Can I offer redundant employees a settlement agreement?

When an employer is looking to make redundancies, a settlement agreement can be a helpful tool. By agreeing to terms with an employee ahead of time, it can save the time and expense of a lengthy redundancy process. It can also help to facilitate a 'smooth' exit from the business and protect the employer from any future tribunal claims.

From an employee perspective, a settlement agreement can provide enhanced redundancy payouts and certainty about their future employment status. This can be especially valuable if they are facing redundancy in a difficult economic climate.

The early redundancy settlement offer:

If your employer offers you an early redundancy settlement, it's important to understand what this means and whether it's the right option for you.

A redundancy settlement is a payment made to an employee who is being made redundant. The payment is in addition to any redundancy pay that the employee may be entitled to under their employment contract or redundancy legislation.

There are a few things to consider before accepting a redundancy settlement:

some redundancy payments may be taxable, so you may not end up with as much money as you think
if you're made redundant, you may be entitled to statutory redundancy pay, which is paid by your employer and is not taxable
you may be entitled to other payments from your employer, such as notice pay or holiday pay
you may be entitled to claim redundancy from the redundancy fund if you're a member of a trade union
you may be able to challenge your redundancy if you think it's unfair

If you're offered a redundancy settlement, it's important to get advice from an experienced employment lawyer before making a decision. They can help you understand your rights and entitlements, and negotiate a better redundancy settlement if possible.

Article by

Marianne Wright

0800 915 7777

Our expert employment law solicitors all have many years’ experience advising individuals who are in your position. We will be able to guide you through the process and to help you secure the best possible outcome.

We offer a range of services, so please contact our friendly customer services team to discuss further via hello@kilgannonlaw.co.uk or 0800 915 7777.

Disclaimer

The above provides a general overview relating to constructive dismissal and is not intended nor construed as providing specific legal advice. Constructive unfair dismissal is a complicated legal claim. An individual should take legal advice from an employment lawyer if they believe their employer has behaved in such a way that entitles the employee to resign and bring a claim for constructive unfair dismissal.

This article is for information purposes only and is correct at the time of publication. It does not constitute legal advice.

28.06.2023

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