Settlement agreements issued under a collective redundancy exercise

Our firm was approached by an employer managing a collective redundancy situation involving over 40 employees across different departments. Specifically, the employer needed assistance with managing the execution of the settlement agreements within a tight time frame.  Our role was to act as the independent solicitor for signing the settlement agreement issued as part of the collective redundancy on behalf of each employee.

Collective redundancy - background to the recommendation

While individual redundancies are challenging enough, collective redundancies pose an even greater legal risk to employers. The rules surrounding collective redundancies are far stricter, and failing to adhere to these regulations can expose your business to serious legal consequences and multiple claims in the Employment Tribunal from employees who object.

When an employer needs to make multiple redundancies at once, it’s essential to follow all legal requirements meticulously. One of the most significant pitfalls is failing to consult with employees and employee representatives at the right time or in the proper manner. Employers often underestimate the importance of early consultation, which is required when 20 or more redundancies are being proposed within a 90-day period. Employers also frequently overlook the need for a fair selection process when deciding which employees will be made redundant. If the selection criteria aren’t transparent, objective, and non-discriminatory, employers could face claims of unfair dismissal.

The consequences of failing to follow proper procedures can be severe. Employers may face claims for compensation from affected employees, which can include severance pay, additional financial settlements, and even costly tribunal claims. These claims will be financially devastating for a business and could damage its reputation.  Employment Tribunals will not be sympathetic as they expect employers to get it right.  Consequently, settlement agreements can be the safest and cheapest option.  Employers prefer to work with solicitors they know and can recommended with confidence to handle their settlement agreements - Gannons was recommended by the employer to the employee as the independent law firm to deal with their settlement agreement.

Our approach

Understanding the urgency and complexity of the task, we adopted a two-stream approach to support the employer’s redundancy process effectively:

1. We provided employees with clear, independent legal advice on the terms and implications of their settlement agreements, ensuring they were fully informed.
2. We worked collaboratively with the employer’s HR team, who managed the formal consultation process internally, while we efficiently facilitated the signing and return of settlement agreements within the employer’s deadline. We also managed the process within the agreed legal fee contribution, handled employee queries promptly, and liaised professionally with HR throughout.

Key benefits of using Gannons

• Independent representation for employees: Acting exclusively for employees ensures complete independence when signing settlement agreements on their behalf. This independence is vital to the integrity of the process. We coordinated closely with the in-house team while maintaining this independence. The employer recommended Gannons to their employees, recognising our reputation for delivering high-quality, reliable legal support.
• Clear and practical advice: We provided straightforward and practical guidance tailored to the stressful circumstances employees faced, while demonstrating understanding and support for the HR team delivering presentations.
• Remote and Efficient Service: We managed all employee communications remotely, utilising secure channels to maintain confidentiality and streamline the process, minimising disruption to business operations.

The outcome

Thanks to this efficient approach, we successfully reviewed and finalised over 40 settlement agreements within the employer’s required timeframe. Our remote support facilitated a smooth redundancy process while ensuring minimal impact on the employer’s day-to-day operations.

This case study illustrates how Gannons delivers responsive, high-quality legal support in complex employment matters, including collective redundancies. We have a proven track record assisting employers to provide their employees with independent settlement agreement reviews, ensuring compliance and reducing risk.

If you are considering collective redundancies and want expert, reliable legal support, please contact our employment team today.