Clarkslegal LLP - Solicitors in Reading and London

Legal Updates

Settlement offers and redundancies: the cost of getting it wrong

29 July 2020 #Employment


As the furlough scheme starts to be phased out from the end of this week, the ongoing economic Covid-19 related downturn means that increasing numbers of businesses are having to announce redundancies.

Responsible employers are mindful of the impact redundancy has on individuals. They are also rightly concerned about the negative effects of redundancy consultation programmes on the morale of all employees involved, including those who remain with the business at the end.

Some of these negatives can be mitigated by making settlement offers which are more generous than statutory redundancy terms. Many businesses view settlement offers as a way to cut short usual redundancy timeframes in order to preserve resources for those jobs which remain viable.

However, it is crucial that, before making any such offers, employers understand the potential legal risks of not carrying out fair and lawful consultation.

This applies particularly where:

  • there are 20 or more redundancies in prospect at one establishment;
  • there is a reduction in headcount but not a complete workplace closure; or
  • headcount in a particular role is being reduced but not to zero.

Miscalculations by employers in any of these situations can lead to the need to substantially increase settlement offers in order to avoid employment tribunal claims.

Most employees will be well aware of the economic strain on businesses but in such a tough job market it is natural for them to fight for the best possible exit package and businesses should plan accordingly.

Understanding the legal risks and correctly judging the level of settlement offer is matched in importance by getting the communications right. The happier the employees are with the way the business conducts itself in difficult times, the less likely they are to make claims.

 

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Read more articles

Russell  Dann

Russell Dann
Associate

E: rdann@clarkslegal.com
T: 0118 960 4653
M: 0792 014 4165

Contact

Employment team
+44 (0)118 958 5321