FAQs

There is no obligation on an employer to use Occupational Health unless specified in the employment contract.

However, Occupational Health referrals are sometimes a sensible thing to do. As an employer you do not want to be making medical decisions about your staff.

Using Occupational Health is often relevant with a disabled employee. This is because they may require certain workplace adjustments which will allow them to do their job. An Occupational health referral would enable you to make the right adjustments. This helps to avoid discriminating against members of staff by unwittingly not implementing a reasonable adjustment.

If an employer is considering dismissing an employee due to their sickness record obtaining an Occupational Health report can be an important element.

Example

An employee has returned from an operation which will require a lengthy recovery period. The employee operates heavy machinery and wants to come back on reduced hours.

The employer decides to instruct an Occupational Health Advisor. The employer would then provide details to Occupational health and the specialist would arrange a consultation with the individual.

In this case the report is likely to say that the employee cannot safely work with heavy machinery. This would then mean that the employer could very reasonably refuse the request to come back to work. It may also lead to the employer deciding that it is necessary to think about dismissing the employer as they no longer are able to fulfil their role. The Occupational Health report would then be an essential feature of the capability dismissal.

If you dismiss somebody who is under two years, they cannot bring an unfair dismissal claim against you.

The two-year rule is very important for employers. It is only when an employee has more than two years’ service that they are able to bring a claim for unfair dismissal.

However, as an employer you still must be very careful as an employee with under two years can still bring other types of claims including discrimination, whistleblowing and “automatic unfair dismissal”. You should always get expert legal advice particularly when you are considering making a dismissal.

Automatic unfair dismissal, which does not require two years’ service, is a claim in which the employee says that they have been dismissed because they have blown the whistle or had some other statutory right breached.

Unlike “ordinary unfair dismissal” there is no statutory cap on damages and awards can exceed the one-year loss of earnings cap (subject to maximum of £105,707).

An important tip for employers is to always ensure that you know when an employee is close to their two year anniversary. When doing this you have to account for their notice period.

In many ways it is good practice to see the first two years of employment as akin to a probationary period. Any decisions to dismiss an employee are generally much easier when the employee has less than two years’ service.

In comparison to days gone by it is now both easier to deal with an incoming employment claim because in most scenarios you will have had some advance notice of it (and so can start to get your ducks in a row) and more important to deal with it properly (as the consequences for failing to do so are more serious).

Historically although you might have had an inkling that an employee or former employee might bring a claim (because you had dismissed them, or they had resigned or raised a grievance) the first formal notification might well be their claim form (known as an ET1) arriving from the Employment Tribunal through the post.

Nowadays, however, in the vast majority of cases an employee or former employee cannot start an Employment Tribunal claim without going through an “early conciliation” process with ACAS. This will result in a call to you from ACAS (provided the employee has not indicated that they do not wish to negotiate a settlement) during which you will be told of the employee’s intention to bring a claim and be given the opportunity to agree a resolution before a formal claim can be brought.

Assuming an ET1 does land on your desk (and it will still come through the post) you have 28 days to respond. But beware – the 28 day clock runs from when the Employment Tribunal posted it to you, not from when you receive it. Helpfully, the covering letter that the Employment Tribunal sends out with the ET1 will set out the last date for you to respond to the claim.

That response is submitted using a standard form, known as the ET3. There will be a copy of it in the pack you receive from the Employment Tribunal. You can complete this and post it back, or you can complete an online form through the Tribunal Service. The latter is the safer course – as submission generates an online receipt. Employment Tribunals are under resourced and swamped with paperwork – so you may well not get an acknowledgement of a paper submission until the 28 day deadline has passed.

What should you put in your response? Much of the ET3 is simply a matter of providing factual information about your business and the employee – dates of employment, remuneration etc.

The important bit is where you set out your reasons for defending the claim. There are temptations both to say the minimum possible and deny everything, and to also to go “chapter and verse” with a full narrative of everything that has happened. Both are wrong.

The ET3 is a great opportunity to make a good impression on the Employment Judge who ultimately hears the case. On the morning of the hearing the ET1 and ET3 are likely to be the first things the Judge reads. If you have set out a concise account of your position and why it is right, you should be halfway there.

Of course to do this you need to know what your position is. That’s why preparation of the ET3 should be approached properly – which you can only do once you have all the facts. There is little worse at a Tribunal hearing than a hastily pulled together ET3 and a set of subsequently produced witness statements that are at odds with each other. Time and effort spent on a well drafted ET3 will pay dividends.

But don’t spend too long ….. if you miss the 28 day deadline, you can now lose an Employment Tribunal claim by default.

The key element with flexible working requests is the word “consideration”.

Any employee has a right to make a flexible working request if they have 26 week’s service. If there is any subsequent dispute surrounding the flexible working request a Tribunal would consider whether you have followed the ACAS procedure and any workplaces policies.

If the request has not been made verbally you should ask for the employee to put it in writing.

Once the request has been made in writing you then to need to discuss it with your employee. This is to ensure that you fully understand what the employee is proposing.

The request needs to considered very carefully and if you cannot agree to the request this needs to be for clear business reasons.

• extra costs that will damage the business
• the work cannot be reorganised among other staff
• people cannot be recruited to do the work
• flexible working will affect quality and performance
• the business will not be able to meet customer demand
• there’s a lack of work to do during the proposed working times
• the business is planning changes to the workforce
• Any decision should be made within 3 months of the request being made. This time can be extended if agreed with the employee.

As flexible working requests are frequently made by women with childcare responsibilities you must ensure that your decisions are not potentially discriminatory. They can also arise in relation to a disabled employee and so can trigger disability discrimination.

Since the pandemic we have seen a significant rise in flexible working requests being used in relation to home working. If they are raised in this way you need to follow the procedure above and apply the specific business reasons to the request being made.

Employers commonly think that because somebody is off sick, they cannot be dismissed. This is not the case. However, there are several things that you need to be aware of.

If the employee has over two years’ service, you need to go through a Capability process. If you don’t do this the employee could bring an unfair dismissal claim. A capability process involves a series of meetings with an employee to understand more about the reasons for being off sick and when the employee may be able to return to work. The purpose of these meetings is to review the position. If it ultimately reaches a stage in which the employee can no longer fulfil their role, then the employer can dismiss, if they follow a fair process.

If the employee has a disability, then you need to consider any reasonable adjustments. This places an additional burden on the employer in that they must avoid any discrimination. {WHAT IS A DISABILITY?}

With an employee who has under two years you may take the decision to simply dismiss with notice. Again, you must be careful with this approach as if an employee does have a disability, they could bring a discrimination claim. So, while they may not be able to bring an unfair dismissal claim they could raise a complaint of discrimination.

So, the question whether it is safe to dismiss will depend upon the circumstances.

Grievances can be dangerous territory for an employer if they are not handled with the correct advice. They can lead to several complicated and expensive claims such as discrimination, ordinary and automatic unfair dismissal.

The first stage is to consider check whether there is a grievance procedure usually contained within the contract of employment or in a separate grievance policy.

If this is not the case then you need to apply the ACAS procedure.

The basic elements are as follows:

1. Acknowledge the grievance and set out next steps.
2. Decide who will investigate the grievance, chair meetings and deal with any appeal.
3. Arrange a meeting with the employee where you can run through the grievance with them. This is an important step so that you can ensure that the grievance is fully understood.

The grievance investigation will involve several steps which may include obtaining documents and speaking with witnesses. It is important that the employer can demonstrate that they have kept an open mind and not prejudged the outcome. Therefore, the ACAS code states that the person who investigates should be different from the individual who deals with the formal hearing.

It is also important to know that raising a grievance is a “protected act” which means that the individual should not be subject to any “detriment” for raising a grievance. In practice this means that the employer should not be punished in anyway for raising a grievance. You must ensure that HR actions which you take, following a workplace grievance being made, could not be interpreted as such.

Once the investigation has been concluded you can then proceed to a grievance hearing in which the employee has the right to be accompanied.

After these stages a decision will be made about the outcome of the grievance. This is a process of going through each aspect of the grievance and confirming whether it is upheld or not.

The employee will then have a right of appeal which must be heard by somebody different.

If an employee is unhappy with the outcome of a grievance, they may decide to pursue additional claims. This can include resigning and claiming constructive dismissal. This is when an employee claims that you have breached their employment contract by not upholding the grievance. They are effectively saying that your actions amount to a dismissal.

The dissatisfied employee could also claim that the decision was in some way discriminatory.

It is consequently important to get every stage of the process correct.

You have a range of options as an employer when an employee is not performing.

The key thing is to deal with issues of poor performance as quickly as possible. Employees are not necessarily aware that they are not performing to the required standard. This can lead to bad habits developing and the issue can reach a stage where there is nothing more you can do informally.

If you capture problems, you may be able to correct the problem early on.

It’s important to recognise the distinction between poor performance which is referred to as “capability” and concerns about “conduct”.

Poor performance is an issue of capability in which an employee may not have the capacity to fulfil their contractual obligations. Conduct is concerned with the employee’s behaviour. An example of poor performance could be not achieving the required level of sales, poor conduct could include an employee who has been dishonest in an expenses claim.

At the early stages of poor performance, it is often a question of having a quiet word with the employee and expressing to them how they are not fulfilling their role.

Make sure that your always keep notes of these conversations even if they are quite brief. This means that if you do have to move to a formal stage you have a record of all the earlier steps that you have taken.

Sometimes the performance does not improve, and you need to start a disciplinary process. This process can ultimately lead to dismissal, formal warnings, or demotion.

If the employee has less than two years’ service, they do not have unfair dismissal rights. In practice this means that you do not have to go through a set procedure to dismiss the employee fairly. So, in these cases you may decide simply to dismiss the employee with their contractual notice.

Caution should always be applied though as an employee with less than two years’ service could still bring several other claims such as discrimination. In cases of poor performance, if the employee connects issues with performance and a disability, this could lead to a discrimination claim.

If the employer has more than two years’ service you will need to go through a fair process to justify any subsequent dismissal.

The disciplinary process will involve convening a disciplinary hearing and allowing the employee to respond to the concerns. A decision would then need to be made about the outcome and a right of appeal provided.

As with many other workplace issues it may be worth considering a negotiated solution. This would involve an off the record conversation with the employee {WHAT IS AN OFF THE RECORD CONVERSATION}.

If you are unfortunate enough to find yourself in a situation where you have completed the work for your customer exactly as they asked and they have disputed your invoice, or even ignored your requests for payment, then legally there are steps you can take to recover the monies owed to you.

Unfortunately, some customers may try to avoid paying your invoice, particularly if it is the final invoice after completion of the work. Whether they create fictitious reasons for their delay in payment, or actually ignore your attempts to seek payment, sometimes your only course of action may be to pursue them through the Courts. In order to maximise your chances of successfully recovering the money, you must follow the correct procedure.

Your first step should be good communication with your customer and explain to them why they should pay the invoice immediately. You must bear in mind that any correspondence, including notes of telephone conversations, can be subject to the scrutiny of the court, should the matter progress to Court proceedings.

Should the debtor not respond to you or fail to pay the debt, then the next step would be to issue a letter before action. This is an essential part of the pre-action protocol and will inform them that payment is overdue, and you will commence legal action if the debt is not paid. The letter should also take into account your position on alternative dispute resolution, and your readiness to settle matters outside of the court arena. However, if you do not follow the pre-action protocols then even if you do issue proceedings and you win your case, you may end up having to pay your own costs and those of the debtor.

If the letter of claim has not prompted payment or you have not agreed acceptable settlement terms, then you are left with issuing Court proceedings.

If it is the case that your customer is not able to pay their debts when they become due then the “nuclear option” of winding up (for a company) or bankruptcy (for an individual) may be the only alternative.

If you have completed the pre-action stages of litigation under the Court rules and are considering issuing proceedings,you should be aware of the milestones of litigation and exactly what those milestones involve.

Statements of Case

Right at the beginning of a claim, the person making the claim (the Claimant) will file and serve Particulars of Claim setting out their case and the remedy sought. Provided that your opponent (the Defendant) is intending to defend the claim, they will then set our their position a document referred to as a Defence. At this stage, the Defendant may also make a counterclaim, if for example, it is their position that they are owed monies in return.

Interim Remedies

You should be aware that it is entirely possible to obtain a judgment against your opponent without going to trial. If the Defendant fails to file a Defence within the required timeframe then you can apply to the Court for default judgment.

Similarly, you may apply to the court for summary judgment / strike out if, once you have received the Defence, it can be established that the Defence has no real prospect of succeeding.

Costs and Case Management Conference (CCMC)

The next stage is the CCMC, which is a procedural hearing whereby the Court gives directions for the future conduct of the case and makes an order approving the parties’ costs budgets. Usually, the order will provide a timetable for the disclosure of documents and witness statements (amongst other directions as necessary). A trial window will be set which, dependant on the complexity of your case, could be some 6-10 months down the line.

Disclosure 

The purpose of disclosure is for each party to make available documents which either support or undermine their case. Each party will then be allowed to inspect these documents. This may include documents that are harmful, sensitive or confidential, but particular care should be taken to preserve all documents. The Court will take a very dim view of any party who fails to disclose or destroys relevant documents, and that party could very well find themselves hit with a hefty adverse costs order. Disclosure is normally the most time-consuming and costly stage of litigation.

Witness Statements

It is useful to identify early on who you intend to give witness evidence and the issues that they are best placed to give evidence in relation to. A written statement will be prepared for each individual which will then be filed with the Court and sent to your opponent. A witness may be called to trial to be cross-examined on their statement.

Expert Evidence

Expert evidence is used if your case involves matters on which the court does not have the requisite technical knowledge. For example, you may need a surveyor to value a property or a forensic accountant to value your shares.

Expert evidence is usually given in the form of a written report, which must be the independent product of the expert. The expert’s overriding duty is to the court and not to the party that instructed them.

Trial 

Most cases settle before reaching trial, due to the growing burden of legal costs, stress and time. Indeed, we recommend that settlement is considered at every stage of proceedings. If your case does reach trial, a Barrister will normally be instructed to represent you and make submissions on your case. Witnesses and experts (if appropriate) will be called to give evidence and will be cross-examined.

The judgment may be given immediately after the trial but is often “reserved” to a later date, particularly in complex matters.

A Statutory Demand is a formal legal demand for payment. It can be served without reference to the Court or even paying a fee. When a Statutory Demand is served upon you and you owe the money, you have 21 days to pay the debt or come to an arrangement to pay, failing which, you could face a petition for bankruptcy (if an individual) or a winding up petition (if a company).

If you are an individual, a bankruptcy petition can only be presented against you if the unpaid debt amounts to £5,000 or more. If you are a company, a winding-up petition can only be presented against you if the unpaid debt amounts to £750 or more.

If you admit that the debt it owed, then you should pay the debt within 21 days. If you dispute the debt that is claim claimed, then you need to act quickly. You need to write to the person who served the Statutory Demand setting out why the debt is disputed and seeking confirmation that the Statutory Demand is withdrawn. If you are only disputing a proportion of the debt, please be mindful that a bankruptcy or winding-up petition can still be presented against you if the minimum prescribed amount is owing, namely £750 if you are a company or £5,000 if you are an individual.

In the event that you fail to obtain confirmation that the Statutory Demand is withdrawn, then it is likely that you will be required to make an application to the Court to protect your position. If you are an individual, then you have 18 days from service of the Statutory Demand to make an application to the Court to set aside the Statutory Demand. If you are a company, you have 21 days from the date of service to make an application to the Court to restrain presentation of a winding-up petition. The most common basis of this type of application is that there is a substantial dispute in relation to the debt and/or a counterclaim taking the debt to below the threshold.

The consequences of bankruptcy to an individual are very serious indeed, your non-essential assets are sold and shared out to those that you owe money to, and you could lose your home.

Likewise, the consequences of a winding up petition to your company could be catastrophic. Once the position has been made public, bank accounts will be frozen, hire purchase and finance facilities will come to a close and other claims usually follow.

If you have been served with a Statutory Demand that you don’t intend to pay, we would recommend that you seek independent legal advice.

As a shareholder you have protection under the law especially under s994 of the Companies Act 2006. This says that you are entitled to present a petition to the Court if you are being prejudiced or harmed by other members in the company and it is unfair. The Court has wide powers to help you which include making an order to:-

• regulate the conduct of the company’s affairs in the future;
• require the company to stop an act you have complained of and/or do an act that you have said it has omitted to do;
• authorise the company to pursue civil proceedings;
• prohibit the company changing its articles; or
• provide that the company or any other shareholder purchases your shares.

Examples of shareholders being unfairly prejudiced include:-

• business is being moved away from the Company or the assets of the Company being used for the personal use of the directors;
• directors paying themselves bonusses whilst refusing to pay dividends to shareholders;
• excluded from management;
• not following any shareholder agreement or Articles of Association;
• repeatedly failing to hold AGMs;
• generation of shares which dilute yours; or
• withholding company documents such as accounts

Of course, there are alternatives to presenting a petition, the main one being reaching settlement with the other shareholders, but other potential remedies could be available as an alternative or alongside a petition, depending upon your circumstances. These include petitioning for the “just and equitable winding-up” under s.122(1)(g) of the insolvency act 1986 (this is well suited to where there is a 50/50 deadlock between shareholders that cannot agree the management of the company) and/or a derivative action under sections 260-264 of Companies Act 2006 (which is where a claim is brought by a shareholder on behalf of the Company when a director is in breach of his duties to the company).

This is complex area of law and good advice at an early stage will be invaluable. Before instructing solicitors you should try wherever possible to obtain a valuation of your shares or at least get a firm idea as to their value. The main remedy if you present a petition is usually the sale of your shares so you need to be sure that they are of such value to mean that litigation is worthwhile. Be careful confiding in the Company’s accountant. Whilst they are under a duty to the Company they may well be friendly with the other shareholders so could be reporting to them what you say or ask for.

One of the first questions your solicitor will have for you is to provide copy documents including any shareholders agreement, share certificates and the Articles of Association – have those ready together with a full account of what has happened, ideally in writing.

If you have received a judgment from the Court, this means that a company or individual has issued a claim against you/your company, and you have not responded, therefore a Court has formally decided that you owe the Claimant the sum of money quoted on the judgment. You had 14 days to respond to the claim by lodging with the Court an Acknowledgement of Service or providing your Defence to the Court as well as to the Claimants (sending the Acknowledgment to the Court extends the time to defend to 28 days). A judgment can affect an individual or company’s credit rating, so it is important to act promptly if you receive one.

You have several options once a judgment is received. If you are not disputing the claim, you could pay the Judgment in full. If you pay within one month you can get the Judgment removed from the register. If you pay later than one month from the Judgment, the Court register will be marked as “satisfied”. Records of Judgments are kept for 6 years on the register, and this is likely to affect your credit rating.

If you or your company do not have sufficient funds to pay the Judgment, you can try and negotiate payments by way of instalments, or if that is not possible, make an application to Court for what is called an Instalment Order.

If you or your company does not owe the money, or you did not receive the proceedings, an application can be made to Court to set aside the default Judgment. This application is made using Form N244, and a fee will need to be paid to the Court. The application must include a full explanation as to why you as a Defendant did not respond to the original claim form.

The judgment entered in default can be set aside in two ways;

1. If the judgment has been wrongly entered; or
2. If the judgment has been entered correctly (served at the correct or the last known address of the Defendant), the Court has discretion to set aside the judgment.

If the judgment has been wrongly entered, the Court must set it aside.

If the judgment is valid, the Court has discretion to set it aside for the following reasons:

1. the Defendant has a good prospect of successfully defending the claim;
2. the Court can see another good reason;
3. the judgment should be set aside or varied; or
4. the Court feels the Defendant should be given more time to defend the claim.

The Court will also consider how promptly the application to set aside the Judgment has been made when exercising its discretion. If the application to set aside is made without adequate explanation for the delay, there is a risk that the Court may not exercise its discretion in favour of the Defendant.