Q: I’ve been offered a settlement agreement. My employer is making my role redundant and I’ve been told I will get statutory redundancy plus an extra £1,000. In previous redundancy situations going back years the company has paid much more generous enhanced redundancies to employees. Do I have a right to the same deal?
Tom Moyes Employment Associate at Blacks Solicitors answers…
Sometimes employers do offer more than the statutory minimum for redundancy. Sometimes the amount you are entitled to is prescribed in an internal redundancy policy, so check if that document exists first.
If there is no contractual redundancy policy in existence then you will be relying on a ‘custom and practice’ argument. A custom and practice argument of entitlement can be difficult, especially if employees that have left in the past have received their sums by way of a settlement agreement.
For enhanced redundancy terms to be implied into contracts of employment, employees must show that the terms are amongst other things, “generally established (well known) and clear cut”.
The tribunals have set out guidelines to follow to establish whether there is an implied policy, such as:
• Has the policy been followed without exception for a substantial period?
• On what number of occasions has the policy been followed?
• Do the employees have a reasonable expectation that enhanced payments will be made?
• Have the terms of the policy been consistently applied on every occasion that redundancies have been made?
In cases where there has been a practice of increasing redundancy payments in the past it is always worth running a custom and practice argument to try and improve the offer detailed in the settlement agreement. If there is no policy or custom and practice then there is no legal entitlement and the additional compensation is at your employer’s discretion, however, this could be open to negotiation if the dismissal is potentially unfair.
Answer given on 30 May 2014.
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.