How to respond to a redundancy announcement?

About Jonathan Lea

Jonathan is a specialist corporate and commercial solicitor who has over 11 years of experience at both large international City firms and smaller practices. For the last two years he has worked on a self-employed basis with a network of other freelance lawyers focused on entrepreneur-led businesses. If you'd like a competitive quote for any legal work please send an email to the address on the home page. You can also follow him on Twitter @jonathanlea

As I’m not an employment law specialist, I thought I’d circulate this employment law conundrum to a few relevant experts I know and see if the online crowd are able to give me and my client some good pointers!

 

The Background

 

A client sold his previously successful business a couple of years ago to a large US group with interests in the same industry.  The deal involved my client staying on as an employee to manage the now US owned UK business.  The US group turned out to be fantastically mismanaged and helped run the UK division into the ground along with the rest of their business.  Perhaps unsurprisingly, the other day the US HQ sent the redundancy announcement below (in italics) to my client, although it still came as quite a shock to receive it. 

 

However, for a while leading up to the redundancy announcement my client has made it very clear to the US group that he would like to leave his employment with the US group and set up on his own to run the UK business under a licence arrangement (with the US group retaining ownership of the UK business trade mark/brand) which would enable my client the freedom to make his own decisions and grow the business again.  A few weeks ago my client put a detailed proposal to the US group’s senior management which they were interested in discussing further.

 

However, now that my client has received the redundancy announcement the US management say they cannot discuss the licence proposal as UK law forces them to follow a redundancy process which cannot be circumvented by discussing the licence proposal. Especially in light of the fact that the UK business just consists of my client and his PA and all my client wants is a frank discussion, is it correct that a CEO cannot circumvent the redundancy process?  Taking into account the facts above and the announcement below how would you advise my client should respond?

 

Redundancy Announcement XX July 2012

Given the continued challenges of a struggling global economy and an overall decline in sales in 2012 versus 2011 and 2010, the XXXXXXX Group has struggled to return to sufficient profits to satisfy our bank covenants.  We have been reviewing and addressing all areas in our business, on a global scale, particularly those that have consistently been running loses.

Even with the transition of our fulfillment operations from XXXXXX to Amsterdam, and the subsequent closing of the XXXXXXX facility, our European business continues to lose money. We have had to look into ways that we can mitigate these losses.

The Group has been and continues to explore various options to reduce our losses in our UK division as well in the Group overall. These options include the negotiated reduction of costs of the European fulfillment centers and unfortunately the potential reduction in staff in the UK sales office and the ultimate closing of the office.  

If there is no alternative but to reduce staff here in the UK office, the part time roles of office assistant and the full time role of manager would be at risk of redundancy. The company would like to avoid having to make compulsory redundancies and therefore would like to consider any volunteers for redundancy. Anyone interested in applying for voluntary redundancy should apply in writing to XXXXXXX by no later than

3 August, 2012.

Anyone may obtain details of what their voluntary redundancy payment would be (
without commitment) from XXXXXXXX prior to 3 August, 2012.

We are looking at ways to avoid redundancies by trying to identify alternative employment within the Group for those at risk.  

While we explore our various options, we welcome any ideas or suggestions you may have to avoid the need for redundancies and to return this operation to profitability.  We will allow you a reasonable amount of time off during working hours to seek alternative employment and we will endeavor to keep all employees informed throughout the process.

In due course we will be writing to all affected employees to arrange a meeting to consult with each person individually.

We realize this is a very difficult time for you all and thank you sincerely for all your extraordinary efforts as we work through the continued challenges the Group faces.

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