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Case Study: Compensation Increased By £8,000 In Settlement Agreement

Summary

How Martin Searle Solicitors increased an employee’s compensation by more than £8,000 and helped him secure a job with a competitor by releasing him from misconceived restrictive covenants.

The situation

Cyril had enjoyed his job as a sales executive with an international insurance company for four years. He consistently met targets and had recently been promoted with a pay rise.

However, a few days after returning from annual leave, an hour into his shift Cyril’s line manager told him he was dismissed with immediate effect. He was handed a Settlement Agreement (then known as a Compromise Agreement) and called into a meeting with his line manager, senior manager and HR manager.

The senior manager said words to the effect of: “I am sure this will come as a shock, but your role is no longer required and we are making you redundant giving you one month’s notice from today. You can choose to work your month’s notice or leave today.”

Cyril was told he would be paid one month’s notice in lieu if he left that day and returned the signed Settlement Agreement. He was also advised his PC, email and mobile phone had been locked. Understandably, Cyril was shocked as this was the first time he was aware his role was redundant or that the company was planning to dismiss him. Neither did he know the company was undergoing a redundancy exercise.

Cyril told the assembled managers he wanted time to consider his position. However, his HR manager advised him that if he left the office to clear his head and returned, security would escort him off the premises. Feeling thoroughly humiliated, Cyril was escorted by security to his desk for his belongings and then off the premises.

Convinced that the company’s actions were unlawful and that this was not a genuine redundancy situation as no one else had been made redundant, Cyril rang Martin Searle Solicitors in Croydon for advice.

What Martin Searle Solicitors did

Our employment law team advised Cyril he had a potential claim for unfair dismissal as the company had failed to follow a fair redundancy procedure. In particular, his former employer had failed to:

  • Advise Cyril he was at risk of redundancy
  • Inform and consult with him
  • Fairly select him for redundancy
  • Consider suitable alternative employment
  • Give him the right of appeal

In addition, the company had overlooked its own internal redundancy policy.

We sent a without prejudice and an open letter to the company setting out the basis of Cyril’s potential claim for unfair dismissal. The company had no defence.

The result

Cyril’s former employer instructed solicitors and we negotiated a severance package of £10,000, equivalent to about six months’ net salary. This was an increase of £8,334 on the previous offer made with the Settlement Agreement.

During the negotiations, Cyril was offered a role with another insurance company. The company had also required Cyril to sign various covenants restricting him from working with competitors. These restrictions were not in his employment contract. We were able to exclude these from the Settlement Agreement enabling him to take up this new position.

To find out more about how we can help with Settlement Agreements, contact us today on 01273 609911, or email info@ms-solicitors.co.uk.

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