Redundancy – do you know your rights?
Oliver Tasker, senior solicitor, takes a look at what rights an employee has when being made redundant, and the additional protection afforded to employees during and following a business takeover.
Since the start of 2017 we have seen a number of household names including Tesco and John Lewis announcing large-scale redundancies to their workforce. Employees are often faced with this situation when a business needs to cut costs however, it can also occur following a business takeover in an attempt to streamline and remove duplicate roles. But did you know that an employee has additional protection during and following a business takeover?
The starting point for any redundancy situation is that an employer has to demonstrate that there is either a reduced need for work of a particular kind, for example, a certain role is no longer required due to a reduction in orders, or the business is closing. These are typical redundancy situations. However, if your employer is going through a merger or takeover then you have additional protection as you should automatically transfer across to the new business on the same terms and conditions with your length of service protected. These rights come from the Transfer of Undertakings (Protection of Employment) Regulations which is often referred to as TUPE.
There are also additional obligations in terms of consultation, not only over the proposed redundancy situation but also over the takeover and the transfer of your employment. You may be notified before the takeover is finalised that the new business (i.e. your new employer) proposes to make redundancies after the takeover takes place. However, this does not mean that you can simply be dismissed because there is someone already carrying out your job or role. There are again enhanced requirements that the employer has to satisfy to justify any redundancy or any change to your terms and conditions following a takeover.
Under these circumstances, it is common to be offered an enhanced payment as an incentive so you don’t go through the whole redundancy process but on the condition that you sign a Settlement Agreement (previously known as a Compromise Agreement). This is a legally binding document where you agree that you will not pursue an employment tribunal claim (often for unfair dismissal) against your employer in return for the enhanced payment. If this is the case, then you have to obtain independent legal advice from a solicitor and your employer will make a contribution towards your legal costs to do so. We will run through the terms of the Settlement Agreement, in full, with you during a meeting so you understand the implications and we will advise you on whether the financial offer is sufficient under your circumstances. We can negotiate directly with your employer or their solicitor on your behalf, so you don’t have to worry.
If you are notified that you are at risk of redundancy, particularly following a merger or takeover, it is vital to obtain legal advice at an early stage. The consultation period is your opportunity to ask questions and raise issues with the proposal so you need to know your rights and where you stand.
Our specialist and leading employment team can help you during this stressful time. We have the expertise to guide you through the process and secure the best possible result for you.
If you are faced with this daunting situation then do contact me or one of my colleagues.