If you’re about to lose your job through redundancy, your employer might offer you a settlement agreement (or compromise agreement in Northern Ireland).
Before you sign, you need to ask these key questions:
How much money would you like to receive?
You might dream of being offered millions of pounds but it’s important to be realistic. The agreement will spell out the exact amount you can expect. It should also reflect any outstanding holiday pay, bonuses, stock options and share awards that you are owed.
Do you have to take any accrued holiday? Do you have to work your notice period? Or will you receive payment in lieu?
It’s important that the agreement makes this clear – otherwise you might turn up to work and find that you’re not expected. Or you might think you don’t have to go to work and find that you’re due in.
Will your employer give you a good reference?
A good reference will help you get another job, and should be attached to the agreement. The agreement might also include wording that prevents your employer saying bad things about you in any references they provide in future.
Are you allowed to work for a competitor?
The agreement needs to say whether and when you’re allowed to work for a competitor. It will also spell out whether or not you can have future business relationships with former colleagues, clients/customers and suppliers.
Are you allowed to tell people why you left (or how much money you were offered)?
Under the agreement, you might be forbidden from discussing the reasons and details of your settlement.
Have you taken legal advice?
Before you sign the full and final settlement agreement, you need to take specialist legal advice. It’s the law! After the agreement is signed, it’s legally binding – this means you can’t change your mind or take your employer to court later. The lawyer (that’s us!) will tell you how much you can expect to receive, how likely it is that your claim will succeed, and how much it will cost to help you negotiate with your employer if required.
Who pays your legal fees?
Most employers will pay the fees for you. Despite this, your lawyer is a professional who will act in your interests, not the employer’s. You can therefore be confident that the advice you receive will be independent and impartial.
Do you have to pay tax on your settlement?
The first £30,000 of any redundancy and compensation payment is usually free of tax and NI deductions. Sometimes, payment in lieu of notice is also tax-free.
Should you bring another claim against your employer?
We can advise whether they have dismissed you unfairly, discriminated against you, broken their contract, or failed to pay you the right amount.
Need help?
For a FREE assessment of your claim, call 0808 168 7288 or fill in the contact form on the top right of this page.
We have already helped thousands of people to win millions of pounds in compensation.
You have a choice of ways to pay, including ‘no win, no fee’.