Redundancy Settlement Agreements – what employees need to know
I’ve been told I’m at risk of redundancy and offered a settlement agreement. I thought I had a right to be consulted and I’m concerned I seem to be the only one in my team who’s been approached about leaving. Any advice?
A redundancy settlement agreement is not uncommon when an employer is offering an employee move than he is entitled to as a statutory redundancy payment and under his employment contract.
Kirk Tudhope, partner at Ledingham Chalmers answers…
Although any suggestion that you may lose your job can be both stressful and hurtful it is worth taking a step back and looking at the offer. If you are confident that you can secure equally lucrative, alternative employment then, irrespective of how unfairly you may have been treated, it could make sense to accept the offer and move on to somewhere you feel more appreciated. For example, if you have been offered a sum equivalent to a statutory redundancy payment plus six months wages, the maths will be clearly in your favour if you are earning a similar salary a few weeks after losing your job. If, however, the offer is little more than you would secure in the event of dismissal, e.g. statutory redundancy plus sum in lieu of notice, then there is little incentive to accept the deal.
If you are not inclined to accept the offer your concern about being apparently singled out is understandable and may well be full justified. Prior to reaching a decision to dismiss, an employer should go through a reasonable or fair procedure. In the case of redundancy the procedure would indeed involve consultation. It may also include using criteria to select from a pool of persons at risk. If an employer does something which is indicative of reaching a concluded view at the outset of any dismissal process (and that could include making a severance offer to only one person) then it may be suggested that any process was a sham or at least was tainted by the fact the employer was not open minded as to outcomes. These concerns could well form grounds for a claim of unfair dismissal if the employee has sufficient length of service to make the claim. In most cases, for anyone engaged on or after 6 April 2012, this is two years.
Making an unfair dismissal claim is, of course, dependant on you losing your job. Clearly most would prefer to leave with an agreed severance package rather than taking their chances with an employment tribunal claim. Accordingly you may wish to review whether there is scope of further negotiation. An offer can, of course, be answered with a counter proposal or a suggestion that agreement could only be reached if a more attractive sum were on the table. If your employer is concerned about a claim they may feel more inclined to be generous. Accordingly legitimate concerns about being singled out by your employer could assist you in explaining why the current proposal is unacceptable and also why a higher sum is sought. These are tactical considerations and are partly dependant on how confident you feel about having such a candid discussion. If you feel uneasy you may want to explore through someone acting on your behalf, including a solicitor or union representative.
Answer given by Kirk Tudhopes on 3 October 2013
IMPORTANT: The contents of this page are for guidance only and do not constitute legal advice. You should consult a solicitor without delay if you require legal advice on a particular employment matter.