Redundancies & settlement agreements
Redundancy and reorganisation situations can be difficult for all those involved. Our employment solicitors offer clear and timely tailor-made advice to guide you through the process and have extensive experience advising employers on dealing with:
- Whether there is a redundancy situation
- Effective strategies for making redundancies
- Formulating selection matrixes
- Collective consultation
- Electing employee representatives
- When to notify the Secretary of State
- Redundancy payments and bonuses
- Settlement agreements – including template settlement agreements and large scale restructure support with automated log and track process.
If you are making large scale redundancies and want to ensure your employees get sound and independent advice, we would be happy to join your panel, using the automated process to manage large numbers of agreements, whilst giving your employees the one to one solicitor advice and care they need.
There’s more information on our FAQ’s about settlements agreements and redundancies
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FAQs – Redundancies and Settlement Agreements
A redundancy situation arises when an employee is dismissed in one of three circumstances:
- Where the employer ceases, or intends to cease, to carry out the business for the purposes of which the employee was employed (a business closure);
- Where the employer ceases, or intends to cease, to carry on that business in the place where the employee was employed (a workplace closure); or
Where the requirement for employees to carry out work of a particular kind (or work of a particular kind in the place where they were employed) has ceased or diminished
An employer may decide to reach a redundancy settlement with an employee affected by redundancy in which they agree to bring the employee’s employment to an end on mutual terms. This is usually not compulsory but may be offered by the employer if, for example, it is offering voluntary redundancy on enhanced terms.
Yes, it is important to count the number of employees affected by a redundancy situation as there are collective consultation rules and obligations that will apply if the employer is proposing to dismiss 20 or more employees at one establishment within a period of 90 days or less.
There are a number of reasons why parties may wish to use a settlement agreement.
It allows the employment to be brought to an end on mutually agreed terms, provides certainty by clearly setting out these terms in a formal document on which the employee obtains legal advice and usually settles particular claims an employee may believe they have against an employer providing certainty that claims will not be pursued.
It can save the time, cost and stress associated with redundancy processes and related claims.
No. There is no obligation on the employee to accept a settlement agreement. They may seek to negotiate the terms or reject the settlement agreement altogether.
There are certain legal requirements that have to be met for a settlement agreement to be valid. These include that:
- The agreement is in writing and relates to a particular complaint or particular proceedings;
- The employee has received legal advice from a relevant independent adviser on the terms and effect of the agreement including the effect on the employee’s ability to pursue claims;
- The independent adviser has a current contract of insurance (or professional indemnity insurance) covering the risk of a claim by the employee in relation to the advice; and
- The agreement must identify the adviser and state that conditions regulating settlement agreements under the relevant statutory provisions have been satisfied
Although it is not obligated to, it is common for the employer to agree to pay a contribution towards the legal costs for the Settlement Agreement. The amount of this varies and will usually be set out by the employer as a term of the agreement so that it is clear from the outset.
