Happy Christmas

May I wish all readers of this blog all good wishes for Christmas and the New Year? I will be adding additional posts over the festive period, depending on how bored I become with eating, drinking and watching TV.

Redundancy & Redeployment

A recent case dealt with the obligations on an employer when making redundancies to try and redeploy “at risk” staff into “suitable alternative employment”.  What does this mean though?  In most consultation processes very little effort is often expended by the employer into fulfilling its obligations.

It  now seems clear that ANY suitable alternative employment in the employer’s group should first be offered to an “at risk” employee before it is offered to any not-at-risk employees.  Employers will inevitably argue that job x was not suitable and there will then need to follow an analysis of just how suitable or otherwise the “at-risk” employee was.  It should not matter that there was a better not-at-risk candidate.  Furthermore, the issue of retraining might arise and the employer could find themselves in difficulty if it failed to recognise this.  For instance, an Equities Analyst covering Europe could surely move across to cover North America, if such a vacancy existed?  It doesn’t seem to happen.

The upshot of this is that “at risk” employees should be preferred above all other candidates when consideration is given to filling internal vacancies.  For pregnant “at risk” employees they also have an added layer of protection because she has the right to be automatically offered any suitable and appropriate vacancy.

Redundancy – what’s going on?

I’ve been writing quite a lot recently on employees’ rights when selected for redundancy  and have covered most of the main issues on rights, selection criteria and compensation.  I thought it might be helpful to set out, on a no names basis of course, the general trends I am seeing from the clients from financial services companies coming in to the office.

1. Consultation – often  ignored.  If more than 20 people are placed at risk in one “establishment”, basically one office (although the law is not entirely clear on this point), within a 90 day period (or 100 people in a 90 day period)  then the employer must consult with the affected staff for at least one (three) months.  Some employers are not doing this or are paying one month’s salary as compensation for the failure to consult. 

2. Selection criteria – often not disclosed. Many people I am seeing have little or no idea why they have been selected and HR often won’t disclose what an individual’s score against the selection criteria is, let alone how that person scored against his/her comparators. 

3.  Compensation packages – not always as generous as in the past.  General custom and practice in the City in the past has been to pay one month per year of service by way of enhancement.  This is still happening, but is not of universal application.  We are seeing two weeks per year in some cases and, in smaller businesses, just the basic statutory entitlement (notice money plus a statutory redundancy payment of £330 p.w p.a of service). 

4. Bonuses – very few people have pro-rated bonus clauses in their contracts of employment.  In most cases employees will be on discretionary bonus schemes which stipulate that that person is in employment (and not under notice) when the bonus is paid, which is often in February/March.  Anyone whose employment is due to terminate before the bonus season commences is going to have difficulties in arguing for a payment in respect of bonus. The law is not at all supportive of employees seeking to challenge a low or non-existent bonus.  Many of the employees I am seeing at the moment seem very surprised at learning this and seem to think that they should be paid a bonus whatever – despite the fact that the banking world, not to mention the rest of the economy, is in meltdown.  It’s time to wake up to the new reality guys.

5. Options/Restricted stock Units –  Much depends on the terms of the Scheme rules.  Some schemes allow a window of time for the stock or options to be traded following termination.  In many cases the options are well under water and currently valueless. 

6.       HR/Employers’ Lawyers – quite often they are taking a very hard line on the packages offered and are refusing to negotiate, unless there is evidence of unfairness.  I have seen a number of people recently where redundancy has been cited as the reason for terminating employment but, in reality, the real reason is often different – and probably unfair.  The current climate makes it easier for employers to get rid of those employees they see as being difficult or aren’t seen as being up to standard.

It’s not possible to generalise all the time though, but we are certainly seeing more people with “issues” on redundancy at the moment than we did back in 2002/2003 the last time there were mass redundancies.  Please also remember that if you do have “issues” with your selection or the package offered the legal fees offered by the employer will probably not be sufficient to cover a solicitor to argue the case fully for you – legal fees on offer seem to be around £400 – 500 inc/exc VAT.  That is enough to give advice on the terms of the agreement and your general rights but is not sufficient to cover negotiating a better package or challenging the reason behind the termination of your employment.

Please give me a call on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk for more advice.

More from Alex

If you want a rationale for redundancy selection, look no further than the cartoon below.  It doesn’t get nearer the knuckle than this,

 

Daily Telegraph 9th December 2008

Thanks be to Alex …

No, I’m not talking about the Chelsea centre half but the cartoon in the Daily Telegraph.  His cartoons are worth the cover price of the Telegraph alone.  Witty, ascerbic and they tell you more about City life than any number of learned articles or (ahem) blogs.  For instance, see the cartoon for the 27th November last;

 

Alex - Daily Telegraph 27th November 2008

Redundancy – know your rights!

Judging from the traffic on this site, redundancy is the big employment law issue at the moment and not surprisingly given the current climate. 1,000 job losses announced this week at Nomura, 650 at Credit Suisse and that on top of the losses at Goldman Sachs and Lehman Brothers. In my day job I am seeing plenty of people from investment banks and beyond, all with concerns and queries about either being told they’ve been selected for redundancy or are at risk. If you’re one of those people what do you need to know?

1. Are you an employee? Most employment protection legislation (apart from that involving discrimination issues) only covers employees and not self-employed people, for instance.

2. How long have you been continuously employed by your employer? To be able to claim a redundancy payment you need two years continuous employment experience. If you have this then you are entitled to be paid a “statutory redundancy payment” (SRP) in addition to your notice monies. SRP is not generous – £330 per complete year of service if you’re between 22-41 and £495 if you’re over 41. Your notice entitlement will be as set out in your contract of employment or as stipulated by the Employment Rights Act 1996 – basically 1 week per year of service up to a maximum of twelve weeks (four weeks notice minimum to be given by the employer once the employee has one month’s service).

3. If you have more than one year’s continuous employment experience then you have acquired the right not to be unfairly dismissed. This is a big topic but, in brief, it may allow you to argue that your selection for redundancy was unfair.

4. Have you been discriminated against? There are six main grounds for discrimination – race, sex, age, disability, religious belief and sexual orientation in addition to other grouds such as being subject to less favourable treatment because of being a fixed time or part-time worker. In addition whistleblowing is another type of claim that might be available. Remember it is your role that needs to be redundant, not you. What will happen to the work you do once you’ve left?

5. Most of the employees I see have been given a compromise agreement by their employer and they need an independent solicitor to advise them on their legal rights under the agreement. I have written elsewhere in this blog on compromise agreements and the issues they raise – see the page headed “compromise agreements” on the tab at the head of this blog for more information. One main reason why employers offer compromise agreements is that they want the employee to waive their rights to sue for unfair dismissal, discrimination, breach of contract etc. This is particularly the case if the employer is offering an enhanced package (in the City this is often, but not always, one month’s full pay per year of service).

6. If you have been given a compromise agreement then you will need to have it reviewed by a solicitor; give me a call if you want me to help. If you are unhappy about your selection or want further advice, get to see a solicitor and get some advice.

7. It is always helpful when seeing a new client to see the contract of employment, all correspondence relating to the redundancy situation and, of course, the compromise agreement.

Please call me on 0207 464 8433 or email me at michaelscutt@dalelangley.co.uk if I can help you at all.

Beware Festive Cheer (or what not to do at the Office Christmas Party)

Now that Christmas is in three weeks time it seems appropriate to repeat my annual warnings about the perils of enjoying the office Christmas party too much (assuming, of course, that your employer is still holding one).  

 

Christmas parties can get out of hand and everyone comes to regret it afterwards. Work rules apply at the Christmas party as much as in the office, which is why actions or comments (which inevitably occur after too much alcohol has been consumed) often end in tears for all concerned.  For this reason many companies choose not to hold an annual bash to avoid all the accompanying aggro.  I had a good laugh when I hear about a friend of a friend of a friend (and not a client I should emphasise) who got so drunk one year that she flashed her breasts at her boss; the next year she merely got so drunk she had to be taken home.  She hasn’t been invited to the Party this year.  In another example, from some years ago, a woman (again not a client) slept with her boss after the party and then, in January, found she was selected for redundancy.

 

It’s not all about drunkenness and sex though.  In one case, an employee who resigned and claimed constructive dismissal because his employers failed to honour the substantial pay rise promised to him at the Christmas party by his line manager lost his case.  It was held the promise had not been intended to create a legally binding obligation. 

 

Remember, office rules apply at the Christmas Party.

If you’ve any more examples of office party howlers please feel free to leave a comment below.

 

This article will appear in the Docklands and Peninsula newpapers week commencing 8th December