Redundancy/waiver agreement/exgratia payment - implications/confusion

Thishitcountry

Hi folks

Hoping some kind souls may be able to shed some/any advice regarding recent sudden redundancy as a result of employer losing main client.

While on the surface a potential payoff on table is relatively attractive I am basically nervous at way whole thing is being handled by employers who have a history of - let's say - a "smoke and mirrors" approach regarding our rights/contracts/pay etc etc

(I dont trust them basically and smell potential rats and do not want to jeopardise future benefits/insurance in prospect of unemployment !)

My post may read as 'too much info' but trying to get over the 'spirit' of employers and how feel we're not being particularly fairly treated during an obviously worrying and stressfull time.

(I am posting this in all MSE forums I think may be relevant in the hope of recieving any advice readers may have as to where I stand re tax/potential JSA/PPI claim/is any of the below bull etc etc )
Many thanks for your time in advance !
(deep breath)..OK here goes ....

BRIEF BACKGROUND/KEYPOINTS

- Small company with 6 total employed (2 'bosses' 4 workers)

- Salary 28k

- My second spell working for them with 3.5 years service in this second spell there (3 years in first spell there)

- I do not have a written contract nor been offered one in either spell of employ (im generally a trusting sort !)

- Apparent for some time workload slowing yet despite requests for general info regarding this noting forthcoming (apreciate no obligation here yet they had given assurances in past that we would get "plenty of notice"

- Thurs 07th May recieved letter by hand from employer outlining reasons for fall in workload "have to scale down our business and implement significant cost cutting which is likely to involve redundancies. We shall consult with youover the next few days to discuss cost cutting, potential redundancy and measures to avoid or mitigate redundancy but we must advise you your position is at
risk..we will meet to discuss matters"

- All 'workers' invited to volunteer for 'vountary redundancy' with promise that any formal comms would state 'compulsary redundancy' (a point requested by all and agreed to by bosses relative to future JSA eligibility)

- Thurs 14th May VERBALLY informed of my redundancy. Advised and named 3 of the 4 workers to be made redundant.

Also advised that they were looking to make exgratia payment and were awaiting tax advice (put accross that it is to be a lump sum that will be tax exclusive) and how this exgratia payment would involve me having to sign a written waiver agreement in respect of any tax that may be payable. Verbally told that Fri 29th May final day of employment.

- Fri 15th May I requested clarification as to what waiver letter is/how to be worded.
Advised by 'other boss' to yesterday's meet (this switching between two bossed as to which one advises someting that has happened all through this mess and prior when whiff of redundancy came as if to keep us confused for whatever reason) that I now have a choice in terms of choose to pay tax on exgratia lump now or take chance on taking it as tax free and he stated thus need for the waiver agreement (?)

(Apologies if this does not read too well as Im really confused by it all. Incidentally this meeting was left until 4:45 pm on Fri after such a bamboozling and tense week)

-When I pressed as to the wording this waiver agreement they seem to be pressing us to sign would take (no draft copy given for consideration) I was told "oh it will be fairly wooly and say employment
has ended" and that it would disclose the amount of the exgratia payment (6k)

This wording now seems to have switched from the gentlemans agreement earlier that outcome would state 'compulsary redundancy'.
I am also concerned that this 'employment has ended' wording could be construed as misconduct or something and have an effect on upcoming PPI claim (i.e. way for ensurer to wriggle out of paying out ?)

SUMMARY

-3 FULL years service without written contract (nor ever offered one.)

-Verbally informed of redundancy (nothing in writing)

-Being asked to sign a waiver agreement that have no solid idea as to its wording. This waiver is being put accross as them doing us big favour r.e. tax avoidance as to afford us more security to live off the associated exgratia payment.

-Information coming from one boss then the other and always put over in wooly fashion and left until end of day etc (never both been present at same time to field questions/advise).

-Not really giving reasonable time to get advice as if to keep us all on the backfoot.

-Bloody confused.

QUESTIONS IM RAISING

-If they formally word communications that "employment has ended" what implications re JSA/PPI claims ?

-Any advice if exgratia payment will effect JSA/PPI ?

-What are pros/cons of a waiver agreement (from my situation and theirs) ?

-They seem very keen to hurry us to sign this waiver - although giving no real indicator as how its to be worded

-From employment law view - any comments ?

-Any comments as to way this has been handled generally welcomed also...

Thanks again in advance folks . . .

healy

As the employment will end through no fault of your own it would not affect any claim for JSA.

If you are claiming contribution based JSA, it would not have any affect if you receive an ex-gratia payment.

Debt_Free_Chick

They are talking about a Compromise Agreement (Google). Basically, you and your employer mutually agree that the employment relationship will be terminated. There will be no reason for the termination and no indication of misconduct - the reason will be "mutual agreement".

They are presumably making a payment in lieu of notice (PILON)? If so, this may or may not be taxed. If they are paying an amount as compensation, then this is normally paid tax free, up to a limit of £30k.

As a condition of a lawfully valid compromise agreement, you must be allowed to take your own legal advice on the validity of the contract and what it means for you. The compensation paid to you will usually include an amount to reimburse your basic legal costs - around £300 (possibly £500 in London/SE where legal costs can be higher).

You will be able to get legal advice and I really suggest that you listen carefully to what the solicitor advises you and then post back here if you are confident of what you're told.

In the meantime, start to find an employment lawyer to advise on the agreement.

Thishitcountry

Debt_Free_Chick

wow thats top advice !

being the sorts they are they said to look at citizens advice "because its free" with no mention of this specific legal advice (not to discredit CA obviously). seems they looking for a signature asap before I can get clued up !?

just to clarify - are they legally bound to pay for my legal advice in this respect prior to signature of this waiver ? or is it kinda tied in with this ex-gratia payment (ie i pay out in advance with assumed re-imbursement to follow within exgratia ?)

they are doing all their side of things through solicitors so obviously know the pros and cons. sorry for sounding dumb its just im having to learn fast and on my feet with this and been a rather mentallt tiring few days ..:o..

zzzLazyDaisy

Just to say, Debt-free chick is right, what they are talking about is a compromise agreement. This is the only way in law that they can prevent you from going to an employment tribunal and claiming unfair dismissal.

BUT the ONLY way a compromise agreement can be valid, is if you have taken legal advice from a practising solicitor and that solicitor signs a declaration to that effect.

If the employer simply presents you with a waiver letter or some other form of agreement, you can sign it as it has no effect at all in an employment tribunal. As far as tax is concerned, any redundancy payment up to £30k is tax free, although any contractual payments such as wages and holiday pay are taxable. Payment in lieu of notice is also tax free provided it is paid in a lump sum after termination of employment (there are exceptions to this, but as you dont have a written contract, they do not apply to you)

If you need further advice it is worth giving ACAS a ring, they specialise in employment issues and will give you free information

Debt_Free_Chick

Section 203 of the Employment Rights Act 1996 requires that any agreement where you waive your right to pursue a claim (under Employment Law) against your ex-employer is not valid unless you have received independent (i.e. your own) legal advice. Compromise agreements DO mean that you waive your right to going to Employment Tribunal - that's the compromise. The company pays you compensation and you agree not to go to ET. The compensation you get should be along the lines of what you would expect from an ET anyway, hence there is no incentive for you to take the matter further - provided the agreement is lawful and the compensation adequate.

If they've offered you an agreement and it states that by signing it you are giving up the right to take a complaint to an Employment Tribunal, then the agreement is not valid, unless you've had independent legal advice. So, you could sign it and STILL go to ET. In practice though, you would get independent legal advice and if the agreement is not fair to you, your solicitor would pursue the matter with your employer.

There is no requirement for the employer to pay for that advice, but the cost of it should be factored into your compensation. If you are only getting the "bare minimum" compensation, then arguably, you are not receiving what you're entitled to, once you deduct the cost of getting legal advice. For this reason, employers tend to add a certain, specific sum for legal advice.

zzzLazyDaisy is right about ACAS - call them directly.

Have they provided a draft agreement yet?

Thishitcountry

DFC - just catching up with all kind advice with view to going into work to request copy of proposed agreement. I propose to do this by simple polite letter so I have it 'minuted' as it were and give them the spooks that Ive looked into this and realise that what theyre trying to put over a a favour 'for your hard work over the years' isnt what it seems and not necessarily to comply upon their (obvious panic-based) request to hurry me with this !

Meanwhile i'll hope to make a call to ACAS too .

Sounds stupid - but im actually enjoying this - ha !

I'll post when know more/convenient tonight . .

Thanks for your continued interest and support so far !

Thishitcountry

LazyDaisy

Thanks for your info too (sorry forgot to reply there)

As of my reply to DFC - first step I guess is to get copy of proposed agreement and take it from there - put pressure back on them (given that they broke this to me/us last thing on Friday and were expecting answers from us today !)

Way we were addressed on Fri was - choose now if want to pay tax or take the risk of not "our solicitor has said HMRC DONT USUALLY come after it" ..well thats so vague its not true and as another kind reply (I posted same thread in couple other forum headers) i'll not be taking their word for it ta very much .

Again - thanks for top advice and support so far ...

shal1969

Hi

My advice to you is don't ever sign a compromise agreement unless you are 100% sure. Last year after been told that our branch was closing down and 11 of were made redundant including myself I found myself another job I was only asking to leave 9 weeks early and they told me if I wanted to go early I would have to sign a compromise agreement relly did not want to as I could have waited but asked my MD would anything change regarding the redundancy payment he said NO!!! so I sign it I left on Friday then on the Tuesday they changed the redundancy package and I lost out on 5K. I contacted him and he said I signed a legal binding document and there was nothing that could be done I think I was treated really bad espically after working they 14.5 year they are SCUM.

zzzLazyDaisy

Are you absolutely sure that you signed a compromise agreement?

A compromise agreement is only legal and binding if you have had independent legal advice and both you and your solicitor have signed the agreement. It is unusual for a compromise agreement to be dealt with so quickly.

Thishitcountry

shal/lazydaisy

hey thats shocking - really feel for you there shal .

the thing im telling myself in all this is "as long as they can look themselves in the mirror..."

now that i have faced them with all the info from the above kind posts things moved pretty quick. appointed solicitor and awaiting their agreement be forwarded. nothing much more to post as yet i guess ...will update as things progress . thanks y'all...