before tribunal. However, we should still fix the time limits in our minds now. If you have already been dismissed, please tell us immediately. If you haven’t been dismissed, we must still discuss this issue which is why we ask for proposed dismissal date.
Tribunal claims must be lodged in the tribunal within 3 months minus a day of the dismissal or of the discrimination. The compulsory ACAS pre-action conciliation process can extend the period by up to a month but ACAS must be contacted during the original period. We should, at this stage, work with the fixed time limit of three months minus a day. The date of the termination of your employment is usually known. If you work during your notice period, then it is the end of that period. However, if you received no notice or a payment in lieu of notice then the start date will be when the Company said your employment ended or perhaps the last day you worked. If this is relevant, please work out when you think the time limit started as soon as possible and let us know by email and on the phone and let us both fix the date firmly in our diaries.
NOTE 5 – HOLIDAYS
If you are to serve any or all of your notice period on garden leave the question of holidays is important. Some companies require you to take your outstanding holiday in the notice period and have a contractual right to require you to do so. Others don’t have this right and/or don’t make this a requirement. Instead they allow you to accrue holiday in the notice period. If this is likely to happen then our normal practice is to remain silent so as not to ‘tip off’ the company that you are going to accrue more holiday. Clients often ask us ‘what happens if I go on holiday during the garden leave period’. The answer is ‘it depends’: most garden leave letters require the employee to remain available for work and/or contactable and as such if you go on unauthorised holiday you will both be in breach of these requirements and potentially be committing gross misconduct or at least misconduct. Clearly, you can book holiday normally even when garden leave has started but in doing uses up some of your holiday allowance. If you have already booked holiday before being put on garden leave but that holiday will take place during the garden leave period, then you could try and cancel it if in the circumstances it would be inappropriate to go on holiday. The danger with this, of course, is that the company may ‘see through’ this and either refuse to allow you to cancel the holiday or worse allow you to do so but make it a requirement that you report to the office every day during the period of what would have been your holiday. What we don’t advise is going on unauthorised holiday as this is likely to be a breach of contract. This note serves to bring these issues to your attention at the earliest stage. Please discuss these issues with us if there are any concerns.