Without prejudice letter: Sham redundancy and unfair dismissal

Lawyer’s email on behalf of client (Names and dates changed to protect our client’s identity):

Attn: [Name of Manager and Company]
By email only to: [Email address of Manager]

24 September [year date]

Our reference:[reference]

Dear Sirs,

Re: [Our client – Client’s name]
Without Prejudice Save as to Costs
Subject to Contract

We are instructed to act for [name of our client] in respect of his employment with XY Limited (“the Company”) and its settlement agreement proposal. The Company should disregard earlier correspondence received from a previous solicitor.

We are instructed as follows:

• On Thursday, 9 September [this year date], [name of our client] received a calendar invite from Mr A, Head of Sales, asking him to attend a meeting on Tuesday 14 September under the title “[next year’s year date]”. There was no other indication as to what the meeting was about, and no other attendee was indicated.
• [Our client] attended the office on Tuesday 14 September and was told the meeting had been postponed until Thursday 16 September. No explanation was provided.
• On arriving at the meeting at 9.30 am on 16 September, [our client] found that in addition to Mr A, a senior HR manager, Ms B, was also present.
• Mr A had a document titled ‘Sales – Proposed Structure Change’ which he proceeded to present to [our client], arriving at the conclusion that as a result of the proposed changes to the business [our client’s] role was at risk of redundancy.
• Ms B explained that there were two potential options available to the Company. The first option would be to go through a redundancy consultation process. The second option would be to enter into a settlement agreement. [Our client] was not asked which option he might prefer but was instead informed that the Company had elected to pursue the second option. Ms B then outlined the terms of a pre-prepared settlement agreement which was handed to him in the meeting together with the proposed structure change document and told to consult a solicitor.

• [Our client] was required to deliver up his Company mobile phone, laptop and security pass during the meeting.
• The meeting lasted no more than 10 minutes, commencing at approximately 9.33 am and ending at around 9.45 am (but including around 5 minutes where [our client] was permitted to delete some personal items from the laptop). He was then afforded some additional time after the meeting to complete the process of deleting items from the laptop whereupon he was required to leave the office under instruction that he should neither return to the office nor contact anyone within it. He was out of the office by 10.02 am.

• [Our client] later attempted to log into his work email address but found that his password had been changed at 12.30 pm on 16 September. His work phone has remained switched off.

• [Our client] understands that on Monday 20 September a meeting will have been held in the office with all the channel managers (a meeting which would normally have been attended by [our client]). He understands that the attendees were informed that Mr A and the Telesales Manager would be working on new telesales projects with the existing telesales partners.

[Our client] has worked for the Company for over 10 years. During this time he has enjoyed a good working relationship with colleagues and stakeholders alike. He has always performed well in his role and, against this backdrop, we were very surprised to learn that he had been treated in the above manner.

It is clear to us that the Company has committed a fundamental breach of the implied term of trust and confidence in his contract of employment and has put itself in a position whereby it will now be impossible for it to fairly terminate his contract (by redundancy or any other permitted reason) unless with his consent through a settlement agreement.

As you are no doubt aware, for an organisation to fairly dismiss an employee by reason of redundancy there has to be both a genuine redundancy situation, and a fair redundancy process. Whether there was a genuine redundancy situation (which is not necessarily admitted) is now inconsequential. A fair redundancy process must involve a period of consultation with the employee, which must be entered into with the employer having a genuinely open mind to redundancy being avoided taking into account any suggestions the employee may have as to how his redundancy might be avoided. If the employee leaving at the end of the consultation process has been predetermined then the dismissal will automatically be unfair.

It is clear from the above events that any future consultation process under the Company’s ‘Option 1’ – going through redundancy consultation is not available to [our client], but would, in any event, be unfair in light of its predetermination.

That leaves him in the position whereby if he decided not to enter into a settlement agreement then he would remain employed by an organisation that has made it clear through its words and actions that his employment has come to an end, which is not a proposition he can reasonably be expected to consider.

The situation is aggravated by the fact that the Company’s treatment of him has not been consistent with that of an employee whose role is at risk of redundancy. Such an employee would not normally be treated as a risk to the business, which might justify his removal from the premises, return of all company property and the immediate changing of passwords. We might expect to see such treatment when an employee stands accused of serious or gross misconduct, which is not the case here, but yet the Company has chosen that approach.

It is also inevitable that his colleagues and partners will draw unjustified, negative conclusions about his abrupt and unexplained departure following a meeting with his manager and HR, which he simply does not deserve. Unsurprisingly, the whole situation has caused him a considerable degree of distress which is particularly acute given his long length of service in a Company in which he had made his professional home and where he looked forward to working for many more years.

Reluctantly, it would seem that [our client] now has to accept that his employment with the Company now must come to an end.

Legal position
We have advised [our client] that he has good grounds for asserting to an Employment Tribunal that a future dismissal on the grounds of redundancy would be both substantively and procedurally unfair. In the event of his dismissal, he would be able to contend that the Company has acted unreasonably in treating his alleged redundancy as a reason for dismissal and that any future consultation would now be meaningless given the events of 16 September [this year’s date].

Further, if the Company now decides not to dismiss him, after having orchestrated his removal on 16 September, he would be entitled to treat that as a repudiatory breach of his contract of employment, amounting to dismissal.

If this matter went to an Employment Tribunal, in the circumstances we expect he would achieve the maximum compensation award, namely a year’s salary plus statutory redundancy payment. He would likely achieve this in light of the manner of the dismissal and because any reduction to the maximum compensation award due to offsetting any future salary he might receive from a future employer would be returned by way of the 25% statutory increase that is applied in cases where employers fail to follow the Acas dismissal process.

Finally, we should point out that, although we note that the draft settlement agreement is marked ‘without prejudice’, it was not offered to him on a without prejudice basis. [Our client] did not agree to enter into a without prejudice discussion with the Company, and without prejudice protection of the settlement agreement cannot be inferred, as the parties were not in dispute at the time of the offer, as required in law.

Settlement agreement

In light of the above, [our client] would be prepared to enter a settlement agreement in which the Company agrees to pay his full contractual salary and benefits up until the termination date, which it is required to do, plus his full statutory redundancy entitlement, a termination payment of £54,529.96, plus payment of his legal fees which have been incurred solely as a consequence of the Company’s treatment (currently £700 + vat).

Please send the revised settlement agreement to [name of individual solicitor] by email or to us at [name of individual solicitor]@monacosolicitors.co.uk and we will arrange early completion.
This letter is written on a without prejudice basis but reserves the right to disclose or repeat parts of it in open correspondence if necessary.
Yours faithfully

Monaco Solicitors