Using Settlement Agreements in the Case of Staff Redundancy

The COVID-19 pandemic has resulted in large-scale staff redundancies in many organizations due to the significant financial hit most have faced.

Staff redundancies are just one of the many cost-saving measures that businesses are being forced to take during these troubled times.

What are redundancy payments?

Large-scale redundancy processes are complex, involving both organizational and emotional implications. Where businesses can afford to do so, they should offer affected employees redundancy payments as compensation.

If the employee agrees to the redundancy payment, they sign an agreement outlining the terms of their employment termination, which eliminates the need for extended consultation periods.

It also helps you in your capacity as an employer, by minimizing any risk of future claims when the Employment Tribunal is underway.

Redundancy agreements can also be reached confidentially, to not impair other employees’ morale.

Why should employers use settlement agreements?

Employers use settlement agreements to ensure that any claims or grievances an employee has against their organization are eliminated, and to reach termination arrangements that both the employee and employer find reasonable. They’re an attractive solution for both parties involved due to the certainty of the contractual agreement.

Employers benefit from settlement agreements, since they’re often relatively cheaper and quicker than extended redundancy consultations. Even when these consultations are carried out correctly—in accordance with all employment laws—they could end up resulting in claims against the business during the Employment Tribunal.

When an ex-employee signs a settlement agreement, the majority of legal claims are waived. This protects the employer and enables them to offset any major legal costs and bad publicity, they would otherwise experience if the employee had made a claim.

What is the process of reaching a settlement agreement?

It’s necessary for an employee to get legal advice independently of the firm so they can understand the effects and terms of any agreement reached. The firm is supposed to pay for this legal advice.

If you need to offer settlement agreements to a number of employees, they will all require legal advice. This is a massive effort, especially if different employees are sent to different solicitors. The process can be streamlined by hiring one solicitor’s firm for all the employees, as long as the firm is not acting on behalf of the employer in any way whatsoever.

We, at Wembley Solicitors, specialize in judicial separation and litigation. Our employment and family law solicitors will help you with any legal issues you may have. Contact us today to schedule an appointment.