Heather Townsend advises on the issues you need to consider when leaving an organisation as a result of redundancy or compromise agreement.

In my last article I dealt with what you should do if you have just been told that your role is has been placed at risk of redundancy. However, not everyone has the luxury of time when they are being made redundant from their role. Some employers will chose to compromise an employee out of the organisation rather than follow a formal redundancy procedure. This guide offers advice on what to do if you discover that you will be leaving an organisation either as a result of redundancy or compromise agreement.

Retain your personal dignity

It is time to leave. But, this is not the time to shout and scream at the person handling your exit from the company. Whilst they have been asked to carry out a process on behalf of the company, they are human beings too, and have thoughts and feelings just like you. Just as you don’t come into work to be shouted at, they don’t either.

Don’t burn any bridges

You may still be feeling very bitter, but the time has come to emotionally and physically move on. In the current economic climate you are more likely than ever to find a new role or work either directly or indirectly from someone that you have worked with. To prove my point, 100% of my first assignments, in the first six months after going freelance came directly or indirectly from someone that I had worked with at my previous employers.

In addition, it is always worth parting on good terms with an employer so as not to run the risk of prejudicing any future reference they may be asked to provide on your behalf. Most employers will now only provide a company reference which will say something very similar to this statement... ‘X worked here from X to X’. However, you are normally asked to provide personal references from people you have worked for – e.g. your previous line manager, a peer.

Take control over the process

Don’t accept the first offer that you are given. If your employer has money problems, there may not be much more on the table, but it is always worth asking. Your employer will be very keen to avoid any negative press coverage or time spent defending itself in a tribunal.

Make sure you take either a union representative or someone you trust into your individual consultation meetings. They are not allowed to answer questions directed to you – however, they can address the hearing and confer with you during the hearing. They can also take notes for you – which may be needed if you decide to take you employer to tribunal.

Think creatively

Before you start to negotiate with your former employer work out what is important to you, and work out what is a nice to have. Your employer will have already told you what may be important to them via the terms of a compromise agreement. There are lots of variables, that don’t involve money, that you can negotiate with your former employers – notice period, content of your reference, who you can go to work for next, who you can take with you to a future firm, how quickly you can contact clients of your soon-to-be former employers, intellectual property, kit or equipment you can take with you etc.

Before signing anything....

Before you sign anything – especially any document that waives your entitlement to take your former employer to an employment tribunal, get the document checked over by a union or a solicitor specialising in employment law. Keep copies of all your correspondence and notes from meetings.

How much should you get to go quietly?

There is no magic formula for this. The stark reality is you will receive as much as you are prepared to accept or ask for (within reason!) – however, the minimum you should receive is what you would have received if you had been made formally redundant.

Any redundancy package will be made up of three elements:

• pay in lieu of notice [determined by your contract]
• statutory redundancy [calculated based on length of service and age]
• compensation from your employer for loss of role [optional]

The government has a calculator which helps you work out the statutory portion of your redundancy pay.  If you are being compromised out of the business, and you can’t come to an agreement on what your payoff should be, then you always have the option of taking your employer to an employment tribunal for unfair dismissal. This is a lengthy and time consuming process, and the tribunal will only give you a pay award for unfair dismissal if you can show you have suffered loss. The maximum amount the tribunal is allowed to award is £63,000.

If you consider taking your employer to tribunal do remember that goodwill from your previous employer may be more important and valuable to you in the long run than a pay award.

Time does matter

You only have three months from your effective last day of employment to lodge a claim at tribunal.

What’s a realistic amount to ask for as a payoff?

It all depends on what your employer has previously paid out to other people, what you would get if you went to tribunal and how draconian the compromise agreement is. Your union or a decent employment lawyer should be able to advise you what amount of money you should ask for. 

Heather Townsend is the driving force behind The Efficiency CoachTM. She is a highly experienced corporate, career and executive coach with over 10 years experience in many diverse businesses including Tesco, Procter & Gamble, BDO Stoy Hayward LLP. Heather blogs at www.theefficiencycoach.co.uk/blog and can be contacted by e-mail at [email protected]