This short guide discusses whether and how to negotiate a better redundancy payment than what may already be on offer and get the payment made as part of a wider settlement agreement.
It should be read in conjunction with our main guide on Redundancy. Further related reading is given at the end of the guide, but you might find particularly useful our short articles on Sham Redundancy and Is my redundancy fair?
This guide covers:
Can you negotiate a better redundancy payout?
Redundancy situations can be one of the hardest situations to negotiate a better settlement package for, especially if there are multiple redundancies.
This is because, if there are many people going to be dismissed for redundancy, the situation is plainly genuine. Additionally, the more people going, the greater the cost, and the less likely your employer is to make an exception in your individual case and increase the amount of compensation they will pay.
A redundancy situation does not always lead to enhanced financial compensation by way of a settlement agreement. If your employers are confident that they have conducted a fair process – as outlined in our main guide on redundancy – they may decide simply to proceed to dismiss you without any kind of exit package.
Is there scope for negotiating more pay in fair redundancies?
The short answer to this question is that you can still negotiate an enhanced deal in some circumstances, but bear in mind the comments below and see also our article: Is my redundancy fair?
Obviously, the more your employer is offering you, the less useful it is for you to point out the holes in the redundancy process itself. But there nevertheless remains scope for some further negotiating on your part.
For example, any ex gratia payment offered in an exit package is often negotiable. If ex gratia pay isn’t negotiable, then you can focus on other areas such as bonus payments, the termination date, share options and holiday pay as points for you to negotiate an increased overall exit package.
Do employers only have to pay statutory pay for fair redundancies?
If the redundancy is fair, employers need not pay any more than statutory redundancy pay (see our main redundancy guide) unless a contractually binding policy is in place which sets out the amount to be paid. So, in these circumstances, there would probably be no point in trying to negotiate a better redundancy package.
Do employers ever pay more than statutory redundancy pay?
Sometimes you don’t have to negotiate at all to get enhanced redundancy pay, because many employers voluntarily offer a settlement with an enhanced amount over and above the statutory minimum.
From your employer’s perspective, this helps to ensure your smooth exit from the business. It also takes into account any element of doubt about the objectivity of the process and protects your employer against any claims you may make against them for their failure to carry out the redundancy process correctly.
How much more than statutory redundancy pay do some employers offer?
There is a lot of variety in such circumstances. Some employers offer little more than statutory, but enough to make the employee accept it if their situation is hopeless.
Other employers offer large amounts even though they don’t have to, especially to high-earning employees.
This is known as a ‘virtuous circle’, in that departing employees are offered very generous terms because those employees making the offer – usually senior HR or board-level directors – want to ensure that a precedent is set, and if they too were to depart, then they would get the best redundancy package as well.
Can redundancy process errors help your negotiations?
Many redundancies are carried out incorrectly by management, to the point where they amount to unfair dismissal under the Employment Rights Act 1996. If you can identify the errors or weaknesses in your redundancy process, then you can use them to strengthen your redundancy negotiations and to negotiate a better redundancy package.
See our main page on redundancy to read what your employer should be doing by way of proper redundancy procedures and to check out whether or not your redundancy dismissal is fair.
For more on how to negotiate a better redundancy package, read our guide on how to negotiate a settlement agreement as well as our article on how much money you should get. If you want a detailed estimate of how much you could get in a redundancy settlement agreement, try our settlement agreement calculator.
Our legal team here at Monaco Solicitors are all fully qualified, experienced employment solicitors who only represent employees. We have plenty of experience of successfully representing people caught up in unfair or sham redundancies.
If you think you are being treated unfairly over your redundancy case and would like help with it, then do get in touch.