Advice for employers in dispute

It can be an awful shock. One minute everything is ticking over quite nicely and the next minute you get an employee going off sick with work related stress and/or a grievance or a letter of resignation. You had not seen it coming and feel both worried and upset. Then the employee lets it be known that they have taken advice and have made lots of notes. This makes it all feel much worse.


The important things to remember are as follows:

  1. Stay calm and stay in contact with your employee. Most issues can be resolved by speaking face to face. But listening is the most important thing here – even if you don’t agree. Do make a note of the meeting.
  2. If an employee is off sick with stress agree how you can communicate with them whilst they are off. Directly or via someone else. Obtain their permission for you to do this. Find out if anything is worrying them that you can investigate further. Understand that they may need extra support and understanding and can’t control how they are feeling.
  3. If you have a grievance or a letter of resignation try and meet them face to face. As soon as possible but not when you feel angry or upset. Be mindful that both documents are official records and if there is any claim or allegation in there you need to take it seriously and respond. Even if they verbally retract it. Get anything in writing as that is what will be relevant in a Tribunal situation.

The types of issues we have seen include:

  • A link with health problems or experiencing work-related stress
  • Allegations of bullying or harassment
  • Allegations of unfair treatment or discrimination
  • A feeling that they aren’t valued
  • A feeling that they have no future
  • A suggestion that things are not as they seem internally
  1. Take care to keep the matter as confidential as possible. No matter how outraged you are don’t share this unnecessarily as that can cause more issues. You can’t control what others say. You also have an obligation legally to keep the matter confidential. This includes sharing it with ex employees and anyone that does not have a clear managerial or professional interest.
  2. Be wary of venting your frustrations on email as your employee could make a Subject Access Request (SAR’s) and see everything you have written. If you want to vent do so verbally and to someone that is in the loop formally.
  3. It’s important not to take your employees action as a personal betrayal. Yes they may have worked with you for a long time but no matter how close you are, you are still their employer and that brings legal and statutory obligations to your door.
  4. Make notes of all conversations and acknowledge the resignation and/or the grievance. Follow your sickness policy if someone is off with stress and consider involving Occupational Health.
  5. Seek professional advice as necessary. This could include an HR Consultant, Employment lawyer, Occupational or Wellbeing practitioner.
  6. Do not ignore how you are feeling. Is this too much on top of everything else you are dealing with? Or can you cope with some self care and support.

For more information and advice please contact

Let’s all relax…

The Mitchell Method of Relaxation

Relaxation is a skill and, like any other skill, benefits from practice.

The relaxation procedure we detail below is one that has been practised for 10-15 years. It is called the ‘Mitchell Method’. Studies have shown that it is extremely effective. The method is commonly used by the NHS in the UK.

Advise your team that you are going to talk them through the Mitchell Method of relaxation and that you would like them to follow what you say in order to practice the technique.

Ask them to get in a comfortable position; this could be lying on the floor, leaning forward onto a desk, or sitting back in their chair. It really is not important as long as they feel comfortable.

When all are in a comfortable position, you will talk them through the following script. Do not alter the words as they are designed specifically to aid relaxation.

The Script:

  1. Arms

Shoulders Pull your shoulders down towards your feet. STOP pulling your shoulders down. Feel that your shoulders are now lower and your neck feels longer.

Elbows Push your elbows slightly away from your side. STOP pushing your elbows out. Be aware that your elbows are open and slightly away from your side.

Hands Stretch out your hands, fingers and thumbs. STOP stretching them out.

Observe your hands, fingers and thumbs fully supported. Feel the surface they are resting on.

  1. Legs

Hips Roll your hips and knees outwards. STOP rolling outwards. Be aware that your legs are slightly apart and turned outwards.

Knees Adjust until comfortable. STOP adjusting. Reflect on the resulting position.

Feet Gently push your feet down, away from your face. STOP pushing them down. Feel your feet hanging loosely from the ankle joints.

  1. Body Press your body into the support. STOP pressing. Consider the sensation of your body resting against the support.
  1. Head Press your head into the pillow. STOP pressing. Feel your heavy head nestling comfortably in the hollow you have made in the pillow.
  1. Face

Jaw Keeping your lips closed, pull down your lower jaw. STOP pulling down.

Feel that your teeth are no longer touching and that the jaw-line is easy.

Tongue Move your tongue low in your mouth. STOP moving. Register that your tongue is lying in the middle of your mouth.

Eyes Close your eyes, if you wish to, or state instead.

Forehead Imagine someone smoothing away from your frown lines from the eyebrows up over the top and the back of your head. STOP doing this. Feel the smoothing of the skin.

  1. Breathing Sigh out. Breathe low down in your chest at your own natural resting breathing rate, with slight emphasis on the out breath

Ending the relaxation

To bring this relaxation session to an end – gradually become aware of the room – feel the floor/chair underneath you – open your eyes – give your limbs a few gentle stretches – have the feeling that you are alert and ready to carry on with your life.

If you would like some training on stress management or to discuss how you can incorporate wellbeing into your People Strategy do get in contact with us.

Bereavement: beyond the legislation

As many of you will be aware, it has recently been reported that parents will become entitled to two weeks of paid bereavement leave if they lose a child. This new law will be effective from April 2020. It will be called ‘Jack’s Law’ in memory of Jack Herd whose mother has been campaigning for reform since her 23-month-old son drowned in 2010. Lucy Herd, Jack’s mother, has commented that she is proud to have achieved this in Jack’s memory and hopes this will help future families.

Whilst this new law on bereavement is a welcome step in the right direction, many employers will want to consider their approach more holistically. The death of a child is one of the most tragic life experiences and therefore an employee is likely to need significant support in order to return to work successfully after such a life changing event.

In our experience, many employers are very sympathetic towards employees losing loved ones – offering them the time and financial support they need to return to work successfully. We encounter many firms that are already going beyond the statutory minimum offering. Two approaches organisations can take is firstly provide time off and secondly support the individual at work itself through, for example, an employee assistance programme which provides access to counselling.

It is becoming increasingly common for organisations to adopt well-being frameworks and approaches which provide employees with channels of support. This support can include provisions for those suffering from poor mental health at different points in their life to help prevent feelings of isolation. Companies without a defined well-being approach should make this a priority of any people strategy.

Earlier this year the Mayor of London and Peter Cheese, Head of the Chartered Institute of Personnel Development, launched ‘London’s Good Work Standard’ which provides a framework of good work guiding principles. One of those is dedicated to workplace well-being and outlines that employers need to go beyond the legislation and create a channel for workforce dialogue as well as fostering a positive culture around work-life balance; offering flexible working for all and encouraging senior managers to model that behaviour.

People strategy is no longer the playing ground of just big companies and corporates, smaller organisations are also now concerned in understanding and supporting their workforces more fully in order to attract and retain talented employees. If your business is small, growing, and concerned about the well-being of its employees a conversation around your people strategy should be on your agenda as well.

If you would like to discuss how well-being becomes or remains a priority for your business, please contact for a discussion on how this could be incorporated into your business’ people strategy.




At this time of year our helpdesk always gets busier. Here are some tips taken from all the queries we have answered in December for the past 3 years.

H – Holiday rules. We get lots of questions about this. The main issues are Annual leave entitlements, Employees fighting over holiday dates and Holiday approval disputes. All much more easily resolved if you have a clear policy and HR system in place to manage it. Harassment claims do rear their heads around now and are to be treated seriously.

A – Arguments just seem to increase about now. Do try and resolve informally and listen to both parties. A is also for Adults and that is generally how we want people to behave; but if you feel further investigation is needed, do one. Alcohol is something that needs managing especially if you are offering it to your staff. Provide alternatives as well and food to soak it up.

P – Pregnancy is wonderful! It leads to the creation of little humans and is to be celebrated regardless of gender. Take a festive look at your parental policies.  P is also for Promotion. Remember that a talented employee remains talented regardless of any assumption you might make about their ambitions because they are about to become a parent.

P – PARTY TIME!  Christmas party for the office can be lots of fun but also might cause a few problems; also, from the effects of attending too many! Decide what your approach is going to be by the culture you want to create.

Y – Young People under 25 are often in need of a bit more guidance at this time of year.  Unplanned absence is often a problem. Help them understand what is OK and what they must avoid.

C – Coughs and colds are rife. There are a lot of germs around at this time of year so manage absence according to any policy you have but remember no-one can prevent the lurgy. Having the goodwill of your staff is everything but so is being fair and consistent.

H – Home is a good place to be and fine for staff to be based there or work remotely. Think about whether this could become more of a thing for you in 2020. In a positive way rather than putting energy into stopping it.

R – Reward time for all that hard work. It’s the season of good will so thank whoever has helped you. Don’t forget the contractors and consultants. Everyone is a worker in your business. Resolutions to make changes at work often happen about now. Make sure you go one step further and get a plan in place.

I – Icy outside so take care and make sure avoid anyone having an accident on your premises. However, don’t stray into giving staff too much advice about how to handle ice and snow.  Other than to enjoy it! Decide what your position is if there is a snow day before you have a snow day! I is also for Image.

S –  Self-care is king. If you feel someone is frazzled or stressed and hasn’t booked holiday or isn’t looking after themselves intervene! Great companies help their staff. S is also for Stay interviews. The opposite of Exit Interviews. Do these for the people you want to keep whilst you still have them. Shutting the door after the horse is bolted is not where you want to be. To be called in and told you are part of the future is powerful.

T – Tribunals are actually quite rare. Don’t overreact if someone mentions one. It’s to trigger you into offering a settlement often. Just take good advice from a professional that doesn’t benefit from going to an ET, follow a process, know your rights and obligations.

M – Mince pies are delicious. However every day from now until Christmas Eve might just be making your workforce feel slow sluggish. Get the Satsumas in!

A – Ameliorate –meaning ‘to better or improve’ your performance review process. Lots of tech solutions out there but often un-needed. Just think about how you can have regular supportive conversations with your teams. That are two way.

S – SAR’s requests. Sorry but they spring up like mushrooms at this time of year. Often deliberately timed to run over the Christmas period. Don’t panic – you can ask for an extension but also, we really like this company who can help the process. It’s the redaction and GDPR that take time. S is also for Single. Remember that some staff struggle at this time of year which is very geared towards couple and families.

If you would like to find out more about subscribing to the Amelore HR Helpdesk for unlimited access to HR support, please email us at





What are the unwritten rules at work?

When you start a new job, you may feel a warm, welcoming vibe as you’re introduced to your colleagues via a company-wide email and taken out to lunch by your boss.

In these early days, you’ll get information on how to file your expense report, order your business cards or how to claim expenses.  You’ll learn what the ‘official’ rules of the workplace are, what policies must be complied with, and what is expected of you in the role you were hired for. Along with an explanation of the company’s values, goals, and mission, your induction may include information on cool company perks such as being able to bring your dog to work.

There’s another category of new workplace rules though that’s not written down anywhere. Not only do they govern the way things actually get done, regardless of anything else you may have heard, but they also define the culture of the organization. “They pick up,” writes Frances Frei and Anne Morris in Harvard Business Review “where the employee handbook leaves off.”

“Culture,” Frei and Morris explain, “Tells us what to do when the CEO isn’t in the room, which is, of course, most of the time.” Though they aren’t documented, they are certainly observable in the workplace. And in the immortal words of Yogi Berra – “You can observe a lot just by watching.”

Here are six things you should observe about the rules you won’t find in your employee handbook.

  1. What flexi time really means:

You love the idea of flexi time and why shouldn’t you? You took the job, in part, because you liked the idea of calling the shots about when you log on and what time you get to the office. Perfect, you thought, as you signed on the dotted line: No more fretting that your boss is timing how long your dentist appointment has you away from your desk.

But, take note. Does your workplace really embrace the flexible arrangement it boasts? Or does it seem like most of your colleagues are at their desks by 8 AM and rarely out the door before 6 PM? Does anyone ever leave midday for a gym class, to go to the chemist, or even to squeeze in a haircut—or are those suspiciously comfy office chairs occupied all day long?

Understanding the reality of the workday and what’s expected of you—no matter what the hiring manager told you in the interview—will keep you from tripping up and help you schedule your extracurricular activities accordingly.

  1. When the work-day actually ends:

Sophie, a woman I worked with, started her second post-university job with huge enthusiasm, a pay raise, and a sparkling brand on her CV. Then she quickly realized she had a problem that was totally going to cramp her happy hour style: No one left the office until the boss did. And the boss didn’t leave until 8 PM.

Being the first to depart in a situation like that can be stressful. If you came in early, it’s likely that no one saw you arrive. If you leave early, everybody knows it. Regardless of how productive your day was, if you regularly jet hours before the majority of your co-workers, you may get inaccurately labelled as lazy or lacking drive and ambition.

The most important thing, of course, is that you get your work done, and that your boss knows you got it done. If the pressure to stay late never lets up, or if your performance is deemed lacking as a result, this might not be the right culture for you.

  1. The open -door policy:

You may find a peach of a company that will tell you the CEO’s door is always open! Come and share your best ideas! We want to hear from you!

The reality may be quite different. You see, it turns out that your manager does not love the idea of you marching into the executive suite and spilling all your brilliance.

Moreover, as lovely as an open-door idea is, it may not always be practical. The CEO may never be around or may rarely have a minute of time to spend with you, or any employee for that matter.

If your company says it has this policy, watch to see if anyone actually uses it (and what happens when they do). Best to be informed before you invite yourself in to share your big ideas with the head honcho.

  1. When you’re expected to respond to email:

Your manager loves to fire off detailed project emails late at night. No need to respond she says, she just needs to get it off of her mind. But the next day, when you notice that your colleagues are talking about the email exchange that happened while you were fast asleep, you feel out of the loop and uninformed.

Knowing when, and how, you’re expected to participate is important. So take a cue from your colleagues. Even if you’re not inclined to change your bedtime just so you can respond within minutes of your supervisor’s message, you can take a look in the morning and get yourself up to speed with anything you may have missed overnight.

  1. How to dress:

You wore your finest interview attire when you were called in to meet with the hiring manager and your future team members, but do you need to replicate that look on a daily basis?

As you walk through your new workplace, note whether your co-workers are dressed in jeans and flip-flops or business-casual attire. Depending on your role, you may be able to rock the T-shirt and trainers—or you might not. But no matter what, remember that your attire plays a role in how confident, creative, and competent you feel. And it certainly plays a part in how you’re perceived by the group as a whole, so dress accordingly.

Oh, and be sure to check out how the team handles tattoos and piercings. Some organisations or managers will be more open to these accessories than others. Observe what your department is doing, and follow suit.

  1. When to take holiday and for how long:

It’s been well documented that Millennials don’t want to be chained to the workplace. But every company defines the concept of work-life balance a bit differently. The stated Annual leave policy will tell you how much time you get to take off. The culture will tell you whether or not people actually pay attention to that policy.

Are you seeing lots of leave days booked and taken by others? Or are the office absences few and far between? Even in companies that offer unlimited holidays, employees may be reluctant to take much time off. Observing the behaviour in your organisation will give you a sense of what the actual Holiday policy really looks like, and how much freedom you’ll have for all the adventure travel you’ve been saving up for.

The bottom line is that no matter what you receive in your induction materials, so much of what you need to know in your new job isn’t going to be found on paper. By utilizing the powers of observation, you can get up to speed quickly. And so that you don’t commit any office faux pas—or worse, put your work ethic in question—you’d do well to figure out the unwritten rules as soon as you’ve memorized where the coffee cups are kept.


5 things every manager (of people) should know

Being a manager can be both a tough and a highly rewarding job. Often the result of a promotion coming after hard work. Or a brand new role in a new organisation.  But rarely does the status of manager come with a tight brief and any training. Most managers learn the hard way about what is expected of them and for many their main source of development is how they have been managed; well or badly.

If every manager understood the following 5 things clearly their chances of being successful and effective would significantly improve which in turn would have a powerful knock on effect across the company.

What their purpose is

When we audit companies we often ask the CEO and other senior people, what the purpose of different roles are. We also ask the individual doing that role. Often the definitions don’t match. Sometimes it sounds like two different jobs to us. If you do nothing else, make sure you can articulate the purpose of the manager’s role.

Often explanations talk about production, technical expertise, sales targets, quality but rarely do they talk about responsibilities for the people being managed. It can be seen as Business as Usual – ie in addition to other expectations on the manager meaning it will be a low priority. Which will impact on the whole culture of the organisation and not in a positive way.

What they can and can’t do

This might seem obvious but it rarely is.  We are talking about whether they can hire and fire, what their budget is, whether they can arrange training and promote people. Are they free to discipline their staff or must this be culturally approved? What isn’t written on the job description or needs to be explained?

What vicarious liability is and how it might impact on them

Vicarious liability refers to a situation where someone is held responsible for the actions or omissions of another person. In a workplace context, an employer can be liable for the acts or omissions of its employees, provided it can be shown that they took place in the course of their employment.

Many employers are unaware that they can be liable for a range of actions committed by their employees in the course of their employment – these can include bullying and harassment, violent or discriminatory acts or even libel and breach of copyright. It’s also possible to take action against an employer for the behaviour of third parties, such as clients and customers, provided these parties are deemed to be under the control of the employer.

The key question of any case of vicarious liability is whether the employee was acting in a personal capacity, or in the course of their employment. This can often be difficult to determine. Nor does an employer’s liability end once the employee leaves the organisation – as the law stands, action can still be taken against an employer even though the person in question no longer works for them.

What their H&S responsibilities are

Under the law employers are responsible for health and safety management. For every employee this responsibility lies with their manager. Even if there is a H&S Advisor. It is the managers that have the responsibility on a day to day basis because it is the employer’s duty to protect the health, safety and welfare of their employees and other people who might be affected by their business.

This means making sure that workers and others are protected from anything that may cause harm, effectively controlling any risks to injury or health that could arise in the workplace which includes managing and monitoring stress. Also managing sickness absence and understanding when an employee may need to be offered reasonable adjustments if they have a special need or a disability, and it might help them remain at work.

Employers also have duties under health and safety law to assess risks in the workplace. Risk assessments should be carried out that address all risks that might cause harm in your workplace.

What the unwritten rules are

Often the unwritten rules or internal ways of working are the biggest keys to success or failure. Knowing them is a start. Often politics is a key part of this. Who to know, be connected with. Who to avoid upsetting. How the organisation deals with conflict and disagreements. How the culture dictates the ways of working for the organisation.

We get involved in situations where managers haven’t worked out and often failing to understand and comply with unwritten rules (obvious to everyone apart from the manager) is sited. Imagine being told it was all over for failing to comply with rules that no-one told them about.

Often a solution to tackling any of these issues that you recognise can be signing up to an HR audit and a bespoke management training programme. So that you know your managers are being supported but also that what they are being taught and guided on is appropriate and on brand for your company.  This can be in conjunction with senior leaders and any internal HR function.

The good news is Amelore offer this service so do get in touch if we can help and advise you further.

The truth about Tribunal Indemnity Insurance

Many busy SME owners choose outsourced HR providers based on the fact that Tribunal Indemnity Insurance is offered and so they feel they have mitigated against a potential financial risk and made a good choice.

However many don’t fully understand what this insurance is and the impact on their business of signing up to such a service. They also have little idea of what risks if any they actually have in their business of someone making a successful claim against them. This blog explains it further.

What is it Tribunal Indemnity Insurance?

Because employment law can appear complex and full of tricky loopholes, the scaremongers selling tribunal indemnity insurance often have a field day by playing on people’s fears of something that can in many circumstances be prevented.

Tribunal indemnity insurance takes various forms which range from insurance against all legal and compensation costs arising from a tribunal claim, to just simply covering legal costs or nothing at all because you didn’t follow their rules.

As with any insurance policy, the first step is to think about the risk you are insuring against. It’s an easy decision for an electrical firm with a warehouse near a river to insure against flood damage. If there’s a flood, all of the stock could be wiped out and the business could go bust. The risk is high, and so is the potential cost of the insured event.

For business owners, it’s not so easy to quantify the risk and potential costs of a tribunal claim, so they go for peace of mind, and take the insurance. The reality is that there are many steps in the journey to an employment tribunal, and an employer who has sensible HR policies and procedures in place, and follows them, is at a very low risk of losing an employment tribunal claim. Even if the employer loses the claim and has to make a compensation payment, the costs are often nowhere near as high as expected.

The claim with the highest sum awarded was in a sex discrimination claim. These are technically uncapped, and can also include awards for injury to feelings.  But the median award in 2016/17 for Sex Discrimination claims was £8,381and for Disability Discrimination it was £10,235. Although there will always be media stories about huge successful claims, they are rare, and the median award is a more realistic indicator of your potential financial risk. The median compensation payment for Unfair Dismissal claims in the same period was £ 7,521.

Three things you should know about Tribunal Indemnity Insurance

No 1 – You may not even need it

The electrical services company will not sit and watch the river rising or not worry about their stock, just because they have insurance. They will use sandbags, move the stock to higher shelves, and stand by with buckets to bale out the water as it flows in. Nobody wants to have to deal with the aftermath of a flood. It’s better to prevent the damage in the first place. If business owners took the same approach to people issues, and took notice and practical action early on, there would be little risk of a tribunal claim, and therefore little need for an insurance policy.

There are HR experts, like us, who can explain all the rules, and help managers to take each step carefully, ensuring that employees are treated fairly and that the needs of the business are also met. This is equivalent to using sandbags.

If managers are not capable of handling an issue with performance, or there is a persistent problem, such as bullying and harassment, then HR experts, can provide training, coaching and even hand holding to support them. This is effectively like moving the stock to higher shelves. But the effect is longer lasting as they are learning how to manage such situations and won’t be fearful of them.

If matters are so serious that the employee is likely to be able to make a claim at an employment tribunal, there are HR experts like Amelore, who can help the business to evaluate the risk of a successful claim, and mediate between the employer and employee.  If that doesn’t work/or it’s to late for that then they can negotiate the terms of a settlement agreement, making a financial payment to the employee to leave the business and waive all their rights to making a claim against you. This is not desirable, and does cost money, but still salvages the situation, a bit like baling water with a bucket. However often this will be much less than you think.

No 2 – Not all of your costs will be covered

If the tribunal claim goes ahead, there will be legal costs, but much more significantly, there will be huge management time lost in the preparation and aftermath of a tribunal – these costs will not be covered by the insurance. The impact on employee motivation, and even on management morale, which ultimately hits the bottom line of the business, doesn’t have a price, and therefore isn’t covered by the insurance.

Using a pragmatic, knowledgeable HR professional to avoid the problem will always be cheaper than paying a lawyer to fix it.

No 3 – Insurance companies don’t like paying out

The real nub of the issue is this – there are so many ‘get out’ clauses in the tribunal indemnity insurance, that an employer runs a real risk of thinking they are covered, only to find that the insurance company then gives lots of reasons why they won’t pay out.

If the insurance is offered as part of an HR service, there will be a big caveat stating that if the employer doesn’t consult the service provider and follow the employment law advice to the letter, the insurance will be invalidated.

This also means that the HR service provider is likely to sit on the fence, or tell their client what the law is, without committing to a recommendation, for fear of invalidating the insurance. So the whole process will go on and on whereas most SME’s need a quick resolution so they can focus on their business.

Some providers may even boast that they help their clients to make sure their paperwork is correct, so that if a claim goes to tribunal, they will have a ‘bundle’ already prepared, saving lots of time. It doesn’t save lots of time for the business owner or manager trying to do their day job and providing them with that paperwork.

In our experience the vast majority of employees are reasonable people, who in turn want to be treated reasonably by their employer. The vast majority of managers and business owners want to have happy, engaged employees.

Surely everyone’s time and effort would be better spent building good relationships, ironing out misunderstandings, and dealing in a reasonable way with problems, than filling in forms, following scripts and ticking boxes to make sure that the tribunal insurance is not invalidated?


So in summary our advice is if you are looking at HR outsourcing providers don’t base your decision on fear.  Fear of something you don’t fully understand. If anyone is selling you their services and using fear as their main incentive ask yourself why?

A good HR outsourcing provider will audit your business and then make clear practical proportionate recommendations to ensure you are legally compliant and have good HR practices embedded. This may involve training your managers. This significantly reduces the risk of a successful claim against your business.

Also take care that the outsourced HR provider you select doesn’t tie you into a long notice period as that will tell you something important about them. Long notice periods are designed to cover poor service. Most SME’s don’t have the time or the energy to battle their way out of a contract they have signed in a rush without understanding the potentially negative consequences.

If you do have an employee dispute and are supported by an outsourced HR provider that doesn’t offer Tribunal Indemnity Insurance, this will be dealt with swiftly and you will benefit from pragmatic commercial advice about your options and any risks.

At Amelore we don’t offer Tribunal Indemnity Insurance. We work with businesses and individuals and firm but fair. We have also never been successfully taken to an Employment Tribunal.  We are not complacent about that fact but we are extremely proud of it.

How should payments in lieu of notice be taxed from April 2018?

From 6 April 2018 all payments in lieu of notice will be taxable, whether contractual or non-contractual. Income tax and class 1 national insurance contributions will be due on the amount of basic pay that an employee would have received if they had worked their notice in full.

What are the current tax rules on payments in lieu of notice?

Currently, if you have a contractual right to make a payment in lieu of notice (‘PILON’), that payment is subject to income tax and national insurance contributions (‘NICs’).

If you don’t have a contractual right to make a PILON (because there is neither an express term in the employment contract nor an established custom and practice of making a PILON), any payment made in respect of an employee’s notice entitlement is generally regarded as ‘damages for breach of contract’ and the first £30,000 can be paid tax-free and without deduction of NICs.

What tax rules will apply to payments in lieu of notice from April 2018?

From 6 April 2018, all payments in lieu of notice will be taxable. The principle is relatively straightforward but there is a complex statutory formula for calculating the sum that should be taxed, known as ‘post-employment notice pay’ (‘PENP’). PENP is, broadly, the salary the employee would have received during any unworked period of notice minus any contractual PILON. It is calculated by reference to:

  • Basic pay only (before any salary sacrifice), disregarding bonus, overtime, commission, benefits in kind etc.; and
  • How much statutory or contractual notice (whichever is longer) the employer is required to give to terminate the contract.

PENP is subject to income tax and NICs in full. The balance of the termination payment is eligible for the £30,000 tax exemption and full NICs exemption (provided it is an ex gratia payment).

Statutory redundancy payments are exempt from PENP calculations and qualify for the £30,000 tax exemption, provided they are genuinely paid on account of redundancy.

The new rules will apply only where employment terminates on or after 6 April 2018.

There may be significant tax implications for non-contractual PILONs made from April 2018. For example:

  • An employee’s employment is terminated without notice on 30 April 2018. The employee is paid £5,000 monthly (basic pay); has a 3 month notice period; and there is no contractual PILON. They receive £35,000 compensation on termination. This an ex gratia damages payment, not linked to any contractual terms such as bonus entitlement.
  • Under the current rules, the whole compensation payment qualifies for the £30,000 exemption. Income tax is due on the balance of £5,000.
  • Under the new rules, income tax and NICs (both employer and employee) are due on the PENP of £15,000. The balance of £20,000 qualifies for the £30,000 exemption.

And from April 2019?

Currently if a termination payment qualifies for the £30,000 exemption, tax is due on any excess over £30,000 but no NICs are payable. From April 2019, employer NICs will also be due on the balance over £30,000. With employer NICs currently at 13.8% this will significantly increase the cost of some termination payments.

In practice

All employers should be aware of the new rules and think about how they might impact on any termination negotiations. It seems that PENP will need to be calculated for each employee whose employment is terminating including those with contractual PILON clauses (although we are still waiting for guidance from HMRC).

Where there is currently no contractual PILON clause:

  • Making a PILON where the termination date is 6 April or later will potentially result in significantly increased costs for both employer and employee.
  • Consider whether to exit any employees prior to April 2018 to take advantage of the more favourable tax position.
  • Think about including PILONs in contracts going forward. Having a PILON clause allows a payment in lieu of notice to be made without being in breach of contract, thereby preserving any post-termination restrictions. There will no longer be any tax benefit in not including one.

Please get in touch with us if you would like to discuss the impact of the new tax rules on your termination arrangements.

More about Protected Conversations

An employment relationship can sometimes run its course necessitating a frank conversation with an employee. It may be in the best interests of both parties to bring the employment to an end by way of a settlement agreement.

Often, the best way to start that process is by having a protected conversation.

What is a protected conversation?

The law allows an employer and an employee to have an ‘off-the-record’ conversation in certain circumstances.

If you or your employee are proposing to end your employment on agreed terms, the conversation can be kept confidential. This means that what you say can’t be used as evidence in an unfair dismissal claim. Although there are some exceptions, generally the conversation is protected.

What are the exceptions?

Protected conversations cannot be held in situations where dismissals are automatically unfair, such as those involving health and safety matters or where the protection of the Public Interest Disclosure Act is invoked. Neither is protection afforded to breach of contract or discrimination claims. This can be a problem. An employer may not know what issues are going to be raised by an employee during a protected conversation so always take advice from an HR professional and research as much of the history about the employee beforehand as you can. Recognise that in some situations having a protected conversation many not be the best route to take.

What should you do if you want to have a protected conversation with an employee?

If you’re planning to have a protected conversation with your employee, make sure you prepare in advance. You need as much information as possible. You may find it helpful to ask/research questions like:

  • Why are you proposing to terminate the employment?
  • Has the employee got a history of anything that might be relevant – grievances, disputes, sickness absence etc
  • How much are you offering and how has that been calculated? (Any notice pay would be taxable)
  • Will you expect your employee to work their notice period?
  • Will you be offering a reference?
  • What is the alternative if you don’t agree to a settlement agreement? I.e. manage their performance under an internal procedure which may result in termination for poor performance and notice pay only OR investigate an alternative role in the company?

Your employee is not under any obligation to accept any proposed settlement agreement. In fact, the law doesn’t allow anyone to accept it until they have taken independent legal advice on it (paid for by the employer usually capped at £350 plus VAT)

Ask your employee to confirm (once they have thought about it) whether they would like you to confirm the proposal in writing. This could be a draft settlement agreement or simply a letter or email. This will help you to clarify what is being offered but always ensure that any subsequent correspondence has ‘without prejudice’ in the title or heading.

Can an employee initiate a protected conversation?

Although a protected conversation is usually initiated by the employer, an employee can also request one, provided that it is with a view to agreeing a settlement agreement.

If your employee states that they’re willing to have an off the record conversation, you can go ahead with a protected conversation if you are minded to agree a settlement with them to leave. Let them know that the details of the conversation should be kept confidential because it’s with a view to reaching a settlement agreement.  Make written notes of the conversation you have had.

At the meeting, you could propose a settlement agreement yourself or you could ask your employee to make a suggestion for you to consider.

Although the most important aspect of a settlement agreement is usually the financial amount, you should consider non-monetary aspects such as:

  • a detailed reference
  • career coach support (professional help with finding another job)
  • release from anything in your employment contract that restricts you after the end of your employment
  • paying for a training course

What happens next?

You should give a reasonable period of time for your employee to consider any proposed settlement agreement. ACAS recommends 10 days, although employers rarely give this long in practice.

GDPR – Employee record keeping and beyond

In a series of blogs, Amelore begin to look at GDPR from a HR perspective to ensure employers are ready for the new requirements in respect of their employee data and beyond. This will form part of a continuous focus on this hot topic until May 2018 when GDPR goes live. We appreciate many companies may not yet of begun their GDPR journeys, so we will be offering advice and guidance in short blogs.  We will also help to signpost employers to useful information which extends beyond the processing of employee data.

GDPR is itself an extension of existing UK data protection laws. This new legislation builds on the Data Protection Act (DPA) which employers already need to adhere to. DPA principles cover areas such as ensuring employers keep accurate, secure information.

The ICO (Information Commission’s Office) are at the forefront of helping organisations understand this evolution of our data protection laws. They recently published GDPR Myths. This series of blogs helps to demystify the new regulations.

Data breach – what an employer needs to do?

In ICO’s latest blog they provide valuable advice and guidance on how employers need to respond if a data breach occurs. They report that some employers have expressed concern that any data breach needs to be reported and that huge fines will ensue. The ICO say this is not the case and that only breaches that are likely to risk people’s rights and freedoms will need to be reported.

The ICO also point out that fines will be proportionate and that companies who are open, honest and report without undue delay can avoid fines. It is expected that by now, larger organisations will already have appointed a Data Protection Officer (DPO). However, smaller organisations are also advised to consider who in their organisation is responsible for data. We would advise all organisations, no matter how small, to know who is responsible for data (again not just employee data) and who is responsible for reporting a breach should it occur. This starts to form a robust approach to data governance.

Employee data processing

Employee data processing will be a key focus for many organisations, however some employers may be worried about any potential changes to how they currently store their data.

All organisations will be storing employee records in some way, shape or form; so you are now advised to review these filing systems, including the security of the data you are processing in respect of employing people, to ensure robustness. We have already observed some organisations writing to their third-party data processers asking for evidence of their compliance.

Handlers of this data need to make sure they are processing data fairly and for legitimate purposes. Furthermore, if they are transferring it outside of the EEA there are specific safeguards in place.

For those employers wondering if the UK’s exit from the EU will affect GDPR the government has already confirmed it will not. However, please note that International companies operating across EU states will need to work out who their lead data protection supervisory board is.

Further still, forming a data protection working party or project team to audit what data is being processed is also advisable. Many companies are already helping organisations with data mapping and auditing. Amelore work closely with Mazars to provide a range of services for our clients.

In summary, the good news is that common sense does prevail and that the processing of data where it is necessary for the performance of a contract will be a valid reason for processing. If you have any queries or questions in relation to any of the points made please contact Amelore for further advice and guidance.

We will continue to focus on this topic as we approach next year tackling other aspects of the GDPR (link to first blog) in further detail; such as consent, the right to be forgotten, and subject access requests.