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The Little Book of Employment Law for Luxury Brands
Did anyone else receive a limited edition, diamanté encrusted, P45 wallet? 2
Welcome Protecting the Brand The Basics Things to Focus on for your Creatives and Execs The Contract is Important but Statutory Rights rule Interns – Less of the Devil Wears Prada, Please! Keeping Big Personalities in Line Corporate Social Responsibility and the Brand Social Media Issues Saying Good Bye (in Style) Dismissing by the Book Follow a Fair Procedure Parting Ways By Agreement About the Team 4 6 7 8 10 13 17 19 22 25 27 29 32 36 3
Welcome Your people are your best brand ambassadors and we like to make sure that HR issues do not get in the way of that! This Little Book therefore provides an overview of those employment law issues that you will want to keep in mind to protect the brand that you have worked so hard to build. It features the work of talented illustrator, David Orme. Very best wishes The Team at CM Murray LLP info@cm-murray.com | +44 (0) 207 933 9133 This booklet is only a brief overview of relevant English employment law and is for general purposes only. Specific legal advice should be taken on particular circumstances – please do contact us and we would be pleased to help you. Information is correct as of January 2021. 4
I’m meeting with our biggest competitor next week... Just keep him talking. 5
Protecting the Brand Some key employment law issues that have the potential to damage a Luxury Brand include: • Loss of your confidential and proprietary information • Threats to your Intellectual Property • Exits of key staff to competitors • Bad behaviour by public figures and others employed by or connected to the Brand • Damaging public litigation, for example discrimination complaints by your staff Read on to find out more about how to handle these issues, reduce risk and to protect the Brand as far as possible. 6
The Basics Employees must receive a written statement of terms within 2 months of starting employment. Most employers provide a more detailed employment contract. The statement should contain details of matters such as: • the parties’ names, and the job title or description • the date on which employment (and continuous employment) began • the rate of pay • hours of work • holiday entitlement • sick pay and leave • pension arrangements • notice period; and • place of work (amongst others) 7
Things to focus on for your Creatives and Execs In a market where innovation and creativity can distinguish you from your competitors, make sure confidentiality and intellectual property clauses are carefully considered and tailored to properly protect the brand. Also consider upfront the protections that may be helpful to the brand in the future if you are faced with the exit of a key member of staff, including: • Length of notice period • Garden leave provisions 8
• Post-employment restrictive covenants: non-compete clauses, non-solicitation/ dealing provisions relating to clients, customers, suppliers and colleagues • Non-disparagement provisions • Controls around public statements 9
The Contract is Important but Statutory Rights Rule Employees are also entitled, subject to certain conditions, to a number of key statutory minimum benefits and rights which override lesser contractual provisions, including (amongst others): • 28 days’ holiday a year (including bank holidays); • Statutory sick pay for 28 weeks in any three year period; • A pension scheme provided by the employer, with statutory minimum contributions; 10
• Right not to work more than 48 hours a week (although employees can opt out of this right), and certain rest breaks; • Maternity, paternity and other family friendly rights and protections; • Minimum statutory notice of termination of one week for every year of service, up to a maximum of 12 weeks’ notice of termination; • Unfair dismissal protection and statutory redundancy payment rights (both normally subject to 2 years’ service); • Discrimination and whistleblowing protections, with the risk of uncapped compensation if a claim against the brand is successful. 11
Our new and improved company logo! An audacious move for an intern! 12
Interns – Less of the Devil Wears Prada Please! Big brands often have lots of people keen to get a foot in the door by spending a period as an intern. However, bear in mind that the legal status of interns is not clear cut. While the risk of your intern qualifying for “employee” status may be relatively low, they may well meet the tests for “worker” status. “Workers” have extensive rights, including the right to be paid National Minimum Wage and to annual leave and rest breaks (as well as having statutory rights, for example discrimination and whistleblowing protection). 13
To seek as far as possible to reduce the risk of your intern having worker status, consider the following: • Document the arrangement (making clear that the internship is not an employment relationship) • Unpaid internships should be kept short and not go on indefinitely - unless an internship is a formal placement as part of an education course, any unpaid arrangement should ideally not last more than a few weeks and expenses should be reimbursed • What will your intern do? Document it clearly – this should be a learning experience, not free labour! Set out learning objectives and make it clear who their main point of contact will be 14
• Payments or other benefits exceeding reimbursement of expenses may be construed as wages which increases the risk of the intern having worker status • Do not make promises of future employment! Even where your intern does not qualify for worker status, remember that you will still owe them important data protection and health and safety obligations. Finally, if the intern will have access to confidential information or potentially be involved in the creation of intellectual property (IP), consider putting in place an agreement which addresses IP rights and confidentiality. 15
You dare to stifle my innovation and creativity?! 16
Keeping Big Personalities in Line With creative people, come creative problems and big personalities can lead to big HR problems! Our key tips: • Have clear policies that set out the standards of behaviour required of all staff, including at work events outside of the workplace • Ensure an open culture, supported by senior management, for staff members to speak out against behaviours that they consider unacceptable 17
• If behavioural issues are identified, take immediate steps to assess the risk to the organisation, considering whether disciplinary action is necessary, and other steps such as training and coaching • Follow formal appraisal processes for all staff, including at the most senior levels, to allow issues to be addressed and rectified early • Document all HR processes 18
Corporate Social Responsibility and the Brand No longer judged solely on the final goods and/or services it produces, a brand today is built and judged on the way it conducts its business more widely. In the luxury sector, brands should be particularly aware of the potential for supply chain issues to negatively impact their businesses. This is in addition to having thorough compliance and governance processes, meaningful Corporate Social Responsibility projects and demonstrating a responsible attitude to ethical issues such as environmental impact and sustainability. 19
We must review the brand’s environmental impact. I’ve worked here for years it’s not affected me! 20
Transparency in Supply Chains – the Modern Slavery Act 2015 places a legal responsibility on companies with a turnover of £36 million a year or more to publish a “slavery and human trafficking statement” for each financial year, disclosing steps they have taken to ensure their business and supply chains, wherever they are, are free of slavery (or confirming that they have taken no such steps). These statements must be published on the company’s website and are increasingly scrutinised by customers and the media alike as a key part of a brand’s corporate social responsibility efforts. 21
Social Media Issues Social media will be an important facet of your brand’s digital marketing strategy - ensure that careful thought is given to the extent to which employees can participate in the brand’s online presence and level of control you wish to exercise. Consider: • Do you have a social media policy in place? • Are employees permitted to engage in conversations regarding the brand on Facebook, Instagram, Twitter or blogs? • Are staff allowed to hold themselves out as connected to the brand on social media channels? • Who is monitoring social media channels? • Does your disciplinary policy make clear that conduct which would result in disciplinary processes offline will also apply to actions taken online? 22
In this locked room 200 interns monitor social media ensuring our company’s ethics policies are not discredited. 23
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Saying Good Bye (in Style) Terminating the employment of your employees can be done in different ways and what is appropriate in one set of circumstances may not be the right way to handle matters in another. Ultimately the Brand’s decision will depend on several factors, including: • The relevant legal issues – e.g. does the employee have two years’ service required for unfair dismissal (except in certain limited circumstances); any potential discrimination or harassment claims; or have they raised concerns of wrongdoing that may qualify for whistleblowing protection? 25
• The Brand’s attitude to risk and the potential financial (and reputational) exposure. • Cost, business needs and management time. • Other commercial considerations in the individual circumstances. 26
Dismissing by the Book A dismissed employee with at least two years’ service has statutory unfair dismissal protections (there are limited circumstances when no minimum service is needed). This means that when contemplating dismissing an employee, you should: • Have a potentially fair reason to dismiss; and • Follow a fair and reasonable procedure. Otherwise, the dismissal will normally be unfair. 27
The 5 Potentially Fair Reasons • Conduct (e.g. theft, persistent lateness) • Capability (e.g. underperformance or ill health) • Redundancy • Where continued employment would breach a statutory requirement (e.g. loss of visa or driving licence) • Some other substantial reason (e.g. reorganisation, relationship breakdown) You will need to have evidence to support a fair reason before taking the decision to dismiss, otherwise the dismissal will normally not be fair. 28
Follow a Fair Procedure Failure to follow a fair process can result in an otherwise potentially fair dismissal being unlawful. Consider the relevant process to be followed (depending on the reason for dismissal), in particular (without limitation): • For most disciplinary and dismissal matters the ACAS Code of Conduct on Disciplinary and Grievance Procedures will apply. Failure to follow the Code may result in a 25% increase in compensation if the employee succeeds at the Employment Tribunal. 29
• Except in very limited circumstances, a capability dismissal will be unfair unless the brand can demonstrate it has afforded the employee a chance to improve and provided support for them to do so. • In redundancy situations, consider the correct pool for selection, apply objective criteria, carry out a proper consultation process and consider suitable alternative roles. 30
Consider this less of a dismissal and more of a re-unification with opportunity... 31
Parting Ways by Agreement In some circumstances the brand may choose to come to an agreed exit with the employee rather than go through a lawful termination process. When considering this option, keep in mind: • The personality of the individual – e.g. will they appreciate the opportunity to agree an exit in a dignified manner or are they likely to be litigious? • What level of financial incentive is the brand willing to pay in order to avoid following a legal process and will it be sufficient for the employee to agree to settle any potential claims? 32
Did anyone else receive a limited edition, diamante encrusted, P45 wallet? 33
• The legal status of discussions with the employee – consider whether a statutory pre-termination discussion is appropriate or whether the discussion can take place on a without prejudice (confidential and non-disclosable) basis. • In order to protect the brand, document any agreed exit in the form of a binding settlement agreement. • Consider additional protections in the agreement, including confidentiality around the circumstances of exit and non-disparagement obligations (including in respect of the brand, its products/ services, its people and so on). 34
• Ensure that the employee’s waiver of claims under the settlement agreement extends to any group companies and individuals related to the brand (e.g. current and former employees, directors and so on). 35
About the Team Clare Murray Managing Partner clare.murray@cm-murray.com +44 (0) 207 933 9134 David Fisher Partner david.fisher@cm-murray.com +44 (0) 207 933 9133 Sarah Chilton Partner sarah.chilton@cm-murray.com +44 (0) 207 933 9125 Zulon Begum Partner zulon.begum@cm-murray.com +44 (0) 207 933 9123 36
Beth Hale Partner and General Counsel beth.hale@cm-murray.com +44 (0) 207 933 9131 Merrill April Partner merrill.april@cm-murray.com +44 (0) 207 933 9139 Emma Bartlett Partner emma.bartlett@cm-murray.com +44 (0) 207 933 9133 37
CM Murray LLP is a specialist UK Employment & Partnership law firm. Chambers and Partners: Ranked Band 1 for Employment: Senior Executives & Corporate & Commercial: Partnership “ This ‘hugely innovative’ employment and partnership boutique has recognised strengths in advising clients on City team moves, high-value discrimination claims and senior executive exits. The team frequently handles cross-border matters for both individuals and corporates.”
Legal 500: Ranked Tier 1 for Employment: Senior Executives & Corporate & Commercial: Partnership “ The firm specialises in acting for firms and individuals in distress situations, where there are serious threats to reputation and where there are multiple jurisdictions involved.”
CM Murray LLP First Floor, 36–38 Cornhill, London, UK EC3V 3NG www.cm-murray.com T: +44 (0) 207 933 9133 Out of hours: +44 (0) 7957 383079 Twitter: @CMMurrayLLP 1 2 0 2 P L L Illustrations by David Orme dorme@hotmail.co.uk Design by toucari.live Y A R R U M M C ©