Employee changes his mind after resigning
GF writes: One of our employees had an argument with a colleague and, in a fit of anger, handed in her notice. We accepted the resignation, but 48 hours later she changed her mind, saying the situation had affected her decision making. Unfortunately, we have already advertised the position internally. Do we have to accept her change of mind?
Hasty resignations can cause headaches for employers and you should proceed with caution, writes Peter Done, managing director of Peninsula. What you can do depends on the circumstances of the case.
One important factor is the employee’s length of service. If she has sufficient service to claim unfair dismissal, you should tread more carefully. This is because refusal to consider an employee’s rescinded resignation could, in some circumstances, be seen as a constructive dismissal. This would result in the same sort of financial penalty as in a case of unfair dismissal.
You should also consider whether there is any discriminatory element in your actions. The Equality Act 2010 protects individuals who possess a protected characteristic — such as disability, race, age and so on — and a refusal to consider a rescinded resignation on grounds of one of the protected characteristics may constitute an act of discrimination.
In the same vein, the circumstances surrounding the argument would need to be investigated. Could the employee claim there was a discriminatory angle to it? If a grievance could be raised, you should consider whether to offer the grievance procedure to the employee, regardless of whether she is coming back or not.
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Although not a legal consideration, you may want to think about what the employee is worth to you. Is she a good worker? If so, then this may be a good reason to allow her to take back the resignation.
However, at the end of the day, if there are no contentious points, there is no legal requirement for you to accept her change of mind.
Bets way of bringing in another partner
AS writes: I would like to bring a new business partner into my limited liability partnership (LLP) and she is willing to invest £50,000 for her stake. What is the best way to do this?
There are two ways you can introduce your new business partner to your LLP, writes Jon Dawson, partner at Kingston Smith LLP. You can ask her to contribute £50,000 as working capital by way of a loan or you can sell her part of the existing equity ownership.
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If you take the first option, an injection of working capital would sit as a loan within the incoming member’s current account but it should allow you and other LLP members to withdraw some of your own capital. You would ideally want to achieve a level of working capital equal to your stake in the LLP, so no single member is over-exposed. This approach should not give rise to any tax liability on the members.
Alternatively, the incoming business partner could buy a share in the LLP direct from the current members. This could be a way for one member to exit or reduce their interest, but you could also dilute everybody’s share. Under this approach, the member selling their equity would be making a capital disposal, which could give rise to a taxable capital gain or a capital loss.
The best approach will depend on the individual circumstances of the LLP members, their tax positions and on the cashflow requirements of the LLP.
The new member will need to sign up to the agreement that governs the relationship between members and the LLP, including how any profits or losses will be allocated.
This may be a good opportunity to review the agreement and consider if it requires some revisions or a total rewrite.
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Once you have made the appointment you have to inform Companies House, your bank, HM Revenue & Customs and any regulators.
Kingston Smith LLP, the chartered accountant, and Peninsula, the employment law firm, can advise owner-managers on their problems. Send your questions to Business Doctor at bizdoc@kingstonsmith.co.uk, write to The Sunday Times, 1 London Bridge Street, London SE1 9GF, or fax to 020 7782 5765. Advice is given without legal responsibility.