The recession is expected to have a serious impact on businesses which is unfortunately likely to lead to an increase in redundancies and the use of Settlement Agreements to terminate the employment relationship.
A Settlement Agreement is often used in a redundancy situation to terminate employment on mutually agreed terms to avoid going through a formal redundancy process.
A Settlement Agreement is a legally binding contact between an employer and employee. Under the terms of a Settlement Agreement, the employee agrees to waive the right to bring any kind of legal action against the employer in connection with their employment or its termination, in return for an enhanced financial package.
Under the terms of a Settlement Agreement, the employee will usually be paid a compensatory payment in addition to the minimum statutory redundancy payment and notice pay they are legally entitled to receive. The amount of the compensatory payment will depend upon the individual circumstances of the case and the strength of any potential claims the employee may have against their employer.
Other terms which are usually included in Settlement Agreements include a standard written reference, confidentiality clauses, an agreement not to make any derogatory comments about the other party and an agreed, internal announcement to colleagues.
An employee is under no obligation to accept the terms of a settlement offer and, as a general rule, should be given at least 10 days to consider the terms offered and obtain independent legal advice. A Settlement Agreement is not legally binding until it has been signed by the employer and the employee.
A realistic and fair settlement package can avoid the need to undergo a difficulty and lengthy redundancy exercise and can often represent a good outcome for both parties.
If you have any queries relating to Settlement Agreements in Redundancy Dismissals please do contact our expert Employment Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.