Redundancy & Settlement Agreements

If you’re at risk of redundancy or have been made redundant, it’s essential that you’re aware of your legal rights. Employment law is in place to protect employees and ensures you’re treated fairly. However, the legislation can be complex and daunting. We are here to help.

What is redundancy?

Redundancy is a form of dismissal from your job. It occurs when your employer no longer has a requirement for your role either because of a business closure, a workplace closure or a workforce reduction.

When making redundancies, an employer must treat you fairly and act in accordance with your contractual and legal redundancy rights. This includes an obligation on your employer to:

• Use a fair and objective way of selecting job roles to be made redundant and tell you what it is;

• Consult with you on the redundancy process and provide you with the opportunity to ask questions and raise objections; and

• Consider alternatives to redundancy.

If you think that you have been selected unfairly, your employer has failed to follow the required consultation procedure or your employer has acted unfairly in other ways, you may have a claim for unfair dismissal and should take legal advice quickly.

Redundancy payments

If you are selected for redundancy, you are entitled to be given notice before your employment ends. Alternatively, if your employer doesn’t require you to work your notice period, they may offer you a lump sum instead, known as payment in lieu of notice.

If you are an employee and have at least two years’ continuous employment with the same employer, you will also be entitled to a statutory redundancy payment.

Settlement Agreements

If your employer has not followed a fair procedure in effecting your redundancy, they may ask you to sign a Settlement Agreement in which you will agree not pursue any complaint against them in the Employment Tribunal or Court in return, often, for an extra payment.

A settlement agreement (or a compromise agreement as they were previously known) is a legally binding document which sets out the terms and conditions reached when a contract of employment is to be terminated or a dispute is to be resolved and where the employee settles or agrees not to pursue claims the employee might otherwise have. Generally, a settlement agreement is signed in consideration of a payment from the employer to the employee.

Strict Time limits

If you have been dismissed, you should call us at the earliest opportunity as there are very strict time limits for claims to be presented to the Employment Tribunal. Normally you must issue your claim within three months from the date of the act complained of.