Q: I'm facing redundancy from my place of work, a well-known financial City institution, and they are suggesting a Compromise Agreement to me. Why would anyone have to sign a Compromise Agreement if they were redundant?
Redundancy is a common theme in Compromise Agreements, especially in the City of London. This is perhaps surprising, because if someone is redundant that is one of the few reasons why an employer can dismiss an employee who has worked for him for more than a year.
Why then would a Compromise Agreement be used in a case of redundancy? Even when dismissal is for an 'acceptable' reason like redundancy, the dismissal must be carried out "fairly".
In particular, the choice of who is to be made
redundant has to follow consistent principles, and where human beings
are involved the choice of what principles to adopt and how these
principles are interpreted are always debatable.
Even if the firm applies a strict rule such as "Last In First Out" (LIFO) -
meaning the last person appointed to perform a specific task will
automatically be made redundant if job losses are needed - there is
still room for debate when job specifications overlap.
There are sometimes allegations of direct, indirect or subconscious
race, sex or disability discrimination. Furthermore breaking notice and
consultation rules may make any dismissal automatically unfair. No
wonder many employers choose to offer redundant employees generous
redundancy terms so long as the employee signs a Compromise Agreement,
accepting the payment really is in full and final settlement with no
comebacks.
Is this in itself undue pressure on the part of
employers? In our view - no. Our experience, especially in
the City of London, is that in most cases employees are well aware of
economic trends. They are happy to agree terms and move on, having
signed a Compromise Agreement they have has discussed (at no cost to
them) with their own lawyer.
For further information call us now on 202 7074 0110 or write to us on guy.thompson@guyt.co.uk