The way that City jobs will be affected by Brexit is still not clear but, in 2017, Deputy Governor of the Bank of England Sam Woods said that forecasts of 75,000 job losses were “plausible.” This figure has since been challenged but, with no real certainty in terms of what the true Brexit impact on jobs will be, many are preparing for round(s) of rapid redundancy.
City Jobs Brexit: employment in the City
Brexit day is still months away but the financial services industry is already proving a nervy place to be. The sector saw a 29% drop in job openings in the year to June 2018, as uncertainty over Brexit and employment slowed hiring. While it is now hoped that fewer jobs will move out of the financial services sector in London to Europe as a result of Brexit impact on the UK, more recent positive figures are not all that they seem. Goldman Sachs, for example, initially caused concerned by stating that it would be moving jobs to Paris but has now said it will also create 150 new jobs in London as part of its new Marcus retail bank. However, on closer inspection, 50 of the Marcus jobs will be in call centres, as opposed to financial services positions. So, the situation remains uncertain.
City Jobs Brexit: redundancies in the City
Given the dampened hiring climate in the City it’s crucial for anyone facing redundancy under these circumstances to get the best possible departure deal. It’s not currently known what hiring prospects in financial services will be like post-Brexit, which makes it even more important to secure the right exit package, whether that’s via redundancy pay or a settlement agreement.
City Jobs Brexit: Redundancy – the basics
- You have the right to be given notice of redundancy. This is based on the number of years of service – 12 weeks’ notice for 12 years or more, one week’s notice for every year of employment for two to 12 years’ service and at least a week for anything below two years. These are the minimum periods of notice that an employer must give in law but your employment contract may contain longer notice periods.
- You may not serve out your notice. An employer can offer pay in lieu of notice or you may be asked to take Gardening Leave, which means serving out the notice period away from the office.
- You have the right to be consulted. Redundancy law requires employers to consult employees before dismissing anyone on redundancy grounds. Different time limits and consultation requirements apply, depending on the number of employees being made redundant.
- Once you’ve received your redundancy notice you’re entitled to paid time off to look for other work (usually two days). You can also take unpaid leave for training and to look for another job, within reason.
- Your employer may choose to offer you a settlement agreement rather than go through the redundancy process to determine redundancy pay.
City Jobs Brexit: The settlement agreement
Settlement agreements are often used in a redundancy situation as an alternative to redundancy procedures. They usually offer a cash payment in return for the employee waiving their rights to bring any kind of legal action against the employer.
In the UK, a settlement agreement must be in writing and will not be binding unless both parties have taken independent legal advice. If you are in a redundancy situation and presented with a settlement agreement, it’s crucial to take legal advice to ensure the agreement is valid but also so that you get the best possible deal.
City Jobs Brexit: What’s the purpose of a settlement agreement?
To bring an employment relationship to an end on agreed terms. In a redundancy situation, the use of a settlement agreement is often to save the time and resources involved in going through the full redundancy process. Settlement agreements are legally binding documents and so should not be signed without a sound understanding of the contents.
City Jobs Brexit: Are settlement agreements voluntary?
Yes. Employees being made redundant are not obliged to accept a settlement agreement that is on the table. If you refuse a settlement agreement then your employer will be required to go through the official redundancy processes in order to legally make you redundant.
City Jobs Brexit: Why do employers choose settlement agreements?
Employers like settlement agreements because they save time and money by avoiding the redundancy process. They also prevent a situation in which an employee feels that the redundancy process has not been properly or fairly handled and subsequently makes a claim against the employer for compensation for unfair dismissal. Once the settlement agreement is signed, as long as it was properly handled, the employee cannot make any future claims.
City Jobs Brexit: Why would an employee accept a settlement agreement?
As employers like settlement agreements, they tend to offer incentives to employees to make signing the agreement more attractive than going through a redundancy process. So, for example, the agreement will usually contain an offer to pay more as a settlement sum than an employee would receive if their employment came to an end via a standard redundancy process.
City Jobs Brexit: What type of clauses might you find in a settlement agreement?
1. Employee entitlement – this covers what the employee is entitled to in return for signing the agreement and could be a combination of:
a) Contractual payments including:
- Payment in lieu of notice
- Accrued, but not taken, holiday
- Any benefits due during notice
- Bonus payments
- Stocks and shares
b) A compensation payment. Above the legal minimums, the amount of compensation offered is dependent on an employer. The first £30,000 is usually tax and National Insurance free.
2. A reference – agreed job reference wording should be attached to the settlement agreement and a clause inserted that requires an employer to refrain from any less favourable oral references.
3. Confidentiality – usually, employees will be required to keep the contents of the agreement confidential.
4. A “non-derogatory” clause – i.e. the employee cannot speak in a derogatory way about the employer. It’s a good idea to make sure that this is reciprocal.
5. Restrictive covenants – there may be restrictions in the agreement on who an employee can go on to work for in the future. Variations and waivers can usually be negotiated.
A redundancy situation is not something to ignore – the right support will be key when it comes to handling the process effectively. Settlement agreements can be complex but, if well negotiated, can help to secure a bright future.