Redundancy Settlement Agreement Solicitors

A redundancy settlement or compromise agreement is a contract where you and your employer agree to resolve particular employment issues on specific agreed terms. Under the agreement, you give up your right to bring up any claims against your employer in return for a sum of money called a termination payment.

This type of agreement is commonly used when the employment relationship ends. However, it can also settle existing disputes where employment is ongoing.

Benefits of Signing a Redundancy Settlement Agreement

The redundancy settlement agreement allows for a clean break. Under the right conditions, it can be a fast, cost-efficient, and stress-free way to end an employment relationship or resolve an existing dispute.

The settlement assures the employer that the employee will not bring any claims against them, and the employee receives a payment that they would not ordinarily be entitled to. It also avoids costly and time-consuming litigation.

The terms of the settlement can be mutually agreed upon by the employer and employee, which means that a settlement agreement may permit an employee to announce to colleagues regarding their departure. The agreement is only valid once you have taken independent legal advice on its terms.

Disadvantages of Signing a Redundancy Settlement Agreement

A redundancy settlement agreement could compromise the ongoing relationship if a settlement is not reached. It may also impact employee morale if used as a substitute for good HR management practices.

The agreement can also be costly because it usually provides an enhanced settlement to incentivize the employee to sign it. This also helps to shorten the process and remove the risk of getting that process wrong and landing the company in a tribunal claim against an unhappy employee.

Why Do You Need Independent Legal Advice for a Settlement Agreement?

It is actually a legal requirement that you have independent legal advice regarding the settlement agreement; otherwise, it will not become legally binding.

Getting independent legal advice is a requirement, but it also ensures that you understand and abide by the agreement's terms and obligations.

The solicitor can also inform you on whether the settlement is far enough and assist you with negotiating if you wish to, but they won't push you into it if you don't wish to.

Basically, the solicitor will explain to you what the agreement means, and they can also advise you on the following:

  • Whether it is in your interests to sign the agreement at all
  • Whether the terms of the agreement are too restrictive or if they’re reasonable
  • The rights that you’re giving up by signing the agreement

Besides the fair severance payment, some agreements can include a good reference, a preferable termination date if a future termination is proposed, and any other benefits you believe you might be entitled to.

Can You Negotiate Settlement Agreements?

Most employees are often happy with the settlement agreement offer and take it without reservation. However, it is not always the case if you consider settlement agreement negotiations.

The agreement can be concluded relatively quickly if you're happy with the terms. However, in some cases, further negotiations may be needed.

You should consider how much you can get from the tribunal to ensure you get the amount you deserve. However, this means the process takes a longer time.