Settlement agreement and voluntary redundancy

fitzy73

Hello,

This is for my OH, not for me.

She has been employed by a financial institution, in a senior capacity, in London for the last 3.5 years.

Last Friday she and her colleagues were told that the structure of the function she works in was being reorganised, flatting it and removing "specialist" roles". Her role is specialist.

Further, the new structure will see all roles being based in Scotland.

She has told her role will no longer exist under the proposed new structure.

She has been offered

(i) a opportunity to apply for one of the roles in Scotland
(ii) to take voluntary redundancy

As we have no intention of moving to Scotland, the latter is the only alternative.

However, the voluntary redundancy offer comes with a settlement agreement, which i set out as

- 3 1/2 weeks pay for every year.
- this includes statutory redundancy.

NB
It is extremely unusual for said company to offer settlement agreements - they only do it for traders. She does not work as a trader.

My questions:

(i) Should she use her solicitor to seek a better settlement agreement?
(ii) There is a large smell of a rat because a settlement agreement is being offered. Any thoughts?
(iii) Anyone know a good settlement lawyer in London?!

BW

Fitzy

TBagpuss

Well, statutory redundancy pay would be 1 weeks pay per year worked (or 1.4 if she is over 41) so they are offering her significantly more than her statutory entitlement.
Is the entire company moving to Scotland, or just her deprtment? (i.e. is there any chance there would be other suitable roles locally)
What does the settlement agreement say about working her notice and getting references?
What does she think she should get, that's better tha what they have offered?

ratechaser

3.5 weeks per year isn't bad, and its rare to get more than a month per year anywhere in financial services (barring anything that may have been negotiated on the way in for the most senior people...).

Presumably as she is in a senior role, she will have a decent notice period as well (3 months?). How is that going to be handled, worked or PILON?

My own take on this is that it's a decent offer if her particular employer is a bit stingy with settlements. In any case, she should be obligated to take legal advice before signing it, thats always been my experience! To cover the employer of course because the agreement will be of the 'we will pay you but you will keep your mouth shut' variety, and they will want to ensure that it was signed with the benefit of professional advice...

EDIT: +1 to Tbagpuss's comment re references - ideally you would want the agreement to specify the detail around that - again from what I've seen in financial services you'd get a sample of what the standard reference will be (provided of course there are no outstanding performance/conduct issues).

Oh and I do know a decent solicitor, but frankly it's better if you can find one that has experience in the form of agreement that this firm typically uses.

AndyBSG

There's nothing fishy about being offered a settlement/compromise agreement, it's pretty much becoming standard policy nowadays for any company that offers an enhanced redundancy package that pays more than the legal minimum.

Basically it's them saying "We could just give you SSR but we're going to give you more on the condition that..."

The conditions are usually things like you not going to the press and criticising or defaming the company and also that you seek legal advice so you can't come back after redundancy and try to claim you were ill advised.

they also protect you because they will detail all the payments you're going to receive and details of your reference for future employers.

3.5 weeks pay for every year is a pretty good package so you'll be unlikely to better that. If you have 3 months notice and things like pension contributions, medical care, etc make up part of your employment the agreement will also detail what happens with that in terms of PILON(for instance when I was made redundant I wanted my 3 months pension contributions but I wanted the medical cover cancelled and receive the 3 months worth of cash for it so I negotiated this)

One thing to consider is if your company has a bonus scheme and if it's discretionary or contractual. We were made redundant just before annual bonus payment and managed to successfully argue that we should receive a pro rata bonus payment as part of our settlement. It's a grey area but there have been several court cases which have weighted it a bit more in the employees favour.

We were all working under 3 month notice which meant we would have been still employed on bonus date and entitled to it but they decided to apply PILON meaning we left before bonuses were paid so wouldn't get them. Luckily everyone voted in favour of rejecting PILON and challenging it so they just decided it was easier to pay us them than call our bluff and risk dragging the whole thing out

If it's any help and you're based in the City we all used Sue Ziegler at Aeon Solicitors for our legal advice and she was very good http://www.aeonsolicitors.co.uk/