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Losing Your Job? Learn Your Redundancy Rights23rd Jan 2019

by Hugh Reid on 23rd Jan 2019

Contact Hugh Reid

Around 164,000 jobs are at risk in retail alone this year as trading conditions on the high street become more challenging.

This forecast from the Centre for Retail Research makes grim reading – especially when one considers all the thousands of other job losses threatened in financial services, tourism and manufacturing.

So what can employees facing redundancy do? Very little, you might think – but this is not always the case.

Your employer has the legal right to make you redundant if, for example:

  • it is a genuine redundancy situation
  • your job ceases to exist
  • your place of work is closing.

However, even if your employer has grounds for redundancy, they will still have to act fairly and follow a reasonable procedure.

Contact Our Employment Solicitors

Facing Redundancy? Get Legal Advice

Make sure your employer is acting correctly. Don’t assume you have to do whatever your employer says simply because they’re in financial trouble and have no choice.

Get proper advice from an experienced employment solicitor – we can advise you on your redundancy rights and how to get the best payout available in your circumstances.

Think hard about the following important issues and how they will affect your redundancy payout…

Has Your Employer Offered You Another Job?

Your employer may offer you an alternative to redundancy – such as another job at another store, branch or place of work.

This could be a good result for both parties if you both agreed but if you refused the job then you could be effectively resigning…so the employer would not owe you a redundancy payout.

The law says that any alternative role that your employer offers you must be suitable and reasonable.

But what is ‘suitable’ and ‘reasonable’?

The new role will normally be in a different place of work. If this is local to you then it may be suitable and reasonable. If the new role is further away then it could be unsuitable and unreasonable.

It would not be suitable and reasonable to require an employee to move hundreds of miles to the new place of work (unless the employee agreed).

The new position should also be at the same level and within your skills to perform. Normally this would also be at the same pay rate unless you agreed otherwise.

Has Your Employer Offered You A Settlement Agreement?

Even though your employer may be well within their rights to make you redundant, many play safe by offering a settlement agreement for you to sign.

This is a legally binding agreement between you and your employer. Under this agreement you waive your employment rights. So you must obtain independent legal advice before you sign a binding legal agreement. You do not have to use legal advisers recommended by your employer.

Be very careful before you sign any settlement agreement as you will commonly be asked to waive important rights in addition to settling your redundancy payment. This is a crucial point – your legal adviser is obliged to advise you of this.

Typically you will be offered more than your statutory redundancy pay to enter a settlement agreement but the employer could try to pressurise you. They may say that you won’t get the enhanced redundancy payout if you refuse to sign but this is not permitted in law.

So get legal advice before signing. Your employer may contribute towards your legal costs (our fees are extremely competitive).

We reply promptly and can generally make an appointment for you to see an employment solicitor within 24 hours of you first contacting us.

Why You Should Think Seriously About A Settlement Agreement

Being dismissed unfairly is a horrible experience – especially if you have given many years of loyal service. After all your hard work, you feel betrayed. That is understandable.

In cases like this, it is all too easy to let your emotions dictate your responses. You’re angry. You want justice. You want payback.

But going to court is not always the most effective way of getting that justice. In most cases the best way is to accept a settlement (provided that it is one that is fair to you). Here’s why…

Taking a claim all the way through a tribunal will cost the average employee in the region of £10,000. For the employer defending the claim could easily cost in the region of £15,000-£20,000. Neither side wants that. So it is in both sides’ interests to reach a settlement as quickly as possible.

Data from the conciliation service ACAS shows that 92 per cent of employment claims are settled. In our experience, most are settled before going to tribunal, some during the hearing – but only a very small percentage run the full course and require a tribunal ruling.

Settling a claim is much smarter. Settlements are better than tribunal awards for a number of reasons:

  • you get to keep all the money – instead of losing some of it to legal costs
  • settlements are more tax efficient than tribunal awards
  • settlements do not affect your benefits – you don’t have to pay back benefits from your settlement
  • settlements involve a fee – but this is very likely to be paid by your employer as part of the agreement. We always try very hard on your behalf to ensure that the employer meets the full cost of dealing with the agreement.
  • a settlement may be paid faster than an award – so you get your money quicker
  • a tribunal award can be reduced by the other side putting forward mitigation arguments (such as asking why you haven’t found another job yet) – but a settlement can’t 
  • a tribunal award can also be reduced by a ‘Polkey deduction’ (the employer admits they made procedural errors but they were entitled to dismiss you for other reasons) – but again, a settlement can’t.

Is Your Redundancy Payout Liable For Tax?

When (and how) you were made redundant will determine whether you owe any tax on your redundancy payout. The law on this changed on April 6 2018.

The change concerns any Payment In Lieu Of Notice (PILON) – such as when an employer makes you redundant without giving you sufficient notice (as agreed within your contract).

Before April 6 2018, any payment triggered by a PILON clause in a contract was subject to tax and National Insurance. If there were no clause in the contract then any PILON could be treated as tax-free up to £30,000.

But since April 6 2018 all PILONs are now taxable, regardless of whether they are contractual or non-contractual.

How Much Does It Cost To Obtain A Settlement? 

It may not cost you anything at all – the employer may pay all of your legal fees. Why? It is much cheaper than paying the legal costs of going to a tribunal.

And that is not the only cost the employer could face. Dealing with an unfair dismissal claim is a time-consuming irritation that they do not need. They would much rather be running their business and making a profit. Just like you, they just want to get on with their life.

So despite all your disagreements, that in itself is something that could unite you both. It may be the starting point for a discussion about reaching a sensible settlement.

And even if your employer does not pay all your legal costs in obtaining a settlement – they have no legal obligation to do so – they may still make a useful contribution.

That is so much better than the huge bill you would face if your case went to a tribunal.

How Long Does It Take?

We act much faster than many other law firms. We can start acting for you within 24 hours of receipt of the paperwork. We can help you to negotiate your settlement and get paid much faster.

Get Expert Legal Advice On Redundancy

Anxious about impending redundancy? Get legal advice as soon as possible.

Contact Coles Miller employment solicitors Hugh Reid or Dion McCarthy at the Poole office, 01202 355695.

This document is not intended to constitute and should not be used as a substitute for legal advice on any specific matter. No liability for the accuracy of the content of this document, or the consequences of relying on it, is assumed by the author. If you seek further information, please contact Managing Partner Neil Andrews at Coles Miller Solicitors LLP.