What happens when an employee resigns after successfully appealing against their redundancy?

Andrew Masters

Partner & Head of Employment

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April 4, 2019

Categories Employment Law

FAQ about redundancy pay and appeals

Question: One of our employees recently received confirmation that they were being made redundant and were issued with a notice of termination. We provided them with the terms of their redundancy, which included an enhanced redundancy payment. The employee successfully appealed their redundancy. They have however, now decided that they do not wish to remain employed by us. Given their decision, and the successful appeal, can we withhold all redundancy pay?

Answer: You may find this a rather unusual situation. Why would an employee who appealed a decision to dismiss and who succeeded, decide to leave anyway? We cannot be certain, however, employees have different reasons for following a process such as this one – it may be with a view to ‘showing the employer up’, highlighted procedural irregularities, assuming there were any, preparing for, or at least threatening tribunal action; or it could be that something happened during the appeal process which caused the employee to change their mind about remaining employed by you, and we would therefore need to look at this in further detail.

It is important to remember that once valid notice of termination has been given, it cannot be withdrawn unilaterally. The employee would therefore have to agree to the withdrawal of the notice, and if they do not, it would still be an effective redundancy dismissal. It is therefore logical that, because the notice of dismissal by reason of redundancy remains valid, the employee is still be entitled to their statutory pay, although there is no case authority for this.

That they were successful in their appeal but decided to leave anyway would however be relevant to any compensation awarded by a tribunal if the employee subsequently lodged and won an unfair dismissal claim. It is likely to be viewed as extremely odd by a tribunal that the individual appealed if they had no intention of remaining.

There are a couple of things worth noting in the procedure used: – First of all, the ACAS Code does not apply to a redundancy procedure. You were not obliged to offer a right to appeal their redundancy, however it was wise to do so to avoid allegations of an unfair procedure, and this is particularly so in cases where the redundancy was challenged by the employee in their initial consultation.

Secondly, if you are offering an enhanced redundancy payment, it is sensible to offer it under the terms of a settlement agreement. Once signed, the settlement becomes legally binding and your employee is prevented from taking any legal action against you in the event of a dismissal.

Contract law allows an employer to withdraw an offer at any time before it has been accepted. This may be relevant to the enhanced redundancy pay which is made via an offer rather than existing as a statutory right. Therefore, if it can be demonstrated that the enhanced redundancy payment has not been accepted, has been rejected, and there is no contractual right to it, then you should, technically, be able to withdraw it. The employee’s appeal itself may be useful in compiling an argument that it has been rejected or not accepted.

If the enhanced redundancy payment offer had been made during settlement discussions, but had not been accepted by the employee, the fact of the offer is unlikely to be admissible evidence in the event of a dispute and therefore can be withdrawn much easier.

Withdrawing the offer to pay enhanced redundancy is, however, unlikely to be well received, potentially leading to the employee seeking legal advice and trying to make a claim against you. The employee may decide to remain, but are likely to be a disgruntled employee moving forwards. It is therefore prudent to balance the legal arguments against the practical situation in order to reach a resolution that suits both you and employee.