Common situations include where the creditor obtains an order for substituted service at
an address at which the individual no longer lives – but service at which address
becomes legally effective. Further, writing letters to the Court explaining why a person
cannot attend a bankruptcy hearing are almost invariably ignored by the Court and
bankruptcy orders are often made in such circumstances.
Bankruptcy has an extremely unfortunate consequence of affecting the worldwide assets
of a person.

Also the fact that the amount claimed is only modest does not preclude the making of a
bankruptcy order (as long as the amount claimed is in excess of the bankruptcy limit
currently £750), and the order will affect the whole of the worldwide assets of the
individual. Accordingly if the bankruptcy order is only for £1500 council tax and a
person’s assets are several million pounds, the bankruptcy will still result in the whole of
the individual’s assets vesting initially into the Official Receiver and subsequently into the
name of any appointed private Trustee in Bankruptcy.

An application can be made to annul a bankruptcy order. If such order is made, the
individual is deemed to never have been bankrupted.

There are two grounds to annul a bankruptcy order.

The first ground is that the bankruptcy order ought not to be made. This is a fairly
difficult ground to satisfy.

It is not uncommon for bankruptcy to be pursued following a judgment entered in default
in the County Court. The Bankruptcy Judge will not normally go behind such judgment.
In such case if it wished to contest the bankruptcy, it will be also necessary to apply to
set aside the judgment in the County Court.

The second most common ground to secure a bankruptcy annulment order is upon the
basis of payment in full of bankruptcy debts and expenses in full.

If a private trustee has been appointed then this will be considerably increase the
amount of the bankruptcy expenses. The fees of the Official Receiver, who is initially
appointed, will usually be relatively modest by comparison.

As a person has been adjudicated bankrupt, they are not able to raise money upon their
assets (which will following the making of the bankruptcy order be vested in the Official
Receiver).Accordingly if this ground is to be relied upon money will need to be raised from family,
third parties or by way of bankruptcy annulment funding. This is a specialist form of
funding- in essence in the form of bridging finance.

Once an application has been submitted to the Court for the annulment of the
bankruptcy order it is generally the case that the Official Receiver does not take steps for
the appointment of a private trustee in bankruptcy and therefore this will give rise to
significant saving in bankruptcy expenses.

Bankruptcy represents a core area of the work of this firm.

We offer an initial fixed fee interview of half an hour at a cost of £75 plus VAT. We are
pleased to undertake this by way of a telephone conference is this should be more
convenient.

If you would wish this firm to assist please contact Lawrence Rodkin (partner).

Stress levels go haywire and shoot up as crunch time approaches. The most common reasons for having these feelings of tension and anxiety are a huge workload and a very tight time frame to finish the job. Research has shown that meeting deadlines leads to more stress and panic symptoms than any other factors. Managers and supervisors are usually the first people who feel the tension, more severely in fact.

Too much stress in the workplace can hinder productivity and seriously affect an employee’s physical and emotional health. Hence, managers should keep stress levels to a minimum. If a manager can remain calm in a stressful work environment, employees are likely to exhibit significantly less stress symptoms.

Workplace stress signs and symptoms

Feeling swamped as the deadline approaches can make confidence levels plummet, making the stressed person both cranky and uncommunicative. This creates the feeling that the effort being put into the project isn’t worthwhile which can lead to a decline in productivity. Ignoring the ominous signs of excessive workplace stress can give way to bigger issues like physical and psychological problems. Here are some of the symptoms to watch out for:

• Anxiety, depression, or irritability
• Turning to drugs or alcohol to ease the tension
• Lack of focus
• Insomnia
• Loss of libido
• Stomach problems
• Tension headaches
• Muscle pains
• Socially withdrawn
• Fatigue
• Indifference
• Loss of interest in working

Excessive work stress that can have harmful health risks is caused by stressors such as extra overtime work due to cutbacks in the labor workforce, pressure to work hard to conform to company expectations, and the gnawing fear of getting fired. Another factor that triggers workplace stress is the heavy strain to perform continually at a steady rate without respite.

As the countdown clock approaches zero hour…

Employers should act as encouraging role models especially during periods when the levels of work stress are high. Preparing your staff to meet deadlines requires tact and a confident attitude, where you need to lay out the work plans and assign tasks fittingly. However, to motivate your employees to finish a project in a narrow time frame, you need to be calm, focused and creative.

Don’t force the results. Rather, invest a lot of time in planning well to ensure you get the job done on time. If you need to outsource certain tasks or hire extra workers, then do so. To lessen the pressure, call some clients and request for an extended deadline.

Start on the toughest areas of the project. Tell your personnel to get the most difficult part of the work, like resources, research and equipment, done and out of the way. Eliminating the hard tasks initially gives you a better shot in meeting the deadline. This preparatory step spearheads the path and gets everybody in the right direction.

Tell your employees to holler at the first sign of a problem. Some workers slow down when they hit an obstacle or a stumbling block. Some may even hide the problem, sometimes in protest for having to work longer hours. Find the people who aren’t cooperating well, but do it discreetly.

To save energy, make sure every employee is focused on the job. Distractions and interruptions can only raise stress levels and drain workers of their energy. See to it that they are focusing their time well in a stress-free environment.

Give your employees sufficient breaks. Working hard and continuously can’t guarantee a better result. Encourage your workers to take five to allow them to get rid of the boredom of work, get their circulation going and to restore some of their energy.

Explain everyone’s job assignment so no one gets confused. Be sure that everyone who receives their work assignment understands their role.

Make sketches and plans so everyone gets a clear picture of what needs to be accomplished. Write down what’s expected of everyone and allow your employees to respond by giving you some feedback. Make everything clear through the use of visual aids like rough drawings, charts, boxes or any materials that can convey your idea. Everyone will be able to catch on.

Prevent pressure buildup by knowing you’re doing a good job. Worry feeds on your energy. If you show signs of stress, your people will notice, and work may slow down. If you remain calm and relaxed, your mind will be more open to ideas and adopt smarter measures to improve the job. If you feel you are in control of the project, then stress and anxiety can’t get a hold on you.

If you failed to make the deadline…

Knowing that they’ll be facing a tight deadline, make sure that your work staff will be able to handle the responsibilities assigned to them efficiently. Should a delay be inevitable, ask your employees to negotiate with the clients who will be affected. Clients who could be ticked off by the delay can be pacified by just offering the courtesy of letting them know what’s going on and what you are doing to make things right.

More information in relation to Ryan Rivera can be found at http://ezinearticles.com/?expert=Ryan_Rivera, which contain a list of some key articles which he has written

Stress at Work, a guidance note to Employers

If you have a member of staff off work, due to stress or long term sickness, it may already too late! But If you can spot the signs and symptoms early enough, you can stop this from being an issue at your place of work!!

22% of workers surveyed in a study run by the OSHA (European Agency for Safety at Work) for all employees across Europe in 2011, were found to have suffered from or are currently suffering from work related stress.

The Signs and Symptoms of stress at work at fairly easy to see.

At first, an employee’s performance will change either dramatically or slowly over time and so it is vital that you have a good performance management process in place which objectively looks at an employee’s performance over time, against the key out puts of their job.

So if I am being measured against a cash output of sales, or turnover, or profit margins etc and this is falling, this will stress me out.

If I am being measured against an output of customer service and my net promoter score is falling – again this could be a stressor for me.

Others might be, projects being late, over budget or not to the right quality. Or maybe you get poor staff feedback.

Our instincts as managers is to become aggressive and tell them to, “pull their socks up!” or ” work harder!” But in reality and this is when the best managers come into their own, seeing or reading between the lines, and asking “What can I do to support, help or coach the employee back to their previous best?”

So do any of your staff have the following:-

• high/excessive workloads
• low control
• low support
• large number of direct reports or none (e.g. loan working)
• difficult staff
• strong unions
• dictatorial management
• long hours
• low income
• pressure at home
• relationship issues at home or at work
• tough client
• highly demanding and stretching outputs
• a long term illness or condition

Do any of your staff suffer from;-

• physiological conditions – such as increasing ill-health
• psychological conditions – bullying or harassment for example
• loss of productivity
• they have become quieter than usual
• or losing their temper more easily and more often than before
• increase drinking, smoking, pill popping for aches and pains
• more doctors visits
• more mistakes than is usual
• high blood pressure
• muscular conditions such as  - neck aches and headaches, back problems
  • increased absenteeism –  especially on Mondays

As a company do you suffer:-

• a Higher turnover of staff compared to your industry norms
• higher costs
• less productivity
• unhappy staff
• morale falling
• falling customer satisfaction scores
  • supply chain issues

Do you as company consider

• the education, training and skills your staff have?
• the confidence they have to do the job?
• their behaviours and attitudes they use?
• do you talk with them and consult them?

Worse still is if you don’t know the answer to the questions above, so you have an employee and you don’t know what they can do, how well they are, how they are coping, how they are feeling, what motivates them, how good they are at their jobs, what help and support they need in terms of training, coaching, mentoring, education, rewards, recognition, quality time, space, tools, equipment, the team they work in and what is required of them. Yes they may have a contract but do they know what the need to do, when and how to do it to the best of their abilities and are rewarded appropriately? And we don’t just mean wages!

A persons performance is directly attributed to the correct and appropriate use of behaviour to complete any task.

Under positive stress and for short periods of time – like a rugby match or for 24 hours before an major presentation to a major client, a person’s performance can increase – get better, as the senses heighten, we become faster, better, more passionate, driven to succeed.

If that pressure goes on for too long or is the wrong pressure on the wrong person at the wrong time, our performance dips, we start to make mistakes, slow down or rush, stop thinking, react to situations, the quality can fall and output is not what anyone wanted. This is negative stress.

If this continues, the pressure rises further and we cannot see a way out of the situation we can suffer distress – this is very bad, very bad indeed.

Now we can act like the Zebra in Africa (From Strategies of the Serengeti by Stephen Berry)  when faced with a stressful situation, like an imminent attack from a pride of lions.

Freeze –  we will freeze – do nothing, stand still hope the threat either goes away or they cannot see us. At work this manifests itself in performance dropping as we do less and less until we suffer inertia.

Flight – Run away from any threat, hope the lion can’t catch us –  at work we see absenteeism and sickness levels increase.

Fight – stand face to face with the threat and in the zebras case bite and kick out – in our case at work, lose our temper and fight with others, customers, suppliers, staff, peers and even bosses.

Flock – all stand together and hope the lion cannot see one of us from another, thus confusing the lion, at work we become unionised or set up informal work groups and gossip about the organisation, creating rifts between teams and individuals, usually around the coffee machine or in the canteen, the rumours start, the hate campaigns are launched against a manager or department.

Frolic – the zebra will mess about and play around, unaware of the threat until it is too late – we can do this too, although less common today, but still exists in the work place, where the staff play around, act the fool, use humour, take the micky out of the leadership team and tell jokes to make light of serious situations.

What is the solution?

First of all, make sure you really know your staff, or at least your managers do, so that any change in behaviour; like being 5 mins late for work in the mornings when he was never late before, is noticed and informally talked about in private to see if there is an issue at home or at work. Use a good behavioural model to profile your staff so that they know themselves and so do you. A really good value for money one is SPECTRUM based on colours and can be completed on line at www.evaluationstore.com. If you see a change in anyone’s behaviour at work which is slightly out of character, write it in your diary on the day you noticed it, ask yourself, what shall I do? Speak to them now, wait for a day or two or leave it? What action should I take? How do I find out what the issue is? Once I know, can I help? The answer is Now, Take action, Yes and yes, to do nothing is wrong!

This helps you to manage, motivate and understand your staff and so when you start to see the early warning signals before the excessive behaviours start you are doing something about early.

Secondly make sure you have a great performance management system which fairly, objectively, and transparently treats all staff equally and looks at the outputs of a job and that you use it every day, every week, every month until it becomes a part of your culture, not another task to be carried out, but instead of, thus saving time and money, motivating staff and engagement. Every company that uses a performance management process as a part of the way they manage and engage their staff, has had an increase in income, profit and morale and a drop in staff attrition rates (source CiPD).

Thirdly, at the top of your company in the core leadership team – define to the staff what you really expect from your staff, what the customers can expect too through your vision, values and mission.

Can you clearly and simply define any job using key outputs, competencies and behaviours? Can you and do you write great goals for your staff which can easily be measured? Do you regularly have 121s with your direct reports, do you coach them, do you face poor performance head on or leave it until it is too late? Do you have regular performance reviews at the senior levels? Or is it only staff who have them? Do you formally assess all your staff and do they have an annual appraisal with a personal development plan, so that they know what is expected of them for the next 12 months and what you will be doing for them? Do you review these quarterly and monthly? Do you have a fair and transparent metrics and ratings system? Do you have the tools, processes and procedures in place along with training to support your performance management? Do all the managers have the right attitude for the performance management that you have or are some cynical about it?

There is also the issue that an employer has an obligation to take reasonable care to secure the health and safety of its staff.

Special care ought to be exercised with staff who are showing signs of stress/depression. The employer should (with the employees consent and in compliance with procedures set out in the Access to Medical Reports Act) seek an initial report from the employee’s GP and/or a consultant and/or occupational health consultant appointed by the employer

If such condition is sufficiently longstanding and serious, this may give rise to the employee having a qualifying disability which is protected by the disability discrimination legislation. This requires an employer to make reasonable adjustments towards such member of staff in relation to the qualifying disability.

There is are complex and involved legal issues as to whether and when a medical condition becomes a qualifying disability and whether an employer has actual or implied (constructive) notice of such disability.

The medical advice received from such report(s) will hopefully assist the employer in being able to secure legal advice as to whether it is likely that the employee has a qualifying disability.

The legal definition of a qualifying disability very briefly requires;-

a)      the employee to have a physical or mental impairment (which includes stress/depression)

b)      the impairment to have a substantial adverse effect,

c)       the impairment effects the ability of the employee to carry out day to day activities

d)      the effect to be of a long time  nature( to have lasted or likely to last 12 months or more).

Reasonable adjustments may include allowing an employee absent due to stress/depression a phased return back to work , permitting shorter working hours, permitting the employee to start and finish work at changed times (to make travel to work less stressful)  and/or home working, as well as other adjustments.

The employer also has an obligation not to treat a member of staff less favourably on account of a qualifying disability.

Breach of the disability discrimination legislation may give rise to a substantial  award of compensation by an Employment Tribunal in favour of the affected member of staff – to include a sum for injury to feelings.

The defence of any Tribunal Claim raised by the member of staff will likely give rise to considerable legal costs to an employer. The Employment Tribunal is a no costs jurisdiction and cost orders are usually only made where a party acts unreasonably in connection with the claim or where the claim is pursued which has only limited prospects of success.

Much benefit may be secured by the engagement by the Employer of  professional advisers (to include human resources consultants) to advise and assist in connection with issues of stress at work.

Human Resources Consultants can (with the assistance of legal advice where appropriate) give a situation at an early point in time the time it deserves, to endeavour to resolve the position, before matter becomes out of control- with an employee for instance becoming absent on long term sickness leave and threatening to take legal action against the Company.

If the matter is not resolvable, the Human Resources consultant can (with the aid of legal advice), seek to resolve the matter amicably with the employee, such as the employee leaving amicably upon the basis of a compromise agreement, – which will settle all relevant claims on the part of the Employee. This will save much costs in defending a claim with the Employment Tribunal no costs jurisdiction.

Disability discrimination also effects workers-  a wider category of staff than employees- which will include casual workers, as well as self employed staff and will also benefit staff as soon as they start working- there is no qualifying period before protection is acquired as against disability discrimination, – this in contrast to the statutory right not to be unfairly dismissed.

Disability discrimination is a legal minefield, and an employer can achieve much benefit by securing professional advice at an early point in time, both in terms of increasing output/performance from affected members of staff and also in preventing claims.

Stephen Jarrett, Freelance Human Resources Consultant

tel – 01494 757013

www.sjjarrett.webs.com

This is a preliminary advice not and is not a substitute for taking detailed legal advice in relation to your situation, which may be legally complicated.

Work related stress is unfortunately very common.

This normally starts by a new line manager being appointed, who takes a dislike to a member of staff (“the employee”).

The line manager commences a campaign to attempt to make the employee leave the company.

Work is typically micro-managed and the work of the employee is criticised in respect of every single perceived fault. The employee is also typically ignored, including in particular during meetings with other members of staff, and is also typically embarrassed in front of his/her peers.

After a while, stress symptoms begin to appear, including headaches, nausea, loss of appetite, sleepless nights, hearing and feeling of heartbeat, panic attacks, loss of concentration, lack of confidence, and reluctance to go outside of the house. These are all typical symptoms.

The employee typically soldiers on without taking legal advice.

It is also relatively common for the employee at this stage be subject to a performance appraisal/and/or disciplinary procedures by their employers.

The stress condition always gets worse and eventually the employee is signed off as unable to work by their GP, and is often away on long term sickness absence.

This is normally when we are first contacted by the employee. We defend any performance appraisal/disciplinary procedures raised against the employee and also raise relevant grievances with the employer.

The situation can be much better dealt with if as soon as the campaign by the line manager commences, legal advice is taken, and grievances raised etc.

It may be possible for the employee to be moved to a different department or to report to a different line manager. It is not uncommon for the employee to leave on the basis of a compromise agreement, as they cannot face working any further for the company. This is wholly understandable.

We have a wealth of experience in dealing with situations like this. We are able to provide proactive advice as to what the employee should do to protect their position and to defend any performance appraisal/disciplinary procedures, and if possible to save their job.

We would strongly recommend to any employees who are subject to such situations not to soldier on without legal help, and to raise grievances with human resources managers of the Company to endeavour to resolve the situation before things develop to the next level.

Stress/depression if serious enough may also qualify as being a qualifying disability, invoking the protection of the disability discrimination legislation- with obligations on the part of an Employer to make reasonable adjustments- such as (amongst others) shorter working hours, a phased return to work after sickness leave, altered start and finish times (to avoid the stress of travel during rush hours), and partial working from home

We are able to offer an initial fixed fee meeting of 30 minutes for £75 plus VAT, and indeed would welcome such meeting to take place by telephone if more convenient.

Reading this article is no substitute for taking legal advice in relation to your own position as each case has different underlying facts.

Lawrence Rodkin

Partner

SIMONS RODIN LITIGATION SOLICITORS

Contact us today to learn more.

This is a preliminary note and is no substitution for the taking of detailed legal advice.  However this article does provide focus to one of the potential key issues which may arise when an employee is setting up his/her own business in competition to the business of his former employer.

It is not uncommon for employees to wish to set up their own business, in competition to their employer.

They may feel that they are successfully making profits for their current employers and that they are not being rewarded enough for their efforts or that the true value of their work is not appreciated by their employers. Additionally they may feel that they no longer wish to be subject to the control of an employer. This situation is fairly common.

Employers do endeavour to protect their business by non competition covenants, some of which are drafted in fairly onerous terms.

These will typically prevent a member of staff from setting up a competing business for a certain period of time and within a specified geographical area. Further covenants may endeavour to prevent employees within a certain period from soliciting clients/customers of the employment business and also seeking to entice away staff members.

Quite commonly such covenants are signed by incoming members of staff without considering or thinking about the same and they find themselves subject to very onerous covenants which (if legally enforceable) may lock them out of the market (or severely restrict their business activities) for a specified period of time.

Employee non competition covenants are only legally enforceable if considered by the Court to be reasonable. They are presumed to be unreasonable and hence unenforceable. This is the starting point.

The legal test utilised by the Court has two parts:-

• The first is that to be enforceable the covenant must be no wider than reasonably necessary for the protection of the legitimate business interests of the employer.
• Secondly to be enforceable the Court must not consider the covenant to be against or contrary to the public interest.

Litigation involving non competition covenants can be relatively expensive. Such legal action frequently result in an application for a pre-trial injunction (which will involve at an early point in time one or more Court appearances). Accordingly legal costs can escalate very quickly and it is not uncommon for such costs to initially mount up to significant sums.

The eventual winning party will make a claim for costs as against the other party.

Former staff setting up a new business normally have cash flow issues. The establishment of a new venture can be relatively costly  and also a new business will commonly receive only a limited flow of income for some while. As this is the case  the former employer has the tactical advantage due to the fact that litigation can be very expensive- especially in terms of the very large amount of adverse legal costs which may be claimed as against an unsuccessful opponent.

However the position is all not one sided in favour of the former employer. Employers who try to place in employment agreements very onerous covenants will find that they have weakened their position.

Covenants preventing employees from setting up competing businesses (non-compete covenants) are generally only enforced by the Court within relatively narrow limits.

Each case will be decided upon its own merits but in general to be on the safe side an employer should not require general non compete covenants to last no longer than 3 months from the date of termination of employment and also should only require such covenants to apply to within a defined geographical area in the vicinity where the employer’s business operates.

In relation to non solicitation/non dealing covenants with clients/customers, again an employer should impose limitations upon the duration and scope of such covenants. Our usual advice to employers is that such covenants should generally not be longer than six months and only relate to clients/customers with whom the employer has dealt with for a period of say 6 or 12 months prior to the end of the employment relationship.

We also further generally advise employers (when acting for them) that time periods for non solicitation/non dealing of co workers should not extend for more than six months only and relate to staff whom the employer has influence over/has dealt with say 6 or 12 months prior to the ending of the employment relationship.

Covenants more onerous than those stated above may be enforced by a Court, and it will be up to the judge to decide such issue, if the matter should proceed to a contested trial.

Each case is different and will possess background circumstances and it is advisable for legal advice to be taken for each separate matter.

It is not uncommon to find employers trying to enforce 1 or 2 year covenants which they may find to be relatively difficult to enforce.

As explained, an employer may try to obtain a pre-trial injunction, and there are stated legal tests as to whether such injunction should be granted or alternatively whether the Court should order what is known as an expedited or speedy trial. A material issue on whether such injunction should be granted is the balance of convenience between the parties and also the view of the Judge as to the likelihood that the covenants will be enforced at a contested trial.

A pre trial injunction if granted would normally be required to be supported by a cross undertaking in damages on the part of the employer. If the employer should lose at trial such cross undertaking will form the basis of a claim to the Court for compensation by the employee. The employee can claim such damages as the Court may consider just for being restricted by the grant of the pre trial injunction.

If you have non-competition covenants which if legally unenforceable will create difficulties with your start-up business, then you should seek legal advice as soon as reasonably possible.

If you wish to be very aggressive and you can apply to Court for a declaration that the relevant covenants are not legally enforceable. This is quite a powerful way forward and automatically you will be on the attack against your former employers in relation to any potential attempts on their part to stop you setting up your competing business. However such action should only be taken with the benefit of counsel’s advice that it will possess reasonable prospects of success.

In our experience, an aggressive stance may result in a compromise deal with the former employer whereby it is agreed that the covenants would be enforced for a lesser period and/or within a reduced scope or that you will only agree not to deal with or solicit certain specified clients for an agreed period of time.

Duty of Fidelity

Employees have a duty of fidelity. This includes not taking with them client lists or contact details of clients/customers when they leave. This duty is frequently breached and it is not uncommon for employees when they leave to have customer contact details on their personal mobile telephones or their personal computers etc. It is essential to destroy and not to take with you any such details. If you have been dealing with clients/customers and you know who they are, it may be possible to ascertain their contact details post termination of employment  via the internet, telephone directory, third party enquiries etc.  There is no need to take client lists or other confidential information away with you and if you do so this may cause endless potential legal problems.

We in fact have acted for an employer where we had managed to secure a pre trial (springboard) injunction against a former employee for e-mailing a client list to his personal email account. This turned out to be a disaster so far as the former employee was concerned.

This note just sets out some of the key issues. In each situation the position will be different and separate legal advice should be sought.

We finally end this note by mentioning that there can be nothing more devastating to a new business start-up when a former employer applies to the Court to endeavour to injunct the business to stop it trading.

Hence the need to deal with the issues raised in this note seriously and endeavour to overcome any potential difficulties before the business materially commences to trade.

Lawrence Rodkin

Partner, Simons Rodkin Litigation Solicitors, Offices in Bloomsbury London WC1 and Finchley North London N12

www.sr-law.co.uk

It is a great temptation when starting off a business to engage self employed consultants/contractors without any formal documentation or simply after an exchange of emails.

There are a number of dangers of doing this.

The most obvious exposure is a risk that the person(s) concerned can in reality as a matter of law be an employee and not in fact self employed.

If such person is as a matter of law an employee this will give rise to potential horrific tax and other legal implications. In particular an employer is obliged to deduct income tax in respect of employees remuneration under the PAYE system and is also liable for employer national insurance contributions of currently 13.8%.  The liabilities can mount up over a period of time, and the Revenue may also impose penalties and interest.

It is not possible for the parties to contract out of an employer/employee relationship.

Whether one exists or not is a matter of law for a Judge to decide.

There are a number of legal tests which of course will be adopted by a Judge in deciding whether or not there is an employment relationship.

One of the key elements of any such test is whether there is a right for the Company to require the consultant/contractor to work and whether there is an obligation on the consultant/contractor to provide their work. This is a cornerstone of an employment relationship.

This will be of particular importance where there are a series of engagements with gaps between each engagement.

There are various elements to legal tests to be adopted by the Court as to whether there is subsisting an employment relationship, including in particular the right of the company to direct how the relevant work under the contract is to be carried out and to give instructions in relation to this or whether the consultants/contractors although committing themselves to undertake the work in question are able to use their own skill and experience as to how the work is to be carried out.

You can appreciate that the legal tests are complicated.

The only advice we can really give is that if a consultant/contractor is only or mainly working for your business then there is potential problem. Typically genuinely self employed consultants/contractors work for a number of different clients.

If they work full time for your business then an issue will arise as to their true legal status.

In this scenario it is advisable for the business to seek legal advice.

As a minimum the business should ask the consultant/contractor to sign an engagement letter containing a number of provisions. This will not only include the amount of remuneration or how this is to be computed but also other clauses such as the time period for carrying out the work, a confidential clause and a tax indemnity.

It is amazing how many times I am consulted where there is no detailed agreement in place and in the absence of settlement it will up to the judge to determine the amount of remuneration to be paid to the self employed consultant/contractor.

Another very important clause for certain types of consultants/contractors is a non competition covenant.

Employees have a duty of fidelity to their employer. Self employed consultants/contractors do not have a similar obligation.

Accordingly if they are working with clients/customers self employed contractors are legally able to solicit these clients/customers for their own purposes or for the purposes of a new business, unless there is an enforceable non competition covenant which they have signed.

In certain situations, such a covenant can be very useful in providing protection to the business.  A very basic example is if a building company were to use self employed labourers to carry out work for a client/customer. The self employed builder has under the general law no restriction on dealing directly with the client/customer after the end of contract.  It is quite legitimate to try to prevent the self consultant/contractor from undertaking work for the client/customer for a specific period of time after the  conclusion of the contract.

The business is not able to prevent such dealings forever and restrictive covenants are only enforceable if reasonable. However, it is possible to provide a measure of protection by well drafted and reasonable non competition covenants.

I have in fact prepared a very short form of self employed engagement letter/declaration. This is not a substitute for a detailed agreement but in my experience a new business cannot usually afford the cost of preparing a detailed agreement. This short form is fairly useful second best alternative for use on a short term/ temporary basis.

As an absolute minimum, it is important to document the remuneration of the self employed contractor, how and when it will be paid and also when the work will be carried out.

If after taking legal advice, the person concerned is more likely to be an employee than a self employed consultant/contractor, then the business in such scenario, if they continue to place a self employed label upon the relationship, will be relying upon the tax indemnity (if any) contained in the self employment agreement. There is no PAYE tax indemnity implied in favour of the employer under the general law

This is a not perfect answer to the postion,  but it is better than not having any indemnity at all. Generally there is no implied right for an employer to recover tax from an employee when PAYE should have been deducted and it has not been.

The Agreement should also provide for the assignment /use of any intellectual property rights created by the contractor/consultant during the use of an engagement as well as an express obligation on the part of contractor/consultant to undertake their work under the engagement with reasonable skill and care.

This note is no substitute for detailed legal advice and just highlights certain key issues which may arise in the engagement of a self employed contractor/consultant.

Lawrence Rodkin, Partner Simon Rodkin Litigation Solicitors

Tel: 0207 112 8841

23^th August 2012

Compromise agreements are a relatively common way of ending an employment relationship.  Under the terms of the Agreement the employee receives a lump sum payment and the agrees to accept the money in settlement of all claims past, present or future which the employee has or may possess as against the employer, any group company or any officer or staff member.

For an employee, it is important to obtain best advice if such agreement is presented to yourself to sign from your employer.

The role of the legal adviser is not just to witness your signature, but to provide detailed advice to an employee as to their legal position, and indeed whether the employee should accept the monetary offer made by the employer under the terms of the Agreement and to discuss other options available.

The legal adviser will also consider amendments which should be made to the wording of draft agreement. These agreements are usually drafted very favourably towards the employer, and need to be amended to redress the balance, and to protect the employee’s interests.

It is not uncommon for the employer to offer a contribution towards the employee’s legal costs under the terms of the Agreement.

In our experience such costs contribution is negotiable, and the amount will usually be required to be increased. This is primarily because the amount of costs offered usually only provide for the signing off the agreement without any amendment. This is of course deliberate on the part of employers, since they do not wish their draft agreements to be amended.

Some of the terms of draft agreements are very onerous, such as an obligation upon the employee to repay the whole of the compromise money if they breach (however minor) their obligations under the Agreement. Such obligations usually include warranties that the employee has never been in breach of their employment agreement (which would include arriving for work late), or will not disclose the terms or even the existence of the compromise agreement to any third parties.

It can therefore be appreciated why amendments are usually recommended.

Employees should be wary about legal advisers who do not suggest any amendments or any serious amendments to the terms of the draft agreement and who are prepared to rely entirely upon the costs contribution to be paid by the employer.

Sometimes we advise clients not to accept the monetary offer on the table.

It is in fact not uncommon for the amounts offered by employers under compromise agreements to be inadequate.

One notable example comes from a client of ours who was offered £8,000 from an employer under a compromise agreement.  We could not recommend the client to sign off the agreement and following the making of a Tribunal claim, settlement with the Employer was agreed in the sum of £25,000.

It is also not uncommon for employees to have the benefit of legal expense insurance cover in order to bring Tribunal claims. This is a common add-on to home contents insurance policies.  Alternatively, where there is no legal expenses cover, in the case of a reasonably strong claim then we would be prepared in conjunction with a barrister to enter into no-win, no-fee agreement.

However, upon the basis that the employee is willing to accept the money on the table then it is necessary to run through with the employee each of the paragraphs of the compromise agreement making amendments where necessary or instructed to do so.

Compromise agreements are generally extremely onerous and in a perfect world we will normally only recommend the employee to sign after implementing reasonable changes.

Legal costs will depend upon the amount of work involved and whether the employee feels that they can live with the Agreement in its amended state or whether we should push to secure further amendments.

Compromise Agreements represent a core area of the work of this firm.

We offer an initial fixed fee interview of half an hour at a cost of £75 plus VAT.  We are pleased to undertake this by way of a telephone conference is this should be more convenient.

If you would wish this firm to assist please contact Lawrence Rodkin (partner).