Tag Archive | "Employers"


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No matter what industry you work in, there will come a time when you receive a complaint based upon the services or goods you have provided.

Unfortunately, the automotive industry is no exception, and it can be easy to see such complaints as an unjustified attack on your company’s good reputation. In the heat of the moment, aggrieved business owners can jump to the defence of their company, engaging in a war of words with the complainant.

According to Gemma Carson, Head of Dispute Resolution at law firm Wright Hassall, they could do more harm than good: “Naturally, business owners can feel like they have a duty to protect their employees, and without thinking, fire back with an angrily worded email, expressing their displeasure with the original complaint.

“When emotions are running high, it is easy to get involved in a heated debate about the rights and wrongs, mistakes and failures, or actions and inactions of one party or another. It is at this point that things can escalate quickly and easily get out of control.

“The most serious issues can occur when promises or threats are made without due consideration given to any existing contractual agreements between the two parties.

“To reduce the risk of worsening the situation, there is plenty that can be done and it should start with a careful consideration of the content of the complaint. The pressure may be on, but take your time and ensure you make no commitments and no threats.

“Allow yourself time to properly cool down before sending a response, as emails sent while emotions are still running high have a nasty habit of biting back later down the line. “Instead, begin by drafting your email and save it to your ‘virtual mantelpiece’. This will give you time to review the situation and think carefully about what you want to say, instead of hitting back with a knee-jerk reaction.

“It is also important to check whether a service agreement and/or a contract exists between the parties. You should read any agreements carefully and check what they actually contain.“With an agreement in place, you may be able to respond to the complaint by highlighting any relevant contractual terms that may help you manage the situation.

“When dealing with a complaint, it is important to be proactive. By acting quickly, you can help diffuse the situation without the need for any legal involvement.

“Personal, face-to-face meetings will often help resolve issues before they can escalate. It is best to either raise the matter directly or if you suspect it to be more serious, to seek legal advice before you make contact.

“If it does feel serious, you should ensure you retain all of the relevant information relating to the complaint, including documents, correspondence and any products or specimen products from the same batch. It can help if you carry out and document any inspections of equipment or machinery.

“Seeking legal advice early on does not necessarily mean a serious legal dispute has arisen.

“Dispute resolution advice is very effective when delivered soon after the complaint is received, but your lawyers do not need to take an active role in the issue. They can offer strategic legal guidance focused on resolving complaint situations and diffusing potential disputes, whilst preserving the commercial position for the future.

“The most important legal factor to remember is that making a rash statement or taking a knee- jerk decision to stop providing your services or products, by sending that angry e-mail draft without first putting it on the virtual mantelpiece, may cause a serious breach of contract.

“If nothing else you risk a serious argument and potentially a threat of injunctive proceedings. In simple terms, a breach of contract can entitle the party affected by it to terminate the contract and then bring legal proceedings against you for damages.

“For this reason, sending that inflammatory e-mail without firstconsideringthe consequences could be a huge mistake that ends up costing time and money, both of which could be better spent managing or growing the business.

“Finally, where parties have become so embroiled that legal proceedings are not only threatened, but seem the only option, choose to work with experienced lawyers who understand commercial disputes and demonstrate a commitment to reaching an early, commercial and cost- effective resolution” concluded Carson.

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 It can leave a bad taste when an employee commits fraud, but it must be dealt with, writes Adam Bernstein.

It’s bad enough losing out to theft committed by customers and third-party criminals, but it can leave a particularly nasty taste in the mouth when those most trusted – staff – commit criminal acts against the business that employs them.

According to Action Fraud, one in five small businesses will have been defrauded at some point in their trading history – sometimes to the point of bringing the business to its knees.

In March 2010, The Journal reported that a 21-year-old garage – Knights of Newcastle – was put out of business after a trusted employee, Colin Prudham, used the company computer to print off 419 fake MOT test certificates. The fraud only earned Prudham £12,500. In February 2011, a former employee in the accounts department was convicted for stealing over £50,000 from Lanehouse Service Station in Weymouth over a six-year period. The managing director, Peter Amery, described Joyce Britnell’s actions as a “major betrayal.”

And in February 2013, a bookkeeper stole £210,000 from a family business involved in motorcycle publishing run by her friends. Amanda Stevens took the money for, among things, hair and clothes leaving the company – Redcat – to pick up the pieces. The fraud committed over a number of years was only discovered when the VAT couldn’t be paid.

While fraud is an ever-present risk, and a destructive one at that, employers can take preventative measures.

The first step is to proactively check on everyone that is employed by the business, especially where they have access to sensitive systems or the company bank account. Quite simply, firms need to know exactly who they are employing. References should be sought and followed up with calls; the matter shouldn’t be dropped until satisfactory answers are received. Everyone from the cleaner to the members of the board, as well as contractors, should be subject to background checks. At the very minimum, it’s important to confirm an employee’s identity, date of birth, residential address, qualifications, employment history, criminal history and financial background. The process can be undertaken as part of the statutory obligation to ensure that an employee has the legal right to work in the UK.

Another option is to ask for a recent bank or utility statement, as well as details to check on qualifications, or a marriage certificate if a married woman has changed her name. You can also ask for past P45 or P60s, as well as data from Disclosure and Barring Service. Credit agency Experian offer background checks for those in the automotive sector to enable employers to check on, for example, qualifications and experience. At the same time, by signing up with one of the credit reference agencies – Experian, Equifax or Callcredit – employers will be able to monitor if employee (or third party) activity has changed the financial status of the business.

Another large step that a business can take to protect its position is to engender the ethos that fraud is not tolerated within the business. This starts at the top with everyone being able to see that the management plays by the same rules that employees have to follow. Policies and procedures need to be written, but they also need ‘buy-in’ from employees which requires consultation. On joining, every employee should be given, among things, an anti-fraud policy. If a fraud should occur and the employee concerned is dismissed, the event and the consequences should be widely communicated to all staff as a deterrent.

Control access
As harsh as it sounds, firms need to strictly control access to their premises and systems. As soon as an employee leaves the company their access to systems should be terminated immediately. Passwords should be changed, passes revoked and possession should be regained of company laptops and mobiles. (It doesn’t hurt to regularly change passwords held and used by all employees).

Take action
If a faked history or worse, criminality, is suspected, it’s important to take good legal advice with a view to with- drawing any employment offer made (or dismissing the employee). The situation should be reported to the police or, in the case of illegal working, to the UK Border Agency, as well as to the recruitment agency if appropriate. Ignoring the issue will only shuffle the problem to another employer; it could also leave the firm open to claims from future employers who weren’t warned about the ‘rogue’ employee.

Check further
Processes need to be put in place so that no one person has sole control over payment systems, chequebooks or the ability to singly authorise purchases over a given (low) value. Invoices should be checked to ensure that they are from genuine suppliers; unexpected requests to change bank accounts should verified – every time; and suppliers should be informed in writing each time a payment is made.

It’s important to also prevent premium rate and international numbers from being dialled out on company phones. Premium rate fraud – also known as PBX or dial-through fraud) involved out of hours calls being made to particularly expensive numbers. Similarly, phone logs should be regularly checked for increased use or unusual call activity.

Lastly, firms should take steps to destroy any documents with sensitive information that may allow a fraudster to misuse the corporate identity for criminal gain.

For paper, this means acquiring a fine cut cross shredder, while for data, firms should securely wipe computers (physically destroying hard drives and USB sticks) while factory resetting mobile devices. At the same time, time spent signing up on Companies House and other agencies websites seeking out their online protections is worthwhile. Companies House, for example, offers the PROOF scheme in relation to the changing of official corporate details; it helps prevent the hijacking of a company.

Fraud is an unpleasant fact of life. However, those firms that make it harder for employees who are criminally minded will be much better off. By removing the opportunity they’ll remove the temptation.


There are countless different ways that an employee can abuse trust. However, the main forms that firms should be on the watch for are:
Procurement fraud: Fraud relating to company purchases of goods, services or works commissioned. Goods are invoiced but not delivered, or are subject to inflated prices.

Travel and subsistence fraud: Where employees claim for, say, food and mileage not incurred or which is higher than receipts can show.

Personnel management: Staff on sick leave but moonlighting elsewhere, misuse of company equipment and time for private purposes, or the use of false references and qualifications.

Exploitation of assets and information: The passing of internal company information for personal gain.

Payment fraud: The creation of fake accounts and invoices, the redirection of cheques and other payments, or the processing payments to the fraudulent individual.

Receipt fraud: The theft of inbound monies or where records for monies owed are altered.

False accounting: Changing records and accounts to misrepresent their true value, to enhance or alter their appearance, to gain funds from a bank, report overly high profits or to hide losses.

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You might be tempted to put exactly what you think of a former employee – but be warned that it is a legal minefield, writes Phil Richardson

Phil Richardson is a Partner and Employment Law Solicitor at Stephensons.

Phil Richardson is a Partner and Employment Law Solicitor at Stephensons.

There is a common misconception that an employer is under a duty to provide a reference for an existing or former employee. In fact, other than where a reference is needed by a regulatory body or there is a prior written agreement to provide a reference, there is no strict obligation on an employer to give one.

However, in practice it is rare for an employer to refuse to provide a reference. This is partly because it is good practice to do so and partly because of the adverse consequences a refusal would have on the employee concerned. The response to a general request for a reference may contain nothing more than factual information about matters such as job description, length of service and reason for leaving (see side box).

Sometimes, though, prospective employers ask more specific questions about matters such as competence and character. It has been established over the last few years that employers owe a duty to former employees to take reasonable care over the preparation of references. Although a reference given by one employer to another about an employee has qualified privilege, which protects employers from liability for untrue statements provided they ‘honestly believed’ in the truth of what they said, there are some limits to what an employer can say.

An employer also needs to consider carefully giving favourable references to employees whom they have dismissed on the grounds that their work was unsatisfactory. Although they may have no wish to ruin the former employee’s future career just because the working relationship broke down, this could backfire if the employee then challenges the reason for dismissal in an action for unfair dismissal.

Employers are often not aware of the action an employee can take if they have suffered a loss as a result of an inaccurate reference. This could be either because they are unable to obtain
employment or because they are dismissed for having unsatisfactory references. There are three possible causes of action available to them under the general common law category of ‘tort’, namely defamation, malicious falsehood and negligence.

Where an inaccurate reference attacks the employee’s reputation, the tort of defamation is the most obvious cause of action. One rsvpelement of a defamatory statement is its falsehood. If the maker of the statement wants to allege that the statement is true, then he or she has the burden of proving it is so. As mentioned earlier, in the context of job references, the referee will have the protection of the defence of qualified privilege. The tort of malicious falsehood protects a person from loss of business reputation. The employee has the burden of proving that the statement was made ‘maliciously’ that is defined as ‘calculated to cause damage.’

However, both malicious falsehood and defamation may prove to be inadequate remedies due to the difficult task of establishing malice and the fact that an employee is looking for a remedy that will compensate him for loss of opportunity. The best course of action for an employee who gets an inaccurate or unfair reference is to sue his former employer in negligence.

It has long been a matter of debate whether an employer has a contractual duty to take reasonable care in preparing a reference. The courts have usually declined to imply such a term into the contract of employment because, generally, it is not necessary to give the contract ‘business efficacy’. In the case of Spring v Guardian Assurance there was an implied term in the contract, as it was standard practice in that industry, for a prospective employer to require a full and frank reference and as a result, a duty to take reasonable care over the reference could be implied into the contract.

At the end of the day, employers must exercise care when preparing references. However, if an employer takes a common-sense approach, there should be nothing for the employer to worry about. Employers must ensure that all the facts on which the reference is based are accurate and that the overall impression of the employee is not misleading.

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Adam Bernstein – Deductions are a legal minefield – so tread carefully if you need to make them

ADAM BERNSTEIN is a freelance business writer specialising in management, marketing and the law

is a freelance business writer specialising in management, marketing and the law

The expectation that someone will be paid in exchange for working for their employer is obvious. But what happens when an employer needs to withhold pay or temporarily reduce an employee’s rate of pay? The answer depends on the type of deduction and what both the law and contract say. Employers that fail to make deductions carefully may find themselves before a tribunal defending an expensive illegal deduction from pay claim.

Mark Stevens, an employment lawyer at Veale Wasbrough Vizards, says that the starting point for any discussion is to look at what makes up someone’s wages and that the law defines it as any sum payable to the worker in connection with their employment. This includes non- contractual bonuses, commission and statutory sick pay.

However, pension contributions, expenses and a loan to an employee are not considered wages – although a failure to provide these benefits when contractually obliged to may lead to the employee bringing a breach of
contract claim.

Unequivocally, Stevens says that it is unlawful for an employer to make any deduction from a worker’s wages “unless the deduction is required or authorised by legislation; or the worker has already given written consent to the deduction being made.”


Using the definitions above, Stevens says it’s clear that an employer can lawfully make deductions from wages in accordance with a statutory requirement to deduct and pay sums over to a public authority, such as to HMRC via the
PAYE system.

But he adds two more causes for a deduction – where they are necessary to right a mistake following an ‘error of computation’, for example, where an automated pay roll system makes an error. There are also exceptions in the legislation which allow a firm to make deductions in very specific circumstances, such as an overpayment of wages and expenses incurred by the worker.

Most importantly, from an employer’s point of view at least, Stevens says the law notes a deduction will not be unlawful if it has been “required or authorised to be made by virtue of… a relevant provision of the worker’s contract” or if “the worker has previously signified in writing his agreement or consent to the making of the deduction”. From Steven’s perspective, an employer wishing to make a deduction must check the contract before making any proposed deduction. He advises: “If the contract says nothing about making deductions from wages, then an employer will need to obtain prior written agreement from the employee to make the necessary deduction.”

Where the employee has not given written consent, whether in the contract of employment or otherwise, an employer should take care to avoid making deductions. Why? Because non-payment of a worker’s wage on any one occasion will be classed as deduction. Interestingly, a deduction can also arise from a late payment rather than no or a short payment.

It’s worth noting that an unlawful deduction could follow if an employer reduces one element of a wage but increases another element, leaving no overall reduction in pay. “This principle was considered in the 2002 case of Pendragon plc v Nota,” says Stevens, adding: “The worker was not paid £72.50 in overtime payment, but his pay for his contracted hours was increased. The Employment Appeal Tribunal held that each element of wages was isolated and the worker had suffered an unlawful deduction as a result.”

So what happens when employers get it wrong? In simple terms Stevens says it can lead to the employee bringing claims for breach of contract, constructive unfair dismissal, or a claim for recovery of the money that they are owed as an unlawful deduction of wages. The remedies an employment tribunal may award to a worker for unlawful deduction of wages include a declaration that the firm has made an unlawful deduction and an order to the employer to pay the sums deducted. (The worker must bring the claim within three months of the deduction, or the final deduction in a series of deductions.)

However, Stevens reports that since the introduction of employment tribunal fees in 2013, claims for unpaid wages have become less frequent since in many cases, the fee could be more than the amount in dispute. “Nevertheless,” he says, “firms should be aware of their obligation to pay wages in accordance with the contract as a disregard for paying wages correctly is very likely to lead to the employee resigning and claiming constructive dismissal.” He suggests that those that might need it should ensure that contracts include a provision to allow for appropriate deduction of wages if required.

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Every manager will have to call a disciplinary hearing at some point but there are some simple steps to make sure the process is fair and legal

Lee_AshwoodIt is often said that the best asset of any business is the staff. While that may be the case, having employees will mean that at some point their behaviour will fall below what is expected of them, either because they break a rule, do not follow a procedure, make a mistake or struggle to do something asked of them. As a manager or business owner, at some point in your career you will be faced with an employee whose behaviour is not what you wanted and you will have to consider how to deal with it.

A good starting place is your disciplinary policy. It will probably identify types of behaviour that you should think of as ‘gross misconduct’, that is behaviour so serious that it, if proven, warrants dismissing the employee immediately and without pay in lieu of any notice. Typically, you will find theft, dishonesty, violence, serious breaches of health and safety, gross negligence and so on, are considered to be gross misconduct. But what about behaviour that is not so serious?

Your disciplinary policy should also clearly identify what behaviour is considered to be misconduct, that is usually minor offences such as lateness, rudeness to colleagues or customers, appearance or minor breaches of procedure and the disciplinary action that may be taken for such misconduct.

Your disciplinary policy should provide for a staged process and even it is does not, it is the recommended approach by experts and also expected by Employment Tribunals should you ever end up there.
In most circumstances, the first stage is speaking to the employee informally about their behaviour. While you may be frustrated by the individual’s behaviour, at this stage in the process it is usually more effective to demonstrate that you are being supportive, want to understand what has caused their poor behaviour and look at ways to prevent it recurring. Remember that your goal is to correct their behaviour and not to alienate them – if you are struggling to decide on what tone to take, you should be thinking perhaps how you would like to be spoken to: with respect and calmly.

Ensure that you have somewhere private to speak to the employee so that you can have an uninterrupted, two-way conversation about their behaviour. Explain what it is of their behaviour that you are unhappy with and what standard of behaviour is required of them. Explain why their behaviour is not meeting that standard and what effect their current behaviour is having, for example on their colleagues’ morale or their team’s performance. Invite the employee to explain why they are failing to meet the required behaviour – do not interrupt and listen to what they have to say.

EARLY RESOLUTION Disciplining Staff
It may there is an issue that you were unaware of that you can help resolve. For example, the employee may reveal that their recent lateness for work is due to an issue with their current child-care arrangements. If you have approached the discussion in an amiable way and with an open-mind, when you get such an explanation from an employee you are well-placed to give them your support and, in return, receive their appreciation which should, in turn, maintain a positive working relationship. Continuing with the example, rather than disciplining the employee, you may choose to adjust their working hours, either temporarily or permanently, to help them.

In any event, by the end of the informal meeting, it is important that you have set the expectation for improvement and explained, albeit it in a nice way, that should the poor behaviour be repeated or continue then disciplinary action may be taken in the future.

In most cases, an informal discussion as has been described here will usually correct the behaviour and the matter will be resolved. However, if the informal approach is not successful, it is important that having a difficult conversation to avoid causing upset, you will inevitably have to speak to the employee at some point and the longer they have been allowed to behave unacceptably without challenge, the more likely they are to be aggrieved and uncooperative when action is taken. If the informal discussion approach is unsuccessful then disciplinary action will be needed and the employee will progress through the staged disciplinary process.

The next stage along the way is to rely on warnings, often on an increasing scale of: a verbal warning, followed by a written warning, a final written warning and, ultimately, dismissal. While that may seem straightforward, it can be difficult to decide at what point to take disciplinary action. You should always be consistent when disciplining employees, however, that can be difficult to achieve as it is rarely a case of “one size fits all” and the action you take will depend on the circumstances of the case. You would not consider taking disciplinary action in respect of an employee who has worked for you for 10 years and has been late on one occasion. By contrast, moving towards a warning is very likely in respect of an employee who has been with you for a few months, is regularly late for work without good reason and has been spoken with informally first.

At this point you may decide that a more authoritarian approach is appropriate given that an informal approach has been unsuccessful. The approach you adopt will ultimately depend on the nature of the misconduct, the individual employee and the stage you are at in the disciplinary process. If you are at the point of issuing a verbal warning then you may still be fairly informal in your approach. If the employee has continued to behave poorly and you are issuing a final written warning, you are likely to take a more authoritarian approach to emphasise the seriousness of the matter, particularly as the next stage in the process could be dismissal. When deciding the approach to adopt, always remember that your goal is to correct the employee’s behaviour and maintain a positive working relationship.

As you may expect, when proceeding with formal disciplinary action, it is important that you adopt a fair process. This is not simply for your benefit or that of your employees, but should you find yourself before an Employment Tribunal, one of the factors the judge will assess is whether the procedure you followed was fair and reasonable.

As part of a fair process, you should ensure that an investigation is carried out to establish the facts (for example, the dates an employee has been late and how late they were each time). The nature and extent of the investigation will depend on the circumstances of the case – it may simply require the employee in question being asked questions (with notes of what is said being taken) or it may need witnesses such as colleagues to give statements, records checked and CCTV footage reviewed.

If, once you have established what appears to have gone on and why, you decide disciplining the employee remains a possibility then the employee should
be invited to a disciplinary hearing. If possible, the person who conducted the investigation should not be the same person to conduct the disciplinary hearing. The disciplinary hearing should be arranged promptly whilst giving the employee sufficient time to prepare; a minimum of 24 hours’ notice is usually provided however your disciplinary policy may provide for a longer period or you may decide a longer period is needed due to the particular circumstances, for example, when there are numerous investigation documents.

When holding the disciplinary hearing, allow the employee to respond to the allegation against them and comment on the evidence; this is the employee’s opportunity to state their case and you should listen and consider their response – you must keep an open mind. Once you are satisfied you have addressed all points, adjourn the disciplinary hearing to consider your decision. Once you have decided on the appropriate action, for example, to issue a first written warning, reconvene the disciplinary hearing to confirm your decision to the employee. Once the disciplinary hearing has been concluded, you should also confirm your decision in writing and, where a warning has been issued, confirm when the warning will expire.

Finally, whenever any disciplinary sanction is imposed,the employee should be given the opportunity to appeal. Where possible, the person who has conduct of the appeal hearing should be different to the person who conducted the investigation and disciplinary hearing.

In most cases, you will see an improvement in the employee’s behaviour before you have exhausted the process. However, if that is not the case, then you will need to consider terminating the employee’s employment as a result of their repeated misconduct. This is understandably a difficult decision to make and will be a last resort. Unfortunately, as a manager of people, you have to make difficult decisions and providing you have followed a process of warnings, you will know you have given the employee ample opportunity to improve before such action is taken.

The consequences of failing to dismiss an employee fairly in the eyes of the law are quite severe. An Employment Tribunal can order you to re-instate them into the job you dismissed them from or re-employ them in a different job. Commonly though, employees do not want to return so they seek compensation with the tribunal being able to order you to pay them up to a sum equal to their annual gross pay (under £78,335) with another 25% added if you fail to follow a fair procedure as set down by ACAS in its Code of Practice on Disciplinary Procedures.

The employee should be notified of the disciplinary hearing in writing and the letter should confirm:
■ The allegation against them;
■ They have the right to be accompanied by a work colleague or trade union representative;
■ The potential outcome of the hearing, for example, a first written warning; and the date, time and location of the hearing.
The employee should also be provided with a copy of all of the documents collated during the investigation.

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