Settlement offer after surprise termination

[Memo88]

Hi, we will be appointing an employment solicitor, but any advice would be so welcome.

Out of the blue, my husband was told yesterday that his employment was being terminated. We live in the uk and he is employed by a uk company, but the main business is based in Canada.

He has worked there for nearly 3 years, has never been told his performance is a problem and received a small pay rise in January.

The company have said the termination is due to performance but given no examples nor followed any procedures to address this.

They have offered him his 6 weeks notice pay plus 10 weeks settlement. If it’s relevant his salary is around £85k plus 15% bonus.

Does this seem reasonable? Does anyone have any experience they can share? Thanks in advance.

I was thinking his employment already had been terminated hence my comment about not following process. But this would make sense.

I was on a similar salary and negotiated a full years salary as my settlement agreement when I agreed to drop my tribunal claim against the company.

See a lawyer and negotiate hard.

What industry does he work in? Why asking - I work in sales and sometimes it’s very easy to say the performance is weak because management can draw unrealistic KPI and refer to this

IME it's quite common for overseas employers just to throw money at it where Uk employment law differs from theirs. In Canada you can fire anyone for a non-discriminatory reason provided you pay them substantial severance. It looks as if they are simply reaching for the UK's nearest equivalent- we don't have the same system but you can quite legally create the same outcome with a settlement agreement.

This will be their opening offer. Your husband needs to speak to an employment lawyer asap who can negotiate for him on pay off, reason for termination and reference.

its a uk company, she says it in her op.

But why would you for a good employee. You wouldn’t. And redundancy is easy. It makes no sense.

Op, I’d suspect he’s being fired for poor performance and he has had multiple discussions on it, and it is not a surprise, simply he’s been hiding that he’s struggling from you.

single person redundancy is the easiest thing in the world and the safest, they tell him his job is going, do a pretend consultation for a month, tell him there are no other jobs they feel he is suitable for, give him his pilon and 3 weeks salary. They can then tweak the job description a bit, and the job title and replace immediately or wait 6 months. No action can be taken by him.

instead firing for poor performance, with no lead up, no evidence, for a good employee, and bunging him 10 weeks pay, would be so ill informed, and clueless.

so as said, I suspect this isn’t as out the blue as he’s been saying,,,just he’s been too embarassed to tell you, and now it’s happened he doesn’t feel able to tell you he knew it was coming and is pretending it’s a surprise.

Redundancy isn't that easy. It is certainly possible to get rid of employees you no longer want through redundancy, but it's a structured process, it requires consultation which takes time and significant hr resource. For a single post it's probably actually cheaper to do it this way especially for a big company with money to throw at the problem.

It’s a good payout. Redundancy would only be 3 weeks pay

What they have done IS illegal. They have broken UK employment law. Saying that, it is not unknown for someone to be fired, presented with a settlement agreement so the 'issue' goes away if they agree and sign it. Very different things.

A UK company owned by a Canadian company making the decisions.

"Bob, the London office is under-performing. We need to cut the headcount."
"OK, so we'll need to start a redundancy pro..."
"Fuck that, just pay them off."

Of course this may not be the case here but it's very very common, especially if the UK sub is only a small part of the wider business.

What does his contract say? And is it based on UK law or Canadian law. Not that I know what the difference would be. For £85k performance expectations might be very high, like increase business by x%. Without knowing the details it's impossible to say if he should get more, but you can always try, and getting a lawyer to look at his contract would be a good start.

No this sounds dodgy. Do they have a UK based HR function?

My advice: the job is over, it is about the money now.

There is no point in trying to challenge the dismissal and keep the job. It would be toxic to work there.
It takes a certain type of person to be willing to go through the employment tribunal process, to get compensation. It could drag on for years.

So the best bet is maybe use a solicitor to get a letter pointing out everything the company has done incorrectly, and use this as leverage to get a better deal.

She never said it was a sub to the diminutive level of being the London office, she said it was a uk company with the main business in Canada. As such, it would be registered in the uk and pay tax in the uk and would be highly unusual if they didn’t understand uk employment law where they had the type of conversation you put forward like two blokes working in some sort of clueless start up.

You can only use redundancy if there is a reduced requirement for whatever work the employee does and you follow the correct process, which takes time. If there is no reduced requirement, it is an unfair dismissal. Contrary to what you think, a settlement agreement is often easier and is always safer. If you make someone redundant they can take you to tribunal. If you use a settlement agreement they give up that right.

Why would you fire a good employee claiming performance issues? Because their face doesn't fit. Because the manager wants to bring in someone else they know. In sales, I've known companies fire their best salesperson because they earn too much commission. There are all kinds of reasons why companies sometimes get rid of good employees.

You’re missing the point, they can say reduced requirement and they need to change the job. This is a business decision. And it doesn’t take time, well not much, you can have it done in 6 weeks.

I am not missing the point. You are.

If you use redundancy the employee will still be in the office while you go through the process and, if it goes to tribunal, you have to show that there was a reduced requirement and that you used a fair process to select them from the pool of possible redundancies. Simply claiming there was a reduced requirement is not enough.

If you use a settlement agreement the employee is out of the door straight away and there is no risk of them taking you to tribunal.

By the way, there is no evidence that the company has done anything incorrectly at all. OP's husband may be a little confused - people often are when they are blindsided by something like this, particularly if they've never encountered a settlement agreement before. Almost certainly what has happened is that the employer has told him that there are performance concerns and that they intend to terminate his employment but, to save going through a disciplinary process, they will offer a settlement agreement that gives him some money for going away quietly. That is a perfectly normal process and entirely within the law. Indeed, the meeting where this happened is regarded as a protected conversation, which means it cannot be used in evidence to a tribunal. It is all entirely off the record.

She hasn't really said anything other than it's a UK company and the main business is in Canada.

Of course anything could be the case- maybe the UK business is huge- but the scenario I've set out would fit the facts, including all this being out of the blue, and is extremely common when you work for a satellite business of a North American group. Employing through a UK sub is absolutely standard in this scenario. I haven't suggested they don't understand UK employment law but rather that they can't be bothered with it. Not really sure what you're arguing with me about. I've suggested a possible scenario and how to respond to it (as a negotiation in which he needs a lawyer).

Thank you all for your responses, I appreciate you taking the time to reply.

I know i sound like a clueless wife, but I’m certain there’s been no issues about performance raised as he is very open about his reviews.

The Canadian based boss has made no secret of the fact they do this (dismiss with no warning and settlement) when they feel someone is no longer right for the company, he doesn’t believe in performance improvement etc.

DH is employed by a uk company, but all decisions are made in Canada, HR is in Canada.

DH is speaking to a couple of solicitors today, I’ve fed him back your advice that the offer is a starting point for negotiation.

Why on earth would he work for a company where the leader goes around telling employees that.?

Small update, the solicitor has confirmed that what they have done is illegal, so we’re hopeful for a productive negotiation.

Yes if there is no history or poor performance it is absolutely illegal.

A settlement agreement does not need any history or poor performance. The only process required in law is that the business has a protected conversation with the employee they want to get rid of and puts a settlement agreement on the table, the employee gets independent legal advice and both parties sign. That's it. Sections 111A and 203 of the Employment Rights Act 1996.

The only possible illegality I can see is if OP's husband has been dismissed already. If the employer has actually terminated his employment, that is clearly an unfair dismissal. The correct approach with a settlement agreement is that the employee remains employed until both sides have signed the agreement. If he is still employed, I struggle to see any illegality in their actions.

To clarify, he has been dismissed, employment terminated, log in no longer works.