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Employment Solicitor on signing a settlement agreement following redundancy

Employment Solicitor Richard Macmillan offers advice to employees who have been made redundant and have to sign a settlement agreement........

Q. I have been made redundant and have to sign a settlement agreement. A solicitor has been suggested by my employer. Do I have to use them?

A. Being made redundant is for most people, a deeply unsettling and concerning time. Naturally, you will be worried about future job prospects and financial security at a time when the economy remains uncertain. 

You may be fortunate enough to receive a financial package. If this is the case, there may be a requirement for you to sign a settlement agreement.  

A settlement agreement (Compromise Agreement) is a legally binding agreement between an employee and employer where usually a financial settlement is offered to the employee in exchange for the employee waiving all their employment rights against the employer. This means that once the agreement is signed, an employee can no longer bring any employment claims against their employer in connection with their employment or its termination.  

To protect an employee who may not be aware of their legal rights, the employee is required to seek independent legal advice on the agreement to ensure that, before signing, they understand its effect on their ability to make a claim in the Employment tribunal or Court. This advice can be given by a trade union official, a solicitor or through ACAS. It is a requirement that the adviser is named in the settlement agreement. Usually in the settlement agreement there will also be a clause in which the employer agrees to make a contribution to legal fees. However, this is not a legal requirement.

Sometimes an employer will suggest Employment Solicitors which the employee can use. Naturally you may be concerned as to the independence of a lawyer suggested by your employer. However, as a matter of professional conduct, a solicitor should only take on a case if he/she is free from a conflict of interest and only act in accordance with their client’s instructions and best interests.  

An employer cannot make you see a lawyer of its choosing as you must be free to choose who you wish to give you legal advice. However, if you are asked to sign an agreement, it may be the case that the contribution to legal fees is dependent on you seeing a particular lawyer. Remember, a contribution to legal fees is not a mandatory requirement and so whilst you do have the freedom to see a lawyer of your choice, it may mean that your employer will not pay any of their costs. You could ask your employer to amend the agreement so that payment of legal costs is not dependant on seeing a particular lawyer. However, if your employer will not agree, you still have the choice of instructing who you choose but you may have to pay all the costs yourself.  

You should feel comfortable with the lawyer you choose, as signing a settlement agreement is a critical step; particularly as you will lose your right to bring any employment claims. At Slater and Gordon, we only act for employees and so you can feel assured that the advice we give will be about putting your interests first.