TUPE / Redundancy Settlement Agreement

[waffle1234]

Hi,

I'm after some advice around a settlement agreement I have been offered, mainly just to confirm it is fair and reasonable given the circumstances.

Background
The company I work for is essentially outsourcing the back office work to another company, who will continue to sell the products we sell now under the name of the existing company.

Several hundred staff are in the TUPE process to move from the original company to the new one including the team I currently manage. I have however been told I will not transfer as my role does not exist at the new company and the responsibilities are split across various employees at the new company.

I have been employed by the company for just over 3 years, and I cannot see in my contract any specific redundancy provisions.

The Offer
I have been offered a settlement agreement which is as such...
- My role stays at the existing company to the end of Q1 2026 (in order to manage the transfer)
- Paid Leave In Lieu Of Notice (3 months)
- Redundancy of 4 weeks at full salary (I earn above the £719 pw statutory cap)
- Additional compensation of 6 weeks full salary.
- Up to £500 legal fees paid to review the offer.

I am told the PILON would be taxed like I earnt it, but the redundancy and additional compensation would be tax free (as under the £30k limit)

My Thoughts
My understanding is that I could dig my heels in and insist I get TUPE'd over, and then would have to 'battle it out' with the existing people who do my role. The worst case scenario would then be if I was still made redundant they could give just 3 weeks notice (which they could make me work), and then 3x £719 capped statutory redundancy pay.

Presumably the new company would prefer to avoid the disruption of putting their existing people who do my role 'at risk' and potential of an unfair dismissal case by making a TUPE'd employee redundant against an existing one - therefore have made this offer.

Question
On the face of it this seems like a good deal to me compared to the alternative.
However I'd appreciate a second opinion as to if I'm missing anything, should attempt to negotiate or should sign before they change their mind!

Thank you

[atticus]

You are being offered a contribution of £500 (+VAT?) for legal advice. You should use that contribution.

NB for a settlement agreement to be valid, the employee must have received independent legal advice.

[waffle1234]

Yes it is £500 +VAT for the independent legal advice which can be billed directly to my employer.

However, upon speaking to a legal firm today they advised that fee would cover only a 30 minute session with myself to explain the contract and provide the countersign / witness that it had been done. They would not be able to comment on the quality of the offer or negotiate changes to the agreement.

[atticus]

Find another firm. For £500 + VAT they could and should do better.

[waffle1234]

Find another firm. For £500 + VAT they could and should do better.

Thank you - I'll contact a couple more and see if they can provide some guidance within that cost.

Did you have a view on the offer itself? My concern originally was a solicitors would just do the minimum and collect the fee (which seems to have been the case with the first ones I contacted!).

Having a rough idea of how good or bad this offer was beforehand would be really helpful.

[waffle1234]

Just to add, the second firm I have approached have also said £500+ VAT is the standard industry fee for 'advice on terms and effects' plus the signing.

They are quoiting £5000 +VAT for a fixed cost negotiation (upto 5 rounds), or staged costs which would start at £1650 +VAT for review, assessment & counter offer.

[ULA]

If a solicitor is doing their job properly to advise on a Settlement Agreement (SA) they should ask to see the draft of the SA plus your contract of employment and review both these document. They should then speak to you about the circumstances that have led to you being offered an SA and then advise on whether:

1.What is being offered is correct contractually, which some of the payments are.
2. That the compensation being offered is fair and reasonable given the circumstances and that you are giving up your rights to pursue a claim.
3. Whether they will need to negotiate on the monetary offer or terms on your behalf with the company and or their legal representative.

If any negotiations are required then that will need to be undertaken on you behalf until such point as agreement is reached and the SA is signed. In some instances if this is protracted they may try to negotiate a higher employer contribution to costs to cover this.

So realistically it is not a half hour job. Typically with little need to negotiate, it is about 1.5 - 2 hours of time.

£500 + VAT is at the lower end but doable on my above caveat.


In terms of the offer you are being given this is compared to statutory redundancy calculation which I have set out below and against which you can consider whether what is being offered is a better option.

If you are being made redundant then the formula for the statutory payment is for every completed year if service:

- half a week's pay for each full year you were under 22
- one week's pay for each full year you were 22 or older, but under 41
- one and half week's pay for each full year you were 41 or older

Your weekly pay is the average you earned per week over the 12 weeks before the day you get your redundancy notice and weekly pay is capped at £719.

In addition if you are not asked to work your notice then you should be given pay in lieu of notice which is subject to tax and NI
Plus any accrued but untaken holiday pay up to the date of your termination again this payment is subject to tax and NI

[atticus]

Thank you - I'll contact a couple more and see if they can provide some guidance within that cost.

Did you have a view on the offer itself? My concern originally was a solicitors would just do the minimum and collect the fee (which seems to have been the case with the first ones I contacted!).

Having a rough idea of how good or bad this offer was beforehand would be really helpful.

Well, after your taxable 3 months pay in lieu of notice you appear to be offered 10 weeks gross and untaxed pay. That is more generous than statutory redundancy pay. I could, and probably should, leave it at that.

You are being offered a package that works out at more than 6 months net pay. If you can find a similarly or better paid job within 6 months, it seems to me that you will be ahead. You will need to decide if that is likely.

This is on the basis of a genuine redundancy. This is also subject to any difficulties that any restrictive covenants may cause, and which you may want negotiated out or softened.

Please also remember that I am just a stranger on the internet. Further, I owe you no legal duties of care of the kind that a solicitor would, and for which they are insured.

[atticus]

If a solicitor is doing their job properly to advise on a Settlement Agreement (SA) they should ask to see the draft of the SA plus your contract of employment and review both these document. They should then speak to you about the circumstances that have led to you being offered an SA and then advise on whether:

1.What is being offered is correct contractually, which some of the payments are.
2. That the compensation being offered is fair and reasonable given the circumstances and that you are giving up your rights to pursue a claim.
3. Whether they will need to negotiate on the monetary offer or terms on your behalf with the company and or their legal representative.

If any negotiations are required then that will need to be undertaken on you behalf until such point as agreement is reached and the SA is signed. In some instances if this is protracted they may try to negotiate a higher employer contribution to costs to cover this.

So realistically it is not a half hour job. Typically with little need to negotiate, it is about 1.5 - 2 hours of time.

£500 + VAT is at the lower end but doable on my above caveat.

Based on my previous experience when in practice, I agree with all of this.

[waffle1234]

Thank you both for your time and comments - the help is appreciated.

[ULA]

You are very welcome.

[waffle1234]

A follow up question to understand my position if I wasn’t to take the settlement…

In a situation where an employee is due to be TUPE’d over, I understand the new employer can start redundancy consultations prior to transfer with the consent of the existing employer, and therefore could make the employee immediately redundant after transfer if there was a valid ETO reason.

What is not clear to me is that in the above situation, does the statutory / contractual notice period start before or after transfer?

My contractual notice period is 3 months, and “at risk” of being made redundant upon transfer end of Q1 2026. I don’t know if they can start the clock ticking on the 3 months notice in Jan in anticipation, or would have to wait until I was transferred

[ULA]

The new employer can consult about redundancies prior to the transfer if the old employer agrees. However, the redundancies cannot fairly go ahead until after the transfer if they are connected with the transfer and are due to the incoming employer's reason. Also, the new employer might need to consult with all affected employees both those that are transferring and the new employer’s existing employees

Your current employer should not make you redundant because the incoming employer wants them to, that would be an unfair dismissal as your current employer cannot rely on the incoming employer's reason to make you redundant. You should transfer over, and the new employer should deal with any redundancies, assuming they have a fair reason to make redundancies.

[waffle1234]

Thanks ULA

Does this mean that mean my 3 month contractual notice period could not start until after the transfer takes place?

What I am concerned about is if the new employer can consult, make a redundancy decision, and start my redundancy notice period before I am due to transfer.

Or, would they have to wait until the transfer, then start the 3 month clock from then.

[ULA]

As far as I am aware redundancy selection process should be post transfer and implementation of redundancies after consultation and notice periods.

However if you are considering a settlement offer against what I have said above run the calculations and take some legal advice.