Settlement Agreements and Redundancy
We live in difficult times. Nobody quite knows what the future holds and for business that often means tightening its belt, reducing overheads and in some cases letting staff go.
One way to do this is to invite the team to talk about “voluntary Redundancy”. Sometimes members of the team are pleased to leave. Perhaps their circumstances have changed. Perhaps they just want a change.
In those circumstances the Management will turn to a Legally binding document called a Settlement Agreement which allows you to depart upon receiving a sum of money in return for a cast iron guarantee that you will not bring any legal proceedings for unfair dismissal, wrongful dismissal and a host of other things.
When looking at your settlement agreement check it provides a good quality reference. Check it provides for payment of your legal costs as it will need to be looked at by an independent solicitor. Ensure there are no unpleasant Non-Compete clauses which stop you from working in the same industry sector or the same area.
There may be cases where you would like a staff announcement as to your reasons for leaving – this is something that can be negotiated and included within the agreement.
Make sure that there is a provision for payment of your salary and any legitimate expenses up to the time you leave. The date that you will depart is normally referred to as the Termination date. It can be in a few days or it can be several months hence.
The most important bit of a Settlement Agreement for most is the size of the payment. The first £30,000.00 is generally tax free.
Most firms will pay more than a standard Redundancy payment. A normal Redundancy payment for a 42 year old is 1.5 X £538.00 X number of years worked. That is assuming your weeks pay is £538.00 or over. A good firm or blue chip Company may well pay 25% or more than this.
One other thing to look out for is will you be asked to work your Notice Period. If paid in lieu, whilst you will be taxed upon it at least you won`t actually have to go into work!
Finally remember that you cannot enter into a Settlement agreement without advice from an Independent Solicitor.
Our Mr Conway has been advising on these agreements for some 30 years and would be happy to help you.
Call us now on 0203 219 0145 to discuss your matter.