A rise in settlement agreements with redundancies and company restructures on the increase
9th October 2024
Our Employment team have seen a rise in the number of clients seeking advice on redundancies and restructuring, in what is believed to be a kneejerk reaction to the Labour government’s proposed employment changes.
We have seen an increase in the number of employers and employees alike who are approaching us for legal advice.
We’re seeing a lot of redundancies and restructuring plans being brought forward, employers are worried about the impact of Labour’s new proposals, including ‘day one rights’ for employees, so they are looking to make any changes to their business now in light of the uncertainties.
In tandem with the rise in redundancies and company restructures we are also seeing an increase in the number of employers seeking advice on “without prejudice” settlement agreements, or packages offered to employees to facilitate a seamless exit.
Labour’s proposals look to strengthen employee’s rights, such as day one rights for example removing the minimum period of two years in which they can bring a claim for unfair dismissal, which is making employers nervous.
A settlement agreement is a written agreement between an employer and employee, often part of a voluntary redundancy programme. Regulated by statute, an employee agrees to waive their right to bring claims against their current or former employer.
Statute requires that before any agreement is signed, the employee must seek independent legal advice on the terms and effects of the agreement and their ability to pursue claims in case of an employment tribunal.
Settlement agreements look to settle all potential claims, with the exception only of enforcing the agreement itself, accrued pension rights, personal injury claims which the employee is not yet aware of. Employers most often offer an ‘ex gratia amounts – a sum of money’ so that an employee will be more inclined to enter into and sign.
The employer will usually propose terms of settlement which can sometimes then be negotiated and agreed upon, with employees required to take legal advice often paid for by the employer before the agreement is made binding.
Employees do not have to accept the first offer made and can come back with a reasonable proposal but in these circumstances will have to pay their own solicitor’s fees.
We remind employers they must adhere to a fair process and consultation, offering alternative employment where possible and getting legal advice before embarking on business changes to avoid things go wrong and facing potential legal claims can prove dividends – as always preventive is better than a cure!
If you have been affected by a redundancy or restructure as an employee. Or are an employer looking for advice then please contact our expert team for assistance.
Article written by Employment Law Solicitor, Kerry Hudson.