Redundancy and settlement agreements

Being made redundant is one of the most stressful experiences an employee can face. It can cause immediate financial concerns, uncertainty about the future, and a sense of unfairness if the process has not been handled properly. While some redundancies are unavoidable because of changes in business needs, others are mismanaged or used as a way of removing staff without following the law.

UK employment law sets out strict requirements for employers. Redundancies must be genuine, the process must be fair, and payments must be calculated correctly. In many cases, employers also propose settlement agreements to resolve disputes and bring employment to an end on agreed terms.

At Marley Solicitors, we support employees who are dealing with redundancy pay disputes, compulsory redundancies without consultation, or the negotiation of settlement agreements. Our role is to protect your rights and secure fair treatment during what can be a very challenging time.

Redundancy pay disputes

Employees with at least two years of continuous service are entitled to statutory redundancy pay. The calculation is based on age, length of service, and weekly pay (subject to a government cap). In addition to statutory pay, some employers provide enhanced redundancy packages as part of company policy or contractual agreements.

Disputes often arise when:

• Employers miscalculate redundancy payments
• Length of service is not counted correctly
• Enhanced redundancy pay is denied even when promised in policy documents
• Employees are dismissed under the label of redundancy when the role still exists

For example, imagine an employee who has worked for a company for 12 years. When made redundant, they discover the calculation only reflects eight years of service, significantly reducing their entitlement. In another scenario, a large organisation may have a redundancy policy that offers enhanced payments, but HR later claims it is discretionary. In both cases, employees can challenge the employer’s approach.

Understanding your entitlement is the first step. A solicitor can check calculations, review contracts, and identify whether you are owed more than you have been offered.

Compulsory redundancy without consultation

Redundancy is only fair when the process is transparent. The law requires employers to consult with affected staff. This applies even where only one employee is at risk.

A fair consultation process should involve:

• Explaining why redundancies are necessary
• Sharing the selection criteria used to identify employees at risk
• Considering alternatives to redundancy, such as redeployment or reduced hours
• Giving employees the opportunity to respond and make suggestions

If 20 employees or more are being made redundant within 90 days, collective consultation rules apply. This means consultation must take place with elected staff representatives or trade unions, and it must last at least 30 days (or 45 days if 100 or more roles are affected).

Compulsory redundancy without consultation is unlawful. Employees in this situation may have claims for unfair dismissal, as well as the right to redundancy pay. For example, if a company suddenly informs a group of employees that their jobs have been removed without any prior discussion, that is unlikely to meet the legal requirement of consultation.

Employers also need to guarantee a fair and non-discriminatory selection process. Using criteria that disadvantage certain groups; such as part-time workers, older staff, or those on maternity leave.

Settlement agreement compensation

Settlement agreements are commonly offered in redundancy situations. They are legally binding contracts that set out the terms on which employment ends. In return for a payment, employees usually agree not to pursue legal claims against their employer.

Typical elements of a settlement agreement include:

• A lump sum payment or exit package
• Payment of notice pay and accrued holiday pay
• Agreement on how employment will be described in references
• Confidentiality clauses regarding the circumstances of departure

Settlement agreements can be beneficial, as they give certainty and allow both sides to move on. However, they should never be signed without proper legal advice. By law, employees must receive independent legal advice for the agreement to be valid.

Negotiating the terms is critical. Employers may initially offer only the statutory minimum or a modest lump sum. With the right guidance, employees can often achieve significantly better terms, particularly if there are grounds for claims of unfair dismissal or discrimination.

For instance, if an employee has raised concerns about consultation failures or unequal treatment, their negotiating position may be much stronger. A solicitor can highlight these issues and use them to secure a higher financial package.

How can employees protect themselves?

If you are facing redundancy or considering a settlement agreement, there are several steps you can take to protect your position:

1. Ask for clear information – request written details of the redundancy process, your selection criteria, and how redundancy pay has been calculated.
2. Check your contract and policies – look for clauses relating to enhanced redundancy packages, notice pay, or bonus entitlements.
3. Keep records – save emails, letters, and meeting notes, as they may be important evidence if disputes arise.
4. Do not sign too quickly – settlement agreements often come with deadlines, but you are entitled to reasonable time to consider the terms.
5. Get advice early – speaking to a solicitor before you agree to anything can help you secure better terms and avoid costly mistakes.

These steps not only protect your immediate position but also give you options if you decide to challenge your employer later.

Employer responsibilities

Employers have a duty to treat employees fairly during redundancy situations. Their responsibilities include:

• Providing meaningful consultation
• Applying fair and objective selection criteria
• Paying redundancy entitlements accurately and on time
• Considering alternatives to redundancy
• Offering reasonable time and access to advice when proposing settlement agreements

When employers fail to meet these responsibilities, they risk legal claims and reputational damage. Even when redundancies are unavoidable, the process must still be carried out with transparency and respect.

Why legal advice matters

Redundancy and settlement issues are not always straightforward. Employers may insist that the process is fair when in fact key steps have been missed. Settlement agreements are also designed to protect the employer, not the employee, which is why legal advice is a legal requirement.

With professional advice, you can:

• Confirm whether the redundancy process has been fair
• Ensure redundancy pay is calculated correctly
• Identify potential claims for unfair dismissal or discrimination
• Negotiate better terms in a settlement agreement
• Approach discussions with confidence and clarity

At Marley Solicitors, we provide tailored advice to employees at all stages of redundancy and settlement negotiations. Our focus is on securing the best outcome for you while reducing the stress of the process.

Speak to Marley Solicitors today

Redundancy is never easy, but you do not have to face it alone. Whether you are dealing with redundancy pay disputes, worried about compulsory redundancy without consultation, or considering a settlement agreement, Marley Solicitors can help.

We will review your situation carefully, explain your options clearly, and support you through negotiations or claims where necessary. Our goal is to ensure you leave employment on fair terms and with the financial security you are entitled to.

Contact Marley Solicitors today to discuss your case in confidence and take the next step towards protecting your rights.