‘The devil is in the detail’

Informal deals done ‘on the back of an envelope’ can cost you dear as a local estate agent recently discovered when the Industrial Tribunal determined that a former employee was entitled to a pro-rata share of the company’s annual profits in his final year of employment.

By way of background, the Claimant was employed by the Respondent’s estate agency franchise.  In the course of that employment, the parties entered into a seemingly informal unsigned arrangement whereby the employee would be entitled to receive 20% of the respondent’s post-tax annual profits. The Tribunal noted in passing that the Claimant never received a written statement of the terms and conditions of his contract of employment. 

The Claimant left his employment in the course of the 2016-17 tax year and sought his cut of the annual profits. 

The Respondent’s case was that their informal arrangement was never intended to be a formal contractual term nor would it entitle the Claimant to such a payment after he left his job. With the benefit of hindsight, this is something that should have been formalised between the parties. 

The Industrial Tribunal concluded that the agreement was intended by both parties to be ‘…a permanent, structural addition to the claimant’s contract of employment.’  

What do your written statements of terms and conditions actually provide? 

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