Redundancy Stunts

So I work for a global fintech company HQd in the US. They’re restructuring – offshoring mainly IT jobs from expensive places to cheaper places.

Next week they are going to be announcing who in the UK is impacted by this. As i understand it, it will be multiple individuals who perform a role who will be let go, but I don’t know if my role is affected yet.

It has been utter chaos while this restructure has been ongoing for the past few months (e.g. teams in other geographies we work closely with simply disappearing, and projects grinding to a halt as a result).

So to be honest I would actually be really happy to go with a decent redundancy payout as I’m sick of the bullshit TBH.

I do have some intel from a colleague who was made redundant around the turn if the year as part of this that they were given a settlement in order to shut up and not take them to a tribunal (I think this is called a Compromise Agreement?).

Anyway, I’ve never been through a redundancy process before and I want to be prepared if I do get the nod.

What should I be watching out for? E.g. what stunts do companies pull to try to minimise their settlement payments and / or skirt around the legalities if redundancy?

I’ve been there 10 years by the way. Not a union shop.

As part of my settllement agreement, the company was very keen to pay for me to have an independent solicitor look over the agreement, as to avoid any comeback later on, so do that. Then as long as you are happy with the pay out, crack on. I’d been there 12 years, got a years salary in compensation.

Thanks.

Is there any rule of thumb regarding what is likely to be offered? I will be getting hold of my employment contract next week but I’m pretty sure it just says statutory …but I’m also pretty sure thats what it said for my colleague who wwnt also –  and they got an additional settlement on top.

but I’m also pretty sure thats what it said for my colleague who wwnt also –  and they got an additional settlement on top.

This isn’t a custom and practice rulling.

Anything over and above your contract usually depends on how quickly and quietly they need rid of you.

Is there any rule of thumb regarding what is likely to be offered?

If its a US company then expect it to be absolute minimum, or they just make your life so unpleasant that you decide to leave before it gets to a redundancy stage.

https://www.gov.uk/calculate-your-redundancy-pay/

Will also get your notice period paid up if you are going immediately. Do you get a bonus? Make sure you get a pro rate payout.

In advance, read through the official Government page on redundancy; https://www.gov.uk/redundancy-your-rights

Run your details through the calculator to see what the legal minimum payment would be; https://www.gov.uk/calculate-your-redundancy-pay

Have a look at the ACAS website; https://www.acas.org.uk/your-rights-during-redundancy

As an American company they may try and run the whole thing based on American employment rights. If they break any UK rules/laws then you will probably end up going down the route of a settlement agreement. This is where ACAS can be a big help, but you need to register any potential ‘complaint’ within 3 months. Don’t be scared to call them for free advice and register your potential complaint based on what they say.

Many employment solicitors offer 1/2 hour free phone consultation if you feel you are drowning in detail once you have heard what your employer has to say.

MOST IMPORTANTLY; Don’t agree to anything in the initial meeting/consultation. Listen to what your company  have to say, take any paperwork they offer and go home to do your homework.

Not sure I agree with Chew. My compromise agreement from a US company was 2 weeks salary for every year of service plus £30k plus 3 months notice. And as above the company paid for a solicitor to rubber stamp the agreement. Hope you get a good offer.

Thanks all, it’s a significant UK presence with own UK legal department so they are well aware of UK employment regulations. Whether they try to flout any of it remains to be seen!

I’ve been made redundant twice

Once after 4 years- 4 weeks salary

Once after 2 years- 4 weeks salary.

Perhaps I should get a job with a us company!

MOST IMPORTANTLY; Don’t agree to anything in the initial meeting/consultation.

Is it legal for a company to offer something that’s only available if you accept it in the initial meeting or that same day? To pressure you into accepting it out of fear of getting even less.

I will be getting hold of my employment contract next week but I’m pretty sure it just says statutory

Contracts are unlikely to specify anything above statutory IME. In a way, that’s better for you because it gets paid tax free (anything contractual is subject to income tax).

As for redundancies, if they’re making a certain number amount of people redundant, they have to inform you that positions are at risk and have a consultation period. Can’t remember the specifics, but it’s worth being aware of them – companies often try to skirt on the edge of it. Selection criteria should be objective and transparent, no doubt they’ll massage them to ditch the people they want to, but if they’re dubious, you can use that as part of any settlement agreement negotiation.

Check if your company has a UK redundancy policy. Ours has separate UK and US policies. A search on the internal web should turn these documents.

good luck. there’s loads of this $h1t going on at the moment.

Mine was a US parent company too.

Statutory payments aren’t really relevant here, as you are doing the company a favour by letting them not go through all the rigmarole of redundancy, so it should be a significantly better offer than that.

Ime companies usually muck up redundancy leaving employees the opportunity to challenge for unfair dismissal at tribunal.

The best outcome then is a compromise agreement or whatever they are called now where they give you money to shut up and go away.

Listen to what they say.  Agree nothing on the spot.  Get proper advice.  Wait for the cockup and then threaten tribunal and wait for the compromise agreement

I don’t think it’s necessarily bad to agree to something straight out. Have a number in your head you’re happy to sod off with. If they offer that, then why not take it? I know if I was offered a year’s money, or more, to go tomorrow, I’d bite their arm off.

I’d submit that much as I respect TJ’s personal experience as an employee and a union rep he has limited experience of ‘companies’ and in fact most DON’T muck it up. Particularly when it’s part of this type of restructuring / downsizing type activity where the HR folks will have been involved from early – I suspect many cases where companies get it wrong and leave room for challenge are where managers have started ‘the process’ against employees they don’t like / want to get rid of and have screwed up and then absolutely they deserve having it used against them. My mate’s wife is an HR director and some of the stories she can tell about having to unpick situations like this are eye-opening.

I’ve 2 lots of experience; once as a manager ‘doing’ the restructuring where I sat in on a number of HR led conversations on the process and with employees and then as an employee myself, where the company paid a specialist employment lawyer who knew their onions and left no loophole.

That doesn’t mean all HR are perfect, some may still screw up. And if they do it strengthens your hand as TJ says. However, I’d also look at this as different in intent. As a manager managing through this process because of a site closure then you might (just slightly)  see the company side, I didn’t want to have to do this but the business couldn’t afford to run 2 labs and had chosen the other one to consolidate to. Being reasonable and fair while trying to get the best you can goes some way – those that negotiated hardest in a confrontational way didn’t necessarily get the best deals.

**

To the mechanism. ACAS site is great for this (when my time came I’d forgotten all the detail stuff so used this for my own ends) but to set out the outline and address a few points above.

https://www.acas.org.uk/sites/default/files/2021-03/settlement-agreements.pdf

There are no compromise agreements, the term is settlement agreement. If you read advice on CAs be cautious, as it may be used interchangeably, or it might be out of date advice

A settlement agreement is a voluntary arrangement in which the employee agrees to end their employment and waive rights to then take the company to court over various things – unfair dismissal, constructive dismissal, etc. IIRC, there are still some things that can then override that – particularly protected claims like racism, etc. which can’t be signed away, but as that wasn’t my situation don’t take that as gospel. Because you’re giving up legal rights you HAVE to have independent legal advice – we’re not deemed competent to make our own decision on this and hence without ILA a SA even if signed is not valid. That’s where it is usual practice that a company will pay for that up to a fixed amount so they can explain and make sure you know what you are agreeing to (if you then engage them to fight for you or negotiate on your behalf then the company won’t cover that, but then you’re into No Win No Fee and the like – I digress)

In a case like yours, depending on how many people are being let go then there may need to be consultation periods, etc., various other things like trying to find alternative roles, etc. but assume after all that is done then some people are to be let go. The amount you can ‘expect’ is set by law – depends on your age and years of service

half a week’s pay for each full year you were under 22
one week’s pay for each full year you were 22 or older, but under 41
one and half week’s pay for each full year you were 41 or older
Length of service is capped at 20 years.

In addition, they only have to pay up to a maximum which is a pretty low number for many middle manager STW types – equiv to about £32k/y salary – and while a company MAY choose to offer more they don’t have to. This is important though when it comes to tax, more later.

If you were made redundant on or after 6 April 2023, your weekly pay is capped at £643 and the maximum statutory redundancy pay you can get is £19,290. If you were made redundant before 6 April 2023, these amounts will be lower.

And if they’ve got everything right and are certain they haven’t screwed up the process then they don’t need to offer a SA because what will you have to take them to court over? However reality is that most cases will offer a SA as a sweetener and to guard against that to ease it through. And it’s a negotiable amount as others have said, no need to take first offer, etc.

If you are also paid in lieu of notice, you can have that as separate to the above. That would be at your rate, not capped as it’s part of your contract, not a Gov/law thing. But you will be taxed on it.

So – tax. How much you get in actual money depends on what categories it comes into. Some is taxable, some not. A fair amount is negotiable eg: if you can afford to do it, getting your payments into a pension rather than as ‘cash’ avoids tax. Getting this right can make a big difference and this is where if they are good the HR department might help you. Makes no real odds where it goes and they don’t really like paying tax any more than you do so if that’s an option ask them to work with you on it.

https://www.gov.uk/termination-payments-and-tax-when-you-leave-a-job/what-you-pay-tax-and-national-insurance-on

Last point as someone above asked – can they put pressure on to get you to accept? Yes and no – if the employer exerts ‘improper behaviour’ as part of the process then it opens up potential ramifications. Offer only valid for 24 hours could be considered to be that sort of thing, OTOH if a company wants to move ahead (eg: in case of voluntary redundancy) then expecting a response in a reasonable timeframe isn’t. That might be a case where if you want to, then let them, don’t meet their timescales, see what happens and then whack them with it as a means to up the pressure on them……ACAS doc covers it all

Good luck!

I took redundancy after 27 years with the same company. They made it quite clear from the outset that a year’s salary + 3 months notice was the maximum they offering. They gave me a number of a local solicitor (which they paid for) and a settlement agreement that I could sign and get the 15 months dosh, or not and get the statutory minimum (which according to that gov link above was about half of what I actually received). I did indeed bite their collective hands off, signed the agreement, and walked off into the sunset. And retired 😄

A compromise agreement is you waving your employment rights in return for a better severance package. They have to pay for you to get the agreement checked by a solicitor. It used to work out better for both parties in most cases as you didn’t pay tax on any notice period, it was all rolled up into a single tax free pay out but HMRC clamped down on that.

It’s quite normal but make sure you know what you’re legally entitled to, unless they are properly exceeding that they there is little point in accepting the agreement.

If you do accept it you are waiving your rights to make a claim and it will usually contain a confidentiality clause so you don’t tell colleagues what you got, they may not offer everyone the same terms.

If you are probably going anyway then work out what you would like. Think about how long will you likely be out of work, what bills do you have to pay, etc. Nothing wrong with taking, or negotiating a deal in the meeting if you have a figure in mind.

For numbers I’d say a week’s pay per year of service is poor. A month’s pay is good. More than that is great. It’s just an offer, you can counter, and even the poor offer is better than nothing and will pay the bills for a while.

A mate of mine went into the locker room and moved everyone’s safety boots around. They had a pair when they came in, but they weren’t theirs and didn’t match…

They had shaved one of his eyebrows off at his leaving drink though

“If its a US company then expect it to be absolute minimum”

My US employer is known for being very generous with their redundancy packages (and tbf also capricious in their strategic decisions so that there are waves of redundancy every 3 years). 150 people were made redundant (in circumstances where the business really had to close for external reasons) and they gave everyone a year’s salary when they could have paid about 50 quid and a bus pass.

Someone above mentioned pro rata’d bonus amounts, ask for any outstanding holiday to be wrapped up in there too. Mrs-G was working part time when she was offered redundancy so there was some complexity around how many days holiday she had left and rather than work it out the company tacked on a full year’s holiday allowance.

 

As others have said the whole thing with the HR guys was much more about ensuring everything she was entitled to was covered, 2 weeks per year, 3 for the years over 40, bonus, holiday, and 3 months notice. Big souless American firm

They gave me a number of a local solicitor (which they paid for)

Would people trust this sort of arrangement? Sounds like the solicitor is working for the company, given they were picked and paid by them.

Bikes and boots yes

The employer must pay for your independent legal asvice.  You do not have to use the suggested lawyer.

Would people trust this sort of arrangement? Sounds like the solicitor is working for the company, given they were picked and paid by them.

I know it sounds dodgy but at that level the solicitor isn’t giving advice, it’s the legality explanation, making sure a layperson understands the rights they are giving up. Not worth a solicitor giving bad advice there, very easily found out with implications.

If you want them to advise you whether it’s a good deal and whether you should negotiate harder, expect to pay more and then maybe use someone else.

Also possible the firm has negotiated a group rate for the solicitor too – which still isn’t dodgy/doesn’t mean they’ll be giving bad advice, just business sense.

I’d submit that much as I respect TJ’s personal experience as an employee and a union rep he has limited experience of ‘companies’ and in fact most DON’T muck it up. Particularly when it’s part of this type of restructuring / downsizing type activity where the HR folks will have been involved from early

This ^^.

I took VR from my last place and it was all handled exactly by the book. To be fair to them, it was a good offer, the HR department was actually very professional (they’d handled Covid really well, did a LOT of extra stuff for employees at what was a very difficult time for everyone) and they made damn sure that everything was efficient and proper because to do it any other way really does leave things open to get very messy – and that costs everyone more than just doing it properly.

“Sounds like the solicitor is working for the company”
Sorry, I should have clarified, they gave me a list of solicitors, one of which was a five minute cycle away. I chose him as I wanted to sorted so I could **** off as soon as humanly possible.

We had a chap made redundant but he challenged the process, he must have done his research and knew his stuff, went on for ages as he just kept at it.  He was nearing retirement anyway so was holding out for every penny, I think he got a pension uplift too.

Best of luck

Sounds like the solicitor is working for the company

He’s working for the employee, but the company pays him (as they have no choice in the matter).

The reason they find one and suggest them is just to speed the whole thing up as they don’t want it dragging on.

The Solicitor will act in your interests or risk getting struck off.

We had a chap made redundant but he challenged the process, he must have done his research and knew his stuff, went on for ages as he just kept at it. He was nearing retirement anyway so was holding out for every penny, I think he got a pension uplift too.

if they are offering anything over statutory then it’s entirely discretionary and they can withdraw or reduce that at any point before you sign up. Also, if you go to court and get awarded less than their initial offer, you will have to cover their legal fees, which would wipe out the entire award, eg they offer you £30k, but you go to court and they award you £25k. However, if the employer’s legal bill is £30k, you end up writing them a cheque for £5k…..

Also, if you go to court and get awarded less than their initial offer, you will have to cover their legal fees

Hmm, I’m no expert in this, but I’m dubious that this is the norm. I think you’d normally go to tribunal, and costs would very rarely be awarded.

Thanks all – really good insights and definitely a few things for me to be aware of and take in board!

I think you’d normally go to tribunal, and costs would very rarely be awarded.

Correct, but there is the option as I understand it for a vexatious claim

https://www.peoplemanagement.co.uk/article/1856837/dealing-vexatious-employment-tribunal-claims#:~:text=The%20key%20takeaway%20from%20an,of%20defending%20a%20meritless%20claim.

When I got made redundant after ten years it was statutory minimum with no prospect of a compromise agreement.

The process was handled very poorly by my line manager (who in nine months in that role spoke to me once) and the selection criteria were weighted against me unfairly imo but it was not really possible to realistically fight it. I did get the company to pay for some professional exams – approx £600 – to get my certifications up to date.

This was part f a big cost cutting exercise which saw a lot of the more senior (thus higher paid) staff leave. It caused a lot of resentment and within six months the other two members of my team had moved on which led to problems supporting customers. I was able to persuade three customers to switch suppliers to the company I found a job at which earned me some nice commission.

It was a shit situation whilst it was happening but worked out better for me in the long run.

That doesn’t mean all HR are perfect, some may still screw up

This. Just because they have used a process to determine which person is in line for redundancy in the past doesn’t mean that it’s the right one and can be challenged

Compromise agreement (if not already fully covered) is standard practice Neil. I signed one, basically that you won’t subsequently take them to court later. Mine was worth it (just about) to not quibble. They also did (maybe didn’t have to) pay for a solicitor to give you advice about it. Mine said “take it”. I had some health issues that maybe they were twitchy about that being a reason to go to ET.

Depends on the terms, but f it’s good enough, take it would be my view. It may not be so good next time. I was in the first round for my company, the rest got rid of a year later. 1 month per year of service (capped at 12, buggers).

They may provide help in retraining – mine did.

First £30k (IIRC) is tax free. I was able to select my own solicitor (selected the wife of a former colleague and fellow MTBer who was a top employment lawyer). I guess the 1 month per year allows them to cap their known outgoings at same as a year’s salary..

Tribunal awards are generally low anyway.    Its the fact that it willl cost the employer to go to tribunal that is the leverage.

Settlement agreements ate only neededif the redundancy has not been fair.  Its to protect the employer from being sued

Mrs TJ used to do a lot of advicework and tribunal work.  Between us we have seen loads of cocked up redundancies but presumably a self selecting sample

Usual advice on negotiation applies, don’t play all your cards at once. When the HR manager told me I was in line for redundancy, I was glad as, after 20 years I was ready to leave (but didn’t know how to, and lose accumulated holidays and the rest). When they explained the terms of the potential agreement, I looked all serious as if I was reluctant to go, internally I was “YEEESS!” – paid to go away.