Before Christmas and at the start of a New Year it can be quite common for businesses to restructure and make changes resulting in redundancies.


Of course, there is never a nice time of year to be faced with the prospect of losing your job and going through the redundancy process can cause a great deal of stress.


However, many people will find themselves better off once they have made the final clean break from their employer and it can be used as a springboard to make a fresh start elsewhere or embark on a career change. See our article on ‘Life After Redundancy’


What is a Settlement Agreement?


Employees typically receive a Settlement Agreement from their employer when they are being made redundant from the company with an enhanced termination package. It is a legally-binding agreement between you and your employer to end your employment, with the additional sum of money being offered in return for certain conditions, such as waiving the right to bring an employment claim against the company in the future.


Settlement Agreements were previously referred to as ‘Compromise Agreements’. From July 2013 they have been known as Settlement Agreements.


Employers may also choose to use Settlement Agreements when they want to end the employment without the need to follow a long draw-out process such as performance reviews or formal redundancy procedures or where there has been a breakdown in the relationship. It can be useful for employers where there is a time or financial pressure to move the situation forward, or where they are eager to make a clean break to prevent potential claims.


In accordance with Acas guidance, you should be given at least 10 calendar days to consider the terms of the Settlement Agreement.


What to do First?


First of all it is important not to panic or let your emotions get the best of you. If you have been offered a Settlement Agreement you need to remain focused in order to secure yourself a reasonable deal and handle the paperwork.


Carefully read through any documentation you have been given, ask questions on anything you are unsure of, take time to speak to your family or friends and digest the situation.


Then, you will need to instruct an independent legal adviser.


A specialist Employment Lawyer, such as Karen Bristow or Hannah Lockyer at Lamb Brooks, will be able to help you through the process.

Why Do I Need Legal Advice?


For a Settlement Agreement to valid, in terms of allowing you to waive your statutory rights, certain conditions must be met, one of which is the requirement that you have received legal advice from a relevant independent adviser on the terms and effect of the Settlement Agreement and its effect on your ability to pursue any rights before an employment tribunal. This advice must also be insurance backed.


It is important that you fully understand what you are signing and appreciate what you are agreeing to as once signed and returned, it will be very difficult to go back or raise any claims in the future.


An experienced Employment Law specialist will also be able to identify what claims you will be compromising under the Settlement Agreement and should you wish, take steps to re-negotiate the agreement.


Your employer should contribute towards your legal costs, most tend to offer somewhere between £350 – £500 depending on the breadth of issues, which is very likely to cover all incurred legal fees if you have a straightforward matter. However, for senior employees / directors, legal contributions can be upwards of £1,000 plus VAT.


If you are not offered sufficient sums to cover all of your legal costs, there are options. Your Employment Law specialist can approach the employer to see if they will increase their contribution or you can pay the difference privately at an agreed stage.


I Am Happy With My Settlement Agreement, What Do I Need To Do?


If you are agreeable to terminating your employment, comfortable with being offered the Settlement Agreement and happy with the sum offered and the terms stipulated by your employer, then you can sign the document upon receiving legal advice. This is usually concluded within an hour’s appointment. The process from then on in will be fairly swift and straight forward. Your employer will need to counter-sign and date the agreement and then act in accordance with the terms agreed.  Usually payments are made within 28 days of your termination date or the Settlement Agreement becoming binding, but this will be confirmed in the agreement itself.


I Am Not Happy With My Settlement Agreement, What Should I Do?


If you are not pleased with the terms or the sum offered in your Settlement Agreement from your employer then you can enter into negotiations. You can do this yourself, or with the help of a specialist Employment Lawyer who will be able to either guide you and arm you with the support needed or take the reins and negotiate directly on your behalf. Specialist Employment Lawyers are very familiar with Settlement Agreements and will have a good understanding of what is fair and reasonable in your circumstances.


You have the option of not signing and can decide to take your employer to a tribunal if you have a case, however you would risk losing the amount offered if unsuccessful and have to pay your own legal costs in respect of the aborted Settlement Agreement.


Next Steps


If you have received a Settlement Agreement, an offer or are being made redundant and need advice from a trusted specialist Employment Lawyer then please get in touch today. Our helpful team can be contacted on 01256 844888, via email at enquiries@lambbrooks.com or via our Live Chat Assistant on our website anytime of day.




Other Articles you may be interested in reading:

Life After Redundancy

What is a Settlement Agreement?

Beat The Workplace Bullies

Speaking to your Boss about Mental Health



The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.