Compromise Agreements and Redundancy
Compromise agreements may become relevant in a redundancy situation. It is unfortunately a fact a life that employers will seek to cut headcount in the face of an economic downturn. An employee should take steps to ensure they know what the redundancy procedure is. These documents are likely to be filled with specific legal terms, and just like any legal procedure, redundancy has small print and fine details which it is vital to understand.
Whilst compromise agreements may come into play, it is first important to understand how redundancy works. Listed below are some of the most common and important terms to understand concerning redundancy - a list of the most important terms may be seen below, this is not an exhaustive list, but is a good starting point.
Redundancy
A redundancy compromise agreement may arise if the redundancy procedure is not carried out properly. There are many myths surrounding redundancy and compromise agreements. We will try to dispel these in this article, and try to understand what redundancy really means. In a nutshell, redundancy is when a job role within an organisation is at a stage is no longer needed. This may be because of new technologies which allow a business to become more automated. In the current economic climate, it is not uncommon that a company goes out of business, closes a particular store or department, , or brings in business automation tools to reduce overheads.
Generally there are two types of redundancies- voluntary and compulsory. With the former type, this usually happens when cut backs are necessary at an organisation. An employer would issue a request to employees to step forward on their own accord. With compulsory redundancy, individuals are selected on a number of criteria (including skills, qualifications, and workplace performance) and are made redundant against their wishes.
Lay off
Someone that is employed could be asked to leave work, if there is not enough for him/her to do. This is not a long term solution and should never be used as one.
Short Time Employment
An option which an employer may take is to cut an employee's working hours reduced. This is not considered as redundancy. It will usually result in a lower salary for an employee and may save the company money. For an employee, this is a short term solution.
Collective Redundancy Consultation
When an organisation needs to make a large amount of employees redundant (over 20),a specific procedure needs to be followed called a CRC (collective redundancy consultation), furthermore, the BERR should be told of the planned redundancies by letter. An meeting should be organised with employees to inform them of the procedure. The time an employer needs to provide varies depending on the size of the redundancies. If there are more than twenty employees then an employer needs to allow 30 days. For 100 employees or more, there needs to be 90 days notice at the very least.Employers need to be aware that these procedures are important, as failure to company will result in employment tribunal claims being made by employees.
Statutory Redundancy Pay
This is defined as the amount obtained by an employee as part of the redundancy procedure. An employee may be able to receive more than this through a compromise agreement. If an employee has been employed full time for more than two years then there is an entitlement to statutory redundancy pay. Your company may give more you more than this, particularly if you have a potential claim against them. The actual amount received by an employee is dependant on the number of years worked at the company, limited to 20 years. These calculations are beyond the scope of this articles. An employment law solicitor will be able to advise you further. Consult your company's redundancy policy - it should lay out exactly what kind of payment you are legally entitled to. Any amount over £30,000 will be taxed, but the first £30,000 is tax free.
Unfair Dismissal
An employee has a right to not be unfairly dismissed. A company needs to carefully select candidates for redundancy whilst following a fair procedure.If you suspect that the procedure is unfair, then you should seek legal advice, as you may be entitled to a larger settlement sum. This may be achieved through a compromise agreement, without the need to go to court. Certain reasons for dismissal (usually to do with discrimination on a wide variety of grounds) automatically qualify as unfair dismissal.
Guarantee Payments
It does not matter if there is no work at a company, provided there is a guarantee of payment in place. Contracts of employment usually guarantee pay, regardless of the amount of work done by an employee. This provides security to the employee, as an employer may not vary the contract of employment without prior consent.
Protective Award
An employer needs to take legal advice when making redundancies. If the procedure is not followed then an employer may become liable for protective awards . This is not good news for an employer, as it entitles the employee to 90 days payment
If an employer fails to follow the correct procedure, an employment may be avoided through the use of a compromise agreement. For many, using a compromise agreement is good, as it saves time and unwanted additional costs.This will of course result in higher payouts to employees. In order to make the most of the situation, employees and employers should seek legal advice from an employment law solicitor.
More information here:
redundancy compromise agreements
Compromise agreements may become relevant in a redundancy situation. It is unfortunately a fact a life that employers will seek to cut headcount in the face of an economic downturn. An employee should take steps to ensure they know what the redundancy procedure is. These documents are likely to be filled with specific legal terms, and just like any legal procedure, redundancy has small print and fine details which it is vital to understand.
Whilst compromise agreements may come into play, it is first important to understand how redundancy works. Listed below are some of the most common and important terms to understand concerning redundancy - a list of the most important terms may be seen below, this is not an exhaustive list, but is a good starting point.
Redundancy
A redundancy compromise agreement may arise if the redundancy procedure is not carried out properly. There are many myths surrounding redundancy and compromise agreements. We will try to dispel these in this article, and try to understand what redundancy really means. In a nutshell, redundancy is when a job role within an organisation is at a stage is no longer needed. This may be because of new technologies which allow a business to become more automated. In the current economic climate, it is not uncommon that a company goes out of business, closes a particular store or department, , or brings in business automation tools to reduce overheads.
Generally there are two types of redundancies- voluntary and compulsory. With the former type, this usually happens when cut backs are necessary at an organisation. An employer would issue a request to employees to step forward on their own accord. With compulsory redundancy, individuals are selected on a number of criteria (including skills, qualifications, and workplace performance) and are made redundant against their wishes.
Lay off
Someone that is employed could be asked to leave work, if there is not enough for him/her to do. This is not a long term solution and should never be used as one.
Short Time Employment
An option which an employer may take is to cut an employee's working hours reduced. This is not considered as redundancy. It will usually result in a lower salary for an employee and may save the company money. For an employee, this is a short term solution.
Collective Redundancy Consultation
When an organisation needs to make a large amount of employees redundant (over 20),a specific procedure needs to be followed called a CRC (collective redundancy consultation), furthermore, the BERR should be told of the planned redundancies by letter. An meeting should be organised with employees to inform them of the procedure. The time an employer needs to provide varies depending on the size of the redundancies. If there are more than twenty employees then an employer needs to allow 30 days. For 100 employees or more, there needs to be 90 days notice at the very least.Employers need to be aware that these procedures are important, as failure to company will result in employment tribunal claims being made by employees.
Statutory Redundancy Pay
This is defined as the amount obtained by an employee as part of the redundancy procedure. An employee may be able to receive more than this through a compromise agreement. If an employee has been employed full time for more than two years then there is an entitlement to statutory redundancy pay. Your company may give more you more than this, particularly if you have a potential claim against them. The actual amount received by an employee is dependant on the number of years worked at the company, limited to 20 years. These calculations are beyond the scope of this articles. An employment law solicitor will be able to advise you further. Consult your company's redundancy policy - it should lay out exactly what kind of payment you are legally entitled to. Any amount over £30,000 will be taxed, but the first £30,000 is tax free.
Unfair Dismissal
An employee has a right to not be unfairly dismissed. A company needs to carefully select candidates for redundancy whilst following a fair procedure.If you suspect that the procedure is unfair, then you should seek legal advice, as you may be entitled to a larger settlement sum. This may be achieved through a compromise agreement, without the need to go to court. Certain reasons for dismissal (usually to do with discrimination on a wide variety of grounds) automatically qualify as unfair dismissal.
Guarantee Payments
It does not matter if there is no work at a company, provided there is a guarantee of payment in place. Contracts of employment usually guarantee pay, regardless of the amount of work done by an employee. This provides security to the employee, as an employer may not vary the contract of employment without prior consent.
Protective Award
An employer needs to take legal advice when making redundancies. If the procedure is not followed then an employer may become liable for protective awards . This is not good news for an employer, as it entitles the employee to 90 days payment
If an employer fails to follow the correct procedure, an employment may be avoided through the use of a compromise agreement. For many, using a compromise agreement is good, as it saves time and unwanted additional costs.This will of course result in higher payouts to employees. In order to make the most of the situation, employees and employers should seek legal advice from an employment law solicitor.
More information here:
redundancy compromise agreements
