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Case Study: Liability on the Books

The Client
A small IT software company considering putting itself up for sale, but with one employee away on long-term sick leave.

The Challenge
The business had been hit hard by the economic conditions and the director was considering selling the business as he was getting to the stage where he wanted to retire. However, one of his software developers had been off sick for several months with an illness that would be considered a disability. The company had been extremely generous and was still paying the sick employee at his normal rate of pay. However, they were concerned that this had been dragging on. They were sympathetic to the sick employee, who was a friend of the director's, but the company didn't know how to approach him for a discussion about what to do next and were worried about the implications of any potential claim of disability discrimination. The employee did not have a written statement of his terms and conditions of employment and the company had known about his illness when they took him on several years ago. They had exhausted all reasonable adjustments that they could make in respect of his disability. The company approached its firm of accountants, to ask for advice. The accountants referred the Company to Helen Astill of Cherington HR, as this was more complex than their usual queries about sickness absence and payroll implications.

The Solution
Helen spent time reviewing the situation with the Director and exploring the various options with him. She identified the fact that they wanted to be considerate to the employee, but that they needed to move forward and remove the uncertainty that had surrounded the issue. She worked with them to review the way that they were working and the fact that in reality the post had become redundant as a result of the fact that they were about to lose a major client. She helped them go through the redundancy consultation process and the sick employee applied for voluntary redundancy as a consequence.

The Results
The ex-employee received his redundancy pay and payment for his notice period, which was a welcome payment in his circumstances and he felt it had all been handled sensitively. The Company has now removed the liability for the ex-employee from its books and can now work with its accountants again to move forward with any potential sale. The feedback from the Company about the service given by Cherington HR has reflected well on the accountants. To quote the Director, "Thank you for your advice which has been most helpful in resolving this difficult situation successfully for all concerned."

Key words: Absence; Redundancy; Business Sale; Disability; Reasonable Adjustments; Accountant

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