Being made redundant doesn’t mean being set adrift

By Daniel Russell

It’s the worst feeling in the world.

Your company announces it’s planning to go through a restructuring process in order to ‘drive efficiencies’ – a popular corporate euphemism which is slightly more palatable than its actual meaning:

We need to save money, so we’re making redundancies

The immediate impact of these announcements is that everyone is thrown into a tailspin of uncertainty and worry. There are mortgages to be paid, children to be fed, bills to pay and, just as importantly, pride and a sense of self-worth to be considered.

Some will come through the process unscathed, usually with the same job and title or with a marginally-changed job and a new job title. For others, the picture is a little bleaker, with a future filled with application forms and interviews.

So, what happens if you end up being one of the unlucky ones who, following whatever internal consultation process is implemented by management, ends up staring down the barrel of their employment ending?

One certainty – if your employer is playing by the rules – is that you’ll be offered what is known as a Settlement Agreement. This is a legally-binding document in which you agree for your employment to end in return for an agreed and satisfactory form of compensation – usually a redundancy payment and often the guarantee of a future reference.

In many cases, the payment made by an employer as part of a Settlement Agreement comes with certain conditions which you, as an employee, agree to meet. Most common among these is that you relinquish any and all claims against the employer in respect of your employment. Put another way, you agree you won’t lodge a future claim of unfair or constructive dismissal.

Other conditions of a Settlement Agreement can be what amounts to a gagging order which prevents you from discussing the nature of your departure from the company or, in some cases, the nature of your employment whilst with that company.

These Non-Disclosure Agreements have recently come under scrutiny due to their liberal use in the departure of civil servants from Parliament and there is increasing pressure for them to be banned as part of a formal Settlement Agreement.

For now, though, they remain one potential option for your employer if the end of your employment has been either acrimonious to the point of potentially representing a reputational risk or the nature of your work is deemed to be commercially, politically or corporately sensitive.

Regardless of how you come to be offered a Settlement Agreement, however, deciding whether or not to accept and sign one can be daunting.

The first thing to say is that it is compulsory for an employee facing the end of an employment to be offered access to independent legal advice. What that means in practice is that you will have the opportunity to get legal advice and support – and your employer is likely to make a meaningful contribution to the cost of that service.

Settlement Agreements can often work in an employee’s favour, giving them a lump sum payment that helps ease the financial burden of temporary unemployment and their transition to another job in return for waiving their employment rights.

If you’re facing the end of your employment, we’d always recommend you take advantage of the opportunity to consult with a solicitor who specialises in Settlement Agreements. They will be able to advise you on the best terms and ensure the agreement you eventually sign is in your best interests within the context of the termination process as a whole.

At Carlsons we represent either individual employees or the employer. In the case of employers, we are able to advise on the correct process to achieve an agreement and on your legal responsibilities during the process of terminating an employment.

To find out more, visit our page on Settlement Agreements or get in touch for a chat in complete confidence.