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Redundancy & Settlement Agreements – Guidance for Employers and Employees

Posted on October 8th 2020

Regrettably the UK has sadly seen a sharp increase in the number of redundancies and individuals losing their jobs as a result of the economic crisis caused by COVID-19.

Whether you are an employer or employee, it is imperative that specialist employment legal advice is sought, as a business owner when making important decisions about restructuring your business or making redundancies or as an employee when deciding whether or not to enter into a settlement agreement.

What is a settlement agreement?

A settlement agreement is a legally binding contract between an employer and employee used to record the agreed terms following termination of employment.

A settlement agreement provides the parties with certainty and security, as it acts as the full and final settlement of potential future employment claims by the employee against the employer, in exchange for the employer agreeing to make certain payments and usually an agreed form of reference available to the employee.

It is, therefore, very important to seek legal advice when preparing and issuing a settlement agreement as an employer and it is mandatory under employment legislation for an employee to take independent legal advice when presented with a settlement agreement for that document to be legally enforceable.

For an employer – it is essential that an agreement is drafted in such a way that it complies with the legal requirements for such agreements set out in a variety of employment legislation.

For an employee – it is crucial that you fully understand and appreciate the effect of the document on your employment rights.

Whether you are an employer or an employee, you will need legal support to ensure that the settlement agreement is compliant and that the employee has received independent legal advice before signing a settlement agreement to understand its content and legal effect.

How can you help me as an employer?

If you are a business owner who has made the difficult decision to make redundancies within your business and are looking to create certainty and security by using settlement agreements to ensure that those employees affected will not bring claims against your business at the Employment Tribunal, we can prepare settlement agreements for you to provide to your employees and advise on the legal effect of those agreements on you as an employer all for a fixed fee agreed with you at the outset.

How can you help me as an employee?

If you are an employee and have been approached by your employer with a proposal for a settlement agreement either because you have volunteered for or been selected for redundancy, or, indeed for some other reason, we can help by providing you with the independent legal advice which you are required to have to explain the content and legal effect of your settlement agreement so that you are fully informed of your rights and obligations before signing.

The fixed fee which we charge for this advice is usually covered by the ‘employer’s contribution’ set out in the settlement agreement.  This means that there is no cost to you for using our services, unless either the contribution proposed by the employer is below our standard charge or you instruct us to renegotiate the terms offered and / or the provisions of the draft agreement and the employer will not increase its contribution.

Contact us

Whether you are an employer or an employee looking for legal advice with regard to settlement agreements or redundancies, our specialist employment solicitors will be able to help.

As well as meeting clients in person, our solicitors are able to conduct meetings online through a variety of video conferencing platforms or indeed via telephone conference which means that there is no need to travel or be local to Chester if you are seeking access to efficient and cost effective employment advice.

If you would like to make an enquiry, please contact us by telephone on 01244 312306 or by email at law@oliverandco.co.uk.

Call and speak to a lawyer on 01244 312306