In my opinion Settlement Agreements (formerly called Compromise Agreements) are more than simply of a waiver of a former employee’s legal rights as they provide an indicator of the economic state the Country is in. It is inevitable that some companies will have to restructure when times are hard but here at Michael Lewin’s Employment Department we have noticed that more and more companies are electing to use Settlement Agreements to obtain security and finality in redundancy situations. In most cases this is positive for employees as the employer needs to offer them an enhancement to the basic statutory entitlement to a redundant employee in order to incentivise them to sign.
We have seen a substantial increase recently in the number of clients we are advising on Settlement Agreements in relation to redundancies. Although these Agreements are becoming more common place there are still key points which some employees are unaware of. I list below some key pieces of information which I believe all should employees should know before they attend upon a solicitor to potentially sign the agreement:
• A lot of Clients are often under the impression that the offer of a Settlement Agreement is “take it or leave it”. Now whilst this may be the case in some scenarios we believe there is no harm in attempting to negotiate a higher figure. You should note however that technically if you return to your employer to request more money this amounts to a rejection of the offer and constitutes a “counter offer”.
• If you have only been offered the basic statutory entitlement (in a redundancy situation your notice pay and statutory redundancy payment or simply notice pay in a non-redundancy related situation) then there is no incentive in place for you to sign the agreement. If this is the case your solicitor should advise you not to sign the Agreement however this will depend on the individual circumstances so ALWAYS seek advice.
• If you decide to reject the Settlement Agreement – your employer will not make the contribution to your legal fees. This is something which many clients have raised with me in the past. To avoid this I would recommend that you discuss the level of Settlement with your solicitor over the phone prior to meeting with them.
If you do ever find yourself faced with the offer of a Settlement Agreement you are now armed with the above knowledge from the outset as to whether or not to sign the agreement and hopefully avoid a situation where you become responsible for the payment of the solicitors fees personally.
Michael Lewin’s Employment Team specialises in increasing the settlement figure payable to employees under a Settlement Agreement so if you have been offered one or as an employer require an agreement drafting please do not hesitate to contact our specialist Employment Team.