Settlement offer after surprise termination

[Memo88]

Hi, we will be appointing an employment solicitor, but any advice would be so welcome.

Out of the blue, my husband was told yesterday that his employment was being terminated. We live in the uk and he is employed by a uk company, but the main business is based in Canada.

He has worked there for nearly 3 years, has never been told his performance is a problem and received a small pay rise in January.

The company have said the termination is due to performance but given no examples nor followed any procedures to address this.

They have offered him his 6 weeks notice pay plus 10 weeks settlement. If it’s relevant his salary is around £85k plus 15% bonus.

Does this seem reasonable? Does anyone have any experience they can share? Thanks in advance.

That will be their first offer. They will almost certainly be willing to offer more than that. When your husband gets a lawyer, they will be able to advise. He won't get as much as he would if he took them to tribunal for unfair dismissal and won, but he won't have the stress of a tribunal with the possibility he might lose.

Has his company been taken over lately? Are there other branches/subsidiaries where he can see a similar pattern of ‘out of the blue’ terminations? Ie, new parent trying to avoid a formal redundancy process? That might give him some leverage

On the surface this looks like unfair dismissal, if you're sure your husband has given you all the relevant facts @Memo88

I don't know why those things would give him any leverage. When an employer offers a settlement agreement, they aim to offer enough to stop the employee taking them to tribunal but less than they might have to pay if it went to tribunal and they lost. The leverage the employee has is determined by the employer's behaviour as that in turn determines how much the employee could win at tribunal.

This would be illegal, and surprising as they can easily just make him redundant, for the same or less cost. It would be very surprising if they didn’t know this.

so why pick this option. I’d really question if your husband is giving you the full story here. A small pay rise was likely inflationary and in line with policy and other employees,

no one just randomly fires a good employee and pretends it was performance, when they can simply say we are making the role as it stands redundant, tweak it a bit and back fill it. Finding a replacement who is also good is costly and risky, and again they can do single person redundancy.

so something is amiss. Ask to see the documentation and see what he briefs a lawyer on.

Why would that five leverage, that makes no sense, redundancy is very easy, he’s been there 3 years, would be 3 weeks pay, not 6 as well. If anything arguing he should be made redundant would cost him.

Well yes - hence why they’ve offered a compromise agreement. Is he only on 6 weeks notice then - I’d have thought 3 months at that salary level.

Whether offering 10 weeks is enough (and as prh says, it’s their first offer, there’ll be room to negotiate) will depend on how easily he can expect to find another job. If he reasonably expects it to take six months, then that might be more realistic.

Bit daft of them to confirm his employment is terminated before entering into a protected conversation to offer him the option of a settlement v's a performance process.

Is the order of events definitely correct? They confirmed his termination out the blue THEN offered a settlement?

No, it is not illegal. It is a perfectly normal approach. An employer wanting to get rid of an employee for whatever reason enters into a protected conversation with them and puts a settlement agreement on the table. If the employee accepts it after getting legal advice, they get an agreed sum in compensation in return for which they agree not to take the employer to tribunal.

They have entered into a protected conversation. It is perfectly normal to tell the employee in the conversation that they intend to terminate the employment and put a settlement agreement on the table. That is what has happened here.

I assume he’s been offered the settlement as part of a protected “without prejudice” conversation.

It is worth him pushing hard on the settlement offer because they’re on weak grounds if they’re saying it’s performance based and there’s been nothing ever raised with him formally as part of this. There’s settlement is there because they want him to go quickly and painlessly, leaving them free to recruit a replacement - the alternative being to put him through a performance management process, which would be drawn out and painful on both sides.

Your husband shouldn’t want this either, but it puts him into a relatively strong position to negotiate on the package.

At a reasonably senior role, it would be reasonable for him to push for the equivalent of 6-9 months net pay as a total package. The tax treatment of the pay out makes a big difference here, so the 16 weeks they’ve offered as a start point may not be too far off but the first offer is almost certainly not the highest they’re willing to go. He should also consider pushing for garden leave rather than PILON - as that gives him slightly longer employment, and therefore continuity of pension and other benefits for those few weeks.

No I get that, ive handled many a PC/WP conversation, ive just never known a company to take the strange risk of confirming employment has actually been terminated (as per the op).

Redundancy is not “easy”. He would be entitled to formal consultation and consideration of redeployment options.

I have! One large company I worked with (albeit not on employment issues) the common practice was to tell people their employment was being terminated and the company would be in touch about the next steps, then a few days later they would be called to an off site meeting where a settlement agreement would be put on the table. The company concerned no longer exists, but that is due to a board level power struggle being won by those who wanted to keep the company anchored in the past rather than those who wanted to face the future - nothing to do with their employment practices!

I dont doubt it happens ive just (thankfully!) never had the pleasure of having to tryband back track that potential mess up if the SA was rejected.

Im no longer in HR but im still getting hives at the thought of a manager informing me they have dismissed someone tap on shoulder style with 3yr service, but not to worry, they followed up with a SA afterwards 😩

I’d be concerned it’s not a uk company don’t know what employment laws apply

get proper advice

I'd suggest 10 weeks tax free money is pretty good for 3 years service. Statutory redundancy capped at £751 a week will be tiny in comparison. You could always ask them to add in the equivalent employer pension contribution for the period of notice? Might bump it up a little. You will have to appoint a solicitor to sign, the company will pay the fees - just check how much they will pay, the solicitor will ask you and invoice them directly. Good luck.

You're covered by the employment law of the country you're employed in. It doesn't matter where the parent company is - they have to follow UK employment law to dismiss him. (I think there are some rare ex-pat contracts that might differ, such as if you're seconded to anotger country for a fixed period, but generally not.)

Where the parent company is can affect how they act - even after decades of working across European countries, at least one US employer of mine seemed surprised every year that they couldn't just sack people like in the USA, but had to follow much more stringent rules that vary by country.

If they are arguing it’s underperformance my starting point would be how long it would have taken them to fairly take him through a capability process. If there genuinely have been no discussions at all this is likely to be at least 12 weeks. When you’re thinking about compensation you need to think about the whole package - car, pension, medical cover, life assurance and any other benefits. The first £30k of any compensation payment (but not notice pay) should be tax free which as a higher rate tax payer is worthwhile.

if you were to pursue a claim you would have to represent yourselves or pay your own legal fees - Employment tribunals don’t usually award legal costs. There is also a huge backlog of claims - some
tribunal offices are now listing claims for 2030 so a long time before you would see any compensation.

I would counter at 6 months full compensation plus pay in lieu arguing that’s how long it would take them to performance manage him given positive track record

It sounds like the company is applying North American employment law as they have made this unnecessarily risky and expensive for themselves. They could have simply followed redundancy procedures and he made him redundant that way. Perhaps they feel the HR resources required weren't worth it for this single post. Anyway, your husband is in a reasonable negotiating position as he's probably been unfairly dismissed due to the lack of due process. The typical end position here as a pp said would be somewhere between what has been offered here and what he would be awarded for unfair dismissal at tribunal. A lawyer will advise.

All this "they can't do this" and "its not UK employment law" is nonsense. They can do this, they have done this and a settlement agreement is perfectly legal. And if they agree they will be given a sum of money not to make a claim and keep it confidential. Yes its shit, but no its not illegal!

Are you sure your husband is being completely honest with you OP?

They have put a settlement agreement on the table, so they are following UK law. My guess would be that they have actually said there are performance issues and they intend to terminate his employment but, to save going through a disciplinary process, they will offer a settlement agreement that gives OP's husband some money for going away quietly.

What makes you think he hasn't been?

You can’t compare it to statutory redundancy you need to compare it to what he could hope to win at tribunal.