Managing settlement agreements when implementing collective redundancies

There are a lot of moving parts when implementing collective redundancies, so it is important to get all the elements as streamlined as possible. Arguably, the difficult part is complying with the statutory obligations to inform and consult with staff representatives as well as fulfilling the employer’s legal responsibilities towards each individual employee. However, tying up all the remaining loose ends is not easy either, particularly when a decision has been made to make receipt of redundancy payments conditional on the employees signing settlement agreements.

For a settlement agreement to be effective in compromising potential claims in an employment tribunal, it has to comply with a number of formalities. Arguably the most important of these is the requirement to obtain independent advice on the “terms and effect” of the agreement. This advice is normally provided by a solicitor, who, for obvious reasons, can’t be the same as the solicitor advising the employer. The independent solicitor will be required to provide written confirmation (either as part of the settlement agreement or in a separate document) that they qualify as an independent advisor for these purposes and have provided the necessary advice.

Each employee is of course entitled to their own choice of solicitor, but where there are large scale redundancies coordinating dozens of different lawyers can be difficult. For these reasons many employers ask their lawyers to manage this process for them. One way of streamlining the process is to work with a different legal firm which has the capacity to advise all the affected employees in a timely manner. They can be made aware of the employer’s standard settlement agreement template and can be thoroughly briefed on the factual background and on the relevant contractual terms.

At Mills & Reeve we have developed innovative solutions for employers in managing such projects, including the preparation of all employee-facing paperwork (settlement agreements and FAQs), online booking systems and a project management portal that can be used to track the progress of each individual settlement agreement. These types of solutions can be made available to the employer, whether we are acting for them, or as a nominated independent legal adviser. Please get in touch with Richard Barker or Kate Watkins if you would like to know more.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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