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De-cluttering employment procedures while managing legal risks

The prospect of Brexit has brought with it increased uncertainty, potentially tougher markets and possibly a smaller pool of the right job candidates. Recruiting and retaining the right people, and managing their exit from the organisation, has never been more important.

There is also an increasing school of thought that puts HR strategy at the forefront of business strategy. Freeing up resources to focus on substance over form may be at its most critical stage since HR procedures first infiltrated businesses. There’s never been a better time to de-clutter HR processes in order to enable organisations to manage employment law risks more efficiently.

Assessment and selection

Often businesses increase procedure and note taking with the aim of being transparent and fair. But lengthy processes, involving too many notes, increase the risk of discrimination claims under the Equality Act 2010 from unsuccessful candidates. Where the outcome of the process is known in advance (which is often the case in internal recruitment) the risk increases due to the similarities between the candidates (in experience, for example). They cannot be distinguished from each other enough to explain the ultimate decision.

Because of this, employers should:

  • Avoid interviewing candidates if the business has already decided who will be successful 
  • Avoid assessments that will not be key to determining the right person for the position 
  • Take only one set of notes, and only record the answers to relevant questions that have been prepared in advance

Job offers

Employers should set out employment contract terms in one document. Overlapping and multiple statements regarding the same contract term – such as statements in offer letters on bonuses, other benefits and notice periods – creates uncertainty. Employees could argue the offer letter applies to their employment rather than their contract of employment or argue that benefits in their offer letter – such as share option entitlements or handbook provisions – are contractual.

Organisations should:

  • Send an email instead of an offer letter, stating that an offer is being made subject to terms that will follow 
  • Ensure the contract of employment does not accidentally incorporate HR policies that the business wishes to be able to amend, replace or remove, or provide a benefit (such as enhanced redundancy pay or a specified number of appeals in a disciplinary process) that’s unintentional 
  • Include provisions in the employment contract that allow for changing terms with notice, transferring the employee to another employer within the group, and a reasonable change in work location

Key employees

Although using standard terms in contracts makes sense in most cases, it is worth considering contracts of employment for key employees in more detail to ensure they are appropriate. Using standard terms in this context can often leave businesses exposed.

  • Check that the notice periods are adequate for business purposes and balance that against the cost of terminating the contract 
  • Ensure that the term and notice periods work in fixed-term contracts (there is often uncertainty around whether fixed term contracts can be terminated with notice) 
  • Focus on the intellectual property clauses in contracts for employees that are key to creative business know-how
  • Ensure the business has several options if the contract has to be terminated, including shorter notice periods for capability dismissals, garden leave provisions, and flexible pay-in-lieu of notice provisions allowing for lump sum payments, payments in instalments (equal in size or otherwise) and for pay in lieu of basic salary only

The organisation should also have regular informal meetings with key employees to gauge how the employment relationship is going and to ensure the business's exposure is managed if that employee leaves. Companies should also avoid subjecting employees to any standard processes (such as appraisals and performance reviews) if these are irrelevant to them.

Resignations and terminations

The key areas of risk for businesses when employment ends are employment claims, and employees taking business with them when they leave. The most obvious employment claims are whistleblowing, discrimination, and breach of contract/unfair dismissal. Garden leave and post-termination restrictive covenants can protect business interests. Employers should:

  • Stop conducting exit interviews, as they often increase the risk of whistleblowing and discrimination claims 
  • Identify the parts of the business that may be at risk following a termination, and revisit documentation designed to protect the business (such as restrictive covenants in employment contracts) to ensure provisions are water-tight
  • Prevent employees who have resigned or been given notice, but who are still employed, from accessing company systems and commercial information
  • Not wipe returned work computers and mobiles during the three months following termination of employment (generally the time limit for bringing an employment-related claim)

Added: 07-11-2016

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