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Redundancy Compromise Agreement

Redundancy: Should I Accept An Employment Settlement/Compromise Agreement?17th Jun 2020

by Hugh Reid on 17th Jun 2020

Contact Hugh Reid

You’re being made redundant. Your employer is offering you a payment to go quickly and quietly. This is called an employment settlement (previously known as a compromise agreement).

But you’re worried. Is the settlement offer fair? Is it high enough? Are you being dismissed unfairly?

By law (Section 203, Employment Rights Act 1996), you are required to obtain independent legal advice regarding the terms of the agreement. Your lawyer is also required to sign a certificate to confirm that they have complied with this.

Your employer will usually offer a fixed sum to cover your legal fees in this respect.

Get Expert Legal Advice On Your Employment Settlement Offer


Why Do Companies Offer Employment Settlements?

Employers need to save time and money when making staff redundant. Your boss doesn’t have the time or desire to argue with you at an employment tribunal. They don’t need the red tape.

Now multiply all that hassle by however many people are being made redundant: it’s an HR nightmare for an employer. They need you all to be gone as quickly and smoothly as possible – so they can fix whatever urgent business problem is forcing them to make you all redundant.

And employment settlements are the best way to do this (when done well).

They are better for the employer, better for you (if the agreement is fair/generous) and better for this country’s overburdened justice system.


Employment Settlements Are On The Increase

We’re seeing lots more of these agreements now. Why? Because some employers have been rushing to make staff redundant before the Covid-19 coronavirus furlough scheme changes.

These employers can’t afford (or don’t want) to pay the mandatory employer contributions being mandated in August and ratcheting up in September and October.


Is My Employment Settlement Fair?

Most settlements are reasonably fair because the employers want you to accept them. It’s in their interests in the long term – it saves them time, money and stress.

But some employers are ‘less than generous’. They’ll try to pay you as little as they can. Some of these lowball offers might sound reasonable at first. Or you may think you have little choice because you’re the one losing your job (with or without a settlement agreement).

But in reality, all the employer could be offering you is the legal minimum. That’s why you need (and have the right to) independent legal advice.

It is important to choose a specialist employment law solicitor with plenty of experience of these agreements. Otherwise you risk being shortchanged by your employer.

In one example I saw recently, an employer tried to fob off a £38,000/year employee with a £2,000 settlement for 4.5 years’ service. That’s little short of derisory – and the employer shouldn’t be surprised when the employee explores their options.

Our employment solicitors can give you all the legal knowledge you need to reject lowball offers – and the confidence to hold out for something better.

Conversely, we can also help you to realise when an offer in the hand is worth two in the bush. We can provide you with important clarity and focus at a time when you need it most.

Remember: your employer’s offer is precisely that…just an offer…and they can withdraw it any time. So we can warn you if you’re throwing away a potentially good deal.


What If The Offer Isn’t Good Enough?

Nobody wants to be made redundant. It is always extremely worrying, especially when times are tough. But what if you were dismissed unfairly? What if there were discrimination issues?

We can ascertain if you have been dismissed unfairly and help you to take your compensation claim to an employment tribunal. 


Get Expert Legal Advice…Fast

Our employment solicitors can see you within 24 hours if you can email us your settlement swiftly. Many law firms are not as quick as this; some need several days’ notice before they can see you. 

We have extensive experience of these agreements (18 years in my case – including helping a 31-year-old City software expert to secure a settlement of £784,000).

Most basic employment settlements are around 15 pages long. But we are quite used to dealing with much longer and more complex agreements (often involving pensions and trusts). We will always discuss and agree our fees with you before we take your instructions. 

Contact Coles Miller employment solicitor Hugh Reid for more information on your rights and whether the settlement you have been offered is fair.