We are often asked to advise on compromise agreements by employees in Stamford, Peterborough and beyond which include enhanced redundancy payments. In cases where an employee has a good unfair dismissal claim, this can pose a dilemma – should the employee take the compromise agreement and the enhanced redundancy pay or risk it all and take their employer to an Employment Tribunal for unfair dismissal.
In cases where the employee has a contractual right to enhanced redundancy pay, this decision can be made easier on the basis that the employee has a contractual right to redundancy pay whether they sign a compromise agreement or not. They can therefore not sign the compromise agreement, bring an unfair dismissal claim and expect to receive enhanced redundancy pay.
In this case at the Court of Appeal, Mirror Group Newspapers argued that to qualify for enhanced redundancy pay, employees had to sign a compromise agreement. They said no compromise agreement, no enhanced redundancy pay. Mr Garrett said he had a contractual right to enhanced redundancy pay whether he signed a compromise agreement or not. The Court of Appeal found in favour of Mirror Group holding that the enhanced redundancy pay was conditional on signing a compromise agreement. A large factor in the decision was that since about 1993, every employee who received enhanced redundancy pay was required to sign a compromise agreement. Accordingly, although there was no written requirement for a compromise agreement to be signed to qualify for the enhanced redundancy pay, the enhanced redundancy pay was contingent on signing a compromise agreement.
To prevent employees taking enhanced redundancy pay and suing their employers, employers may, if they offer contractual enhanced redundancy payments, wish to make any such payments expressly conditional on the employee signing a compromise agreement. An express term to this effect may have saved Mirror Group a trip to the Court of Appeal.