When your boss has provided you with an agreement to settle as a possible redundancy alternative, you might contemplate which one to choose. This article will provide all the information you require to make the right choice on redundancy settlement advice.
What is an agreement to settle?
The settlement contract is an agreement by the employee who agrees to give up their right to take any lawsuit against the employer. It is typically in exchange for a settlement amount.
A settlement agreement is often what is utilized in redundancy situations. But a settlement agreement cannot be the same as redundancy.
What is redundancy?
Redundancy is legally defined. It generally indicates that the employer’s requirements to perform specific types of work have diminished or stopped. The company does not require as many employees as it did in the past.
It could also be that the company has decided to shut down one place of work, and employees who work at that location will be required to move to another site. If they cannot move (for instance, it’s far enough away), the employees could be dismissed.
If an employer finds itself in an emergency of redundancy and needs to go through a fair redundancy process before deciding on which employees to cut. It could be necessary to include:
- identifying the those who are at risk of being redundant
- Applying fair selection guidelines for
- employees working with employees
- Explain the reason for the redundancies.
- Examining whether there are alternative options
- Inquiring about whether staff members could be transferred to a different job position
This could be a significant stress for employers regarding time, administration, and morale. Most employers will provide employees with a settlement deal instead of having to go through the redundancy process.
Due to the Coronavirus crisis, numerous employers place their employees on furlough leave to prevent redundancies. If, however, redundancies become necessary, an employer may provide a settlement offer regardless of whether the employee is taking a vacation.
What should I do if offered a settlement offer?
1. Be at peace and take notes on everything.
If you’ve been asked to attend an online video call by your employer, you should be calm and collected throughout the conference. It isn’t easy to keep track of everything said while receiving a redundancy settlement but remember that there’s no pressure placed on you to make the decision immediately. Do not be afraid to ask questions and note everything you recall about the conversation instantly. Also, it would be best if you asked your employer to submit all the information discussed in writing at their conclusion.
2. Consult an employment lawyer for advice.
It is a legal requirement that you seek out guidance from a licensed professional. A settlement agreement can only be binding when you’ve obtained independent legal advice about the matter.
An experienced employment lawyer can assist you in determining if you’re receiving a fair bargain and if you’ve got any legal grounds to bring a case against your employer, like discrimination or unfair or unjust dismissal.
Your employer may suggest a solicitor; however, you are at liberty to select your own. In any event, the employer is obliged to cover the costs of a solicitor for you.
3. Plan
The process of deciding is the most challenging part. If you do not sign the agreement, you are protected by your right to file a lawsuit against your company.
To determine if the agreement you have been offered is a good deal, you should consider why you’re getting the deal and what rights you’re required to waive in signing it.
A lawyer can assist you in negotiating for a better price, which might include a higher payout. If you’re going through a time of unemployment, you’ll need to be able to meet the cost of living for your household until you find a new job. One of the important considerations is whether the cash being offered is sufficient.
But this will drag out the process and could be more difficult in the end. Your lawyer will inform you of the likely results of every possible course of decision and offer suggestions for the best way you should proceed.
Don’t be scared to inquire with your solicitor about any aspect of the process. They are here to assist you.
Does it make sense to give the settlement agreement over redundancy?
There’s something right with this, the sense of
one of the benefits of the agreement to settle is that an employee can waive any right to follow an appropriate redundancy procedure in exchange for an increased redundancy payout. It’s typically a win-win. Employees earn more while the employer gets more time managing the company.
The employee doesn’t have to sign the settlement agreement. If they choose not to accept it, then the employer may proceed with the redundancy process. The employee might be able to seek advice about whether the procedure was conducted in a fair manner or if they can seek compensation through an Employment Tribunal for unfair dismissal.
But the employee may prefer to agree to the settlement offer since it typically includes an option to pay more than what they would get if their job were terminated in accordance with the standard redundancy process.
If you accept the settlement agreement, it will be impossible for you to seek compensation at any employment hearing. It is crucial to determine whether the amount provided by your company is sufficient. If not, there is a possibility of negotiations.
But, refusing to sign a settlement agreement to pursue a claim for more compensation from an employment tribunal could be extremely risky; there are many reasons why a settlement arrangement is usually (but not necessarily) preferable to an employment tribunal claim.
The motivation for the employer to offer more compensation to employees is to prevent the employer from having to undergo the redundancy process. The incentive for employees is the higher payment they’ll get.
How does the redundancy plan compare to the settlement agreement?
If you disagree with the settlement offer and your employer then makes you redundant, you’ll be able to receive certain minimum payments as part of a redundancy plan. This is the case for:
A redundancy payment
There are two kinds of redundancy payments.
1. Statutory Redundancy Payment
A statutory redundancy payoff is the minimum amount of money the employer must pay under the law in order to compensate you when you’re laid off.
The value of redundancy pay is based on three aspects:
Your salary
Your age
How long have you been employed?
Look on this government site to determine your statutory redundancy payout.
2. The Enhanced Redundancy Payment
Additionally, to your standard redundancy payment, your company might also provide you with an increased redundancy payoff. It is a redundancy pay that is higher than what is required by law.
Your rights to this are contingent on the terms of your contract of employment or the employee handbook. It’s worth looking into whether you’re eligible to receive an enhanced redundancy pay when deciding on your next move.
Payments for contracts
The terms of your employment contract require the employer to pay specific amounts of money, regardless of whether you’re laid off. The payments you receive comprise:
All benefits and salary all the way to the date of termination
Notification pays (the amounts of the notices you’re entitled to must be specified in your contract of employment)
Any accrued but not taken a holiday
You can expect to receive these funds even in the absence of an agreement to settle.
Pay in lieu of notice.
Your employer might give you a payment instead of a Notice. This means that you will receive a cash payment for your notice period without being required to work to earn it.
There isn’t any obligation on employers to make payments in place of Notice. The employment contract typically gives them the option to make the payment if they choose to.
What kind of payments are you likely to receive if you choose to use the settlement agreement instead of redundancy?
If you choose to accept the settlement agreement in place of redundancy, you’ll typically be compensated more. What reason is there to agree to the settlement?
The amount of additional financial incentive will depend on a variety of variables that include:
There’s a possibility of you filing the case of pursuing an Employment Tribunal claim for unfair dismissal
The generosity or lack thereof of your employer
What was the compensation of staff in the past?
To learn more about settlement agreements, go through this page on what you can expect in the settlement agreement.
You might also be able to negotiate benefits that are not financial, like a solid reference.
Do you need to negotiate a better settlement amount?
Based on the circumstances which led to the offer of a settlement contract, you may be able to bargain for a larger payment.
The best method to talk with your employer is within the context of a private conversation. This lets both parties discuss the current employment situation openly without fearing the words they speak of will be misused against the other.
If you think there isn’t a legitimate redundancy, you might consider letting employers know you intend to be claiming unfair dismissal if the settlement amount isn’t raised.
If, however, you’re sure that the redundancy has been legitimate, it is possible to be better off negotiating the basis of goodwill. Instead of threatening legal action, it is possible to achieve a better outcome by asking your employer to give you more. It is more likely to work if you’ve got an established rapport with the employer.
