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Why?

At the end of last week, bookmaker William Hill made an announcement that 700 betting shops will close over the next few years resulting in up to 4,500 job losses due to reduced income from fixed-odds betting machine business. Hot on the heels of this surprise announcement came the news only hours ago that German banking giant Deutsche is to make almost 20,000 job cuts over the next couple of years as a worldwide cost saving measure and reorganisation.

When?

William Hill

William Hill, which has 2,300 shops and 12,500 employees, said the closures could begin before the end of the year and that there will be commitment to consider voluntary redundancy options and redeployment opportunities across the business.

Deutsche

It has been reported that in ruthless investment banking norm, many staff were told not to come to work, or were told after being called into a meeting room unannounced that their passes would stop working at 11.00am so they had to pack up their desks and leave the building.  It is likely that these employees will have been placed on ‘paid leave’ whilst a consultation exercise takes place so as to minimise any potential risk to the business, confidentiality, financial and reputational.  Deutsche bank is one of London’s largest employers with some 8000 employees in the city and the mass reduction in head count is as a result of closure of the share trading arm of the bank.

Redundancy

There are broadly three ‘main’ redundancy situations (although the statutory definitions are more complex):

• closure of the business as a whole; (Deutsche Bank scenario)
• closure of the particular workplace where the employee is employed; (William Hill scenario)
• reduction in the size of the workforce;

 How?

 An employer should give as much warning as possible of impending redundancies and undertake a consultation process to adequately consider suitable alternatives.

Alternatives to making redundancies are:

• voluntary redundancy
• lay off
• salary reductions
• short time working

At the first stage the employer must choose a fair pool from which to select the redundant employees. There is a significant amount of flexibility given in this as an employment tribunal will not go behind the business reason for such a decision. They must apply their mind to the decision and act from genuine motives. Any unreasonable artificial selection of the pool, by failing to include all those doing similar or comparable work may be deemed unfair selection.

The second stage is selection of reasonable selection criteria. They must be objectively measurable and non discriminatory. Once the criteria are chosen they are applied fairly and objectively.

An employer is required to also look for suitable alternative employment and adequately consult with employees in relation to any possibilities; an employee is allowed to refuse an alternative however the refusal should not be unreasonable otherwise the employee risks losing the entitlement to statutory redundancy pay. Employers are permitted to undertake a competitive interview process for suitable vacancies and equally an employee is entitled to a statutory trial period of 4 weeks before making a decision.

If no alternatives are found, then the employer will proceed to confirming the redundancy and an employee would be entitled to a statutory redundancy payment.

Statutory redundancy payment

Payments are based on an employee’s age and length of employment.

• 1.5 weeks’ pay for each full year of employment after their 41st birthday
• a week’s pay for each full year of employment after their 22nd birthday
• half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years and weekly pay is capped at £525. The maximum amount of statutory redundancy pay is £15,750.

Settlement Agreements

Investment banks are known to give employees one month for every complete years service however staff who have been made redundant at Deutsche bank have confirmed that the offer is only a weeks’ pay for each complete year of service for the majority of staff, another blow to affected staff.

Where organisations offer enhanced packages, it is usual to require employees to sign Settlement Agreements. This safeguards the employer from the risk of any claims being brought against them dismissed employees.

It order for such a Settlement Agreement to be legally binding, there is a requirement for the employee to obtain independent legal advice as to the terms and effects of the same, It is usual for the employer to make a contribution towards legal fees for such advice.

Legal Advice

Facing redundancy can be a stressful time, compounded by the complexities of an unknown process and  dissecting the contents of a settlement agreement. Curwens LLP have a team of specialist employment lawyers who are experienced in advising on redundancy situations, including settlement packages and negotiating the best deal for you.

If you require advice on this or any employment law matters please feel free to contact Kaajal Nathwani on 020 8363 4444 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Settlement Agreement