Surviving redundancy by making the most of your Settlement Agreement

Advice  |   8 May 2014

So, it’s happened. The meeting you were dreading: you are being made redundant.

So, it’s happened. The meeting you were dreading: you are being made redundant.

In redundancy situations employees are often left with little choice other than to accept that they are losing their job. When redundancy is inevitable, we advise our clients to negotiate, where possible, a severance package. So, for example, you may have been advised that your employer only intends on paying you the minimum statutory and contractual entitlements. In these circumstances, we encourage our clients to seek an improvement on these terms or, if you are required to work your notice period, to try and obtain a payment in lieu of notice allowing you a period to look for alternative employment. We regularly advise employees on the terms of their settlement agreement.

What is a Settlement Agreement?

A settlement agreement is an agreement between you and your employer requiring you to compromise any claims against them in connection with the termination of your employment, in return for an enhanced redundancy payment from your employer.

A settlement agreement must follow certain formalities in order to be valid and as your solicitor, we will ensure that this document meets these legal requirements.

Our role in a Settlement Agreement

Whilst a vast number of settlement agreements are straightforward and do not require amendment, we believe it important that our clients are adequately compensated following termination of their employment and this often involves us re-negotiating their financial package. We believe it important that comprehensive advice is provided to our clients in order to achieve financial security and protection moving forward. In doing so we pay particular attention to the following issues when advising our clients on a settlement agreement:

  • Your final date of employment – ensuring that you receive your normal remuneration and benefits up until this date;
  • That proper notice is being paid (what is in your contract of employment may be superseded by your statutory entitlements);
  • That you are receiving an appropriately enhanced financial package in line with the potential claims you may have (this will depend on the circumstances of each case);
  • That any bonus due to you is included in the agreement confirming when payment of this will be paid;
  • What the position is regarding share options and SAYE (save as you earn) schemes;
  • That you are not compromising claims in respect of your pension, future personal injury or when seeking to enforce the settlement agreement against your employer;
  • When the settlement monies will be received and on what terms;
  • What the tax position is, whether this has been accurately reflected in the settlement agreement and/or whether you require separate tax structuring advice;
  • Whether you have been provided with a contractual reference assisting you in securing future employment and whether there are reciprocal “no bad mouthing” provisions contained within the agreement; and
  • Whether your employer is precluding you from securing future employment by the inclusion of post-termination restrictions.

At Thackray Williams LLP we have a long-established record of concluding settlement agreements quickly and usually at no additional cost to you. This is the case whether you simply want to sign the agreement or arrange for us to re-negotiate terms on your behalf.

For more info pleas contact a memebr of our employment team: David Hacker,or Emma Thompson .Or if you are particularly concerned contact our free advice line, 7 days a week from 8am to 8pm on 020 8461 6143​.