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Redundancy in Lockdown


January 2021

If you’ve been offered a Settlement Agreement due to the current economic uncertainty, you are certainly not alone…The CIPD published a report in Autumn 20 indicating 30% of employers were planning to make redundancies and other steps to cut workforce costs such as furlough, redeployment and cutting bonuses- ‘Labour Market Outlook: Autumn 2020.’


You’re not alone…

If you’ve been offered a Settlement Agreement due to the current economic uncertainty, you are certainly not alone…The CIPD published a report in Autumn 20 indicating 30% of employers were planning to make redundancies and other steps to cut workforce costs such as furlough, redeployment and cutting bonuses- ‘Labour Market Outlook: Autumn 2020.’

Over 25 years as an employment lawyer (and as an employee myself back in the day) I’ve seen the job market take major hits and all the panic and gloom at the time, but things always bounce back. 

So, whilst you might be worried, the best advice I can offer right now if you’re looking at redundancy is to firstly think about your future. With a new US president, millions of vaccinations under way and a Brexit deal there are reasons to be optimistic and you need to make sure you are in the path of the next opportunities.

Positive thinking

Looking back on my own time as an employee (before I set up this firm), I have to say I’m quite amused now at just how upset I was at the time; but there are perfectly normal reasons for this. We’re pack animals and we don’t like being booted out of the gang. Going to work can be tiring and sometimes stressful but it gives us a sense of belonging, routine and purpose so having the rug pulled will hurt.

But if you give into that mindset you will make the major error: not grabbing the opportunities which follow on from redundancy. For starters there’s no blame or reputation damage in a redundancy; future employers won’t think worse of you especially given the Worldwide economic picture with very obvious reasons for changes to the workforce.

And being redundant gives you time and space as well as a financial cushion to step right back and really plan what you’re going to do next… If you play your cards right you could find yourself a better paid job, with a better (or no) commute or possibly the chance to work from home. One thing’s for sure whatever happens next there are going to be major changes to how all of us operate.

Think about those times when you have been looking for work from an existing job: sneaking off for interviews and then watching the paint dry as you work out your notice or sit at home unable to get on with your life on ‘garden leave.’ With a clean break there’s none of the pretence or back covering and none of the stress of a handover whilst getting yourself ready for a new job.

Settlement Agreements normally have a clause requiring you to state that you have not received an offer of a new job at the date of signing. But if you get one after signing and have received notice pay and compensation that’s what you call a windfall…most agreements offer payment in lieu of notice instead of working it which sets you free.

Redundancy gives you space and time and most importantly a clear head so why not take a deep breath, lots of exercise and plan your future?

Negative thinking

Unless you have a crystal-clear case for unfair dismissal or other claims such as discrimination with a very clear financial goal you should think very carefully about any sort of fall out with your current employer. And if there is a real prospect of finding work, my advice to most employees would be to take that as your own justice because a job is an asset whereas a legal case is often a liability.

There are many reasons to be cautious before challenging your former employer especially right now:

  • The level of detail and scrutiny in tribunal claims is quite shocking. Raking over and over history is very depressing for you and those around you.
  • If you use a lawyer, then you can probably say ‘goodbye’ to around a third of any gain you achieve at a tribunal.
  • A settlement can be paid without deductions of tax up to £30,000 but tribunals are based on net earnings.
  • You have to produce evidence of job searches (called ‘mitigation’ evidence) to be eligible for an award. You could start the legal process and find that you have a job once it’s started which would mean your recoverable losses could be quite low.
  • A settlement agreement contains reference clauses and protections for your reputation. Compared to a tribunal decision (which by the way can be downloaded by anyone from the Online Register) this is a much better protection.
  • The Redundancy Payment is the same as the Basic Award (£538 for each year worked under 41 and £807 for years worked over 41 to a maximum of 20 years). Under redundancy, contractual notice will automatically be paid so you are only looking at a claim for lost earnings which is capped at one year’s net pay. This can be reduced in some cases for example if a tribunal find that you would have been dismissed in any event. So, if you have a settlement offer the amount you are pursuing may not be that exciting.

Challenging redundancies is always going to be difficult but especially right now. A tribunal has no power to query a management decision to make cuts; employers don’t have to justify a decision to consider cuts to the workforce. A decision to restructure-even when everyone’s busy- is not challengeable provided it is genuine...This leaves the question of why you were selected, and tribunals are very reluctant to trawl through redundancy criteria and points looking for glaring problems!

Softer negotiations

Settlement Agreements can be fine-tuned and sometimes there can be room for manoeuvre. We can check that out for you diplomatically and without jeapordising the deal or your relations with your employer. For example agreements can be tweaked for tax efficiency (employer pension contributions are one way) and sometimes employers will change references or improve the amount on offer.

Often it is better to raise this on the back of goodwill rather than by way of legal threat.

Soak it up and crack on!

As I say unless you have a significant case, with clear evidence and a really valuable financial goal, I would think very carefully about making yourself stand out as ‘special’ at a time when redundancies are very normal, and offer you a genuine chance to seize the day.

Ask yourself where will be in 2 years’ time? And apply your best efforts to that end.

Contact Gordon today to get Same Day Settlement Agreement Advice.

Gordon Turner / gordon@gtelaw.co.uk / 0207 247 7190


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