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Think you are facing redundancy? Here’s some factors to consider

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Much has been commented upon in recent weeks about the struggles facing the north-east oil and gas industry, particularly in relation to the ongoing rounds of redundancies.

In the cyclical nature of the industry, within which the majority of us are all involved to a greater or lesser extent, it is inevitable that once the operators cull their numbers, the service sector will follow suit given the reduction in their commercial and, as a result, financial forecasting.

Having spoken to clients and contacts in the service sector, I am aware that there are very few who have not commenced their consultation processes.

In the last couple of weeks, I have been approached by employers who have almost come up short in their endeavours to identify groupings of employees who have seemed to them to be “obvious” candidates for redundancy. Those groups are contractors, those posted abroad and migrant workers. All of these groups potentially have protection, notwithstanding any of their contractual arrangements.

Many “contractors”, depending upon their circumstances, will have employment status and not, in law, be self-employed. Employees posted abroad, whether they are seconded or contracted to a sister company, or for the duration employed by a sister entity, may still be protected by UK legislation., again depending upon their individual facts and circumstances.

Last but not least, those workers who are sponsored by UK employers and who have limited leave to remain in the UK acquire employment rights in the same way as resident European workers. They are also protected from discrimination from the recruitment stage of employment. To “red circle” any of the foregoing groups in an effort to save on redundancy payments will potentially be counter-productive for the reasons given above., especially when we remember that Employment Tribunal awards for dismissal for any protected characteristic carry no financial cap.

When being offered redundancy packages, employees should ensure that all of their contractual rights have been identified including bonus, commission and share options which have vested. Depending upon the share scheme, it may be possible to accelerate vesting where there have been grants which are not yet vested. Often, the opportunity to receive an enhanced redundancy payment overshadows other potentially more lucrative options which may be not be quite so obvious, and which are then contractually removed under the veneer of a settlement agreement.

Like all employment law decisions, they should not be taken lightly or without expert legal advice.

By Linda Beedie, partner, First Employment Law