For Employees: Redundancies & Settlement Agreements

For Employees: Redundancies & Settlement Agreements

Download our handy PDF guide to Settlement Agreements by clicking here.

Being made redundant

We understand that the prospect of losing your job can cause huge strains on your life.  Being made redundant can be emotionally and financially challenging.  In certain circumstances, if there is not a genuine redundancy situation or if the employer did not follow a fair procedure, you may have a potential claim.

If you are being made redundant, or are unsure if you have a valid claim, please do not hesitate to get in touch with a member of our team for expert advice on how best to proceed.

You may well be asked to sign a settlement agreement. You should always obtain legal advice before signing a settlement agreement, as you are effectively signing away your rights to claim for unfair dismissal.

Being asked to sign a Settlement (compromise) agreement

When the employment relationship breaks down, one solution is for the parties to enter into a settlement agreement. This is a legally binding agreement whereby the employer usually agrees to pay the employee a lump sum in return for the employee agreeing to waive their rights to pursue a legal claim.

Our employment team is very experienced at taking on settlement agreements and act for employees at all levels. We pride ourselves in explaining any technicalities in plain English and can advise you of the various options available to you.

We will be able to advise you on:

  • Whether the situation gives rise to any claims against the employer, and whether the settlement agreement provides for appropriate compensation
  • What claims you are promising to waive
  • If you are to be bound in the future by any restrictions in terms of restraint of trade obligations
  • What you are and are not permitted to disclose about the settlement agreement to other people

Your employer will usually (but does not have to) provide a contribution towards your legal fees and in the majority of cases where the agreement is not contested this will be sufficient to cover the whole bill. For the avoidance of doubt, although they may be paying our invoice, the employer is not connected with us and we are acting solely in your best interests.

We understand that your settlement agreement is important to you and will aim to take as much of the stress away as possible by negotiating with your employer on your behalf where necessary.  Ultimately, our aim is to ensure that you receive the best outcome possible.

 

To read our frequently asked questions for employees, click here. For more specific FAQs around settlement agreements, please see below:

 

Our Frequently asked questions on settlement agreements:

Why am I being asked to sign a Settlement Agreement?

If you are being made redundant, or are leaving your employment for some other reason, it is common practice for employers to offer terms of settlement under a Settlement Agreement in return for you agreeing to waive all your statutory rights against them.

A Settlement Agreement is a legally binding document under which you agree not to pursue any claim you might have in a Court or Employment Tribunal against your employer.

 

Why am I being asked to see a solicitor?

A Settlement Agreement is only legally binding if you have taken advice from an independent solicitor (or other suitably qualified person) on the terms and effect of the Agreement and, in particular, its effect on your ability to pursue your rights before an Employment Tribunal.

The Agreement is a very important document and your solicitor will need to explore your individual circumstances and advise you as to the impact the Agreement will have on you.  Some of the clauses can be quite legalistic, and it is vital that you fully understand these clauses before signing.

 

Are the terms of my Settlement Agreement negotiable?

As a general principle, yes. However, it depends upon your particular circumstances and this is something your solicitor would want to explore with you. Your solicitor will advise you whether the terms are fair, and will outline the implications should you wish to negotiate any improvements.

 

How much will it cost me?

It is usual for the employer to make a contribution towards your legal fees. Depending on your circumstances, and the amount of contribution being offered, this may cover the whole cost of the meeting with the independent solicitor.

If your circumstances are more complicated, the potential cost may exceed the contribution and, in that situation, the solicitor will explain the likely costs involved and the different options that are available.

 

Do I have to accept the Agreement?

You are under no obligation to sign the Settlement Agreement but if you do not sign you may not get the benefits offered under the Agreement. Your solicitor will explain this in more detail.

 

What information do I need to provide?

Your solicitor will ask you to provide information about such things as your length of service, your salary and other benefits you receive, your notice period and the background to the situation.

If you have a copy of your contract of employment as well as a copy of a recent payslip, that would assist. You should also provide any documentation relevant to the situation, e.g. letters of redundancy, and the Settlement Agreement itself.

You will also need to provide photo ID (e.g. a passport or drivers’ licence) and a recent utility bill with your current home address on it and dated within the last three months.