DAYNA Rodrigues and Victoria Eustace, in law firm Blandy & Blandy’s Employment Law team, explain what employees and employers should consider when facing a redundancy situation or dealing with a settlement agreement.
This Summer, a survey published by Acas (the Advisory, Conciliation and Arbitration Service) suggested that one third of employers are likely to make redundancies by January 2027.
This forecast is not unrealistic as many businesses continue to face high operating costs and reduced demand in the context of wider economic uncertainty and alongside the continued changes to employment rights resulting from the Employment Rights Act 2025 (ERA ’25).
For employers, carrying out a redundancy consultation exercise can be a daunting prospect. For employees, being placed at risk of redundancy, engaging with a consultation process and reckoning with the possible outcomes, can be very unsettling.
In England, a fair (individual) redundancy consultation process would generally involve (but not necessarily be limited to) an employer explaining the business reasons for the proposed changes, identifying who is at risk of redundancy as a result, consulting and supporting affected employees, considering alternatives to redundancy such as redeployment and applying any selection criteria fairly and objectively before any final decisions are made.
At present, and subject to upcoming changes in line with the ERA ’25, where 20 or more redundancies are proposed within a 90-day period at one establishment, collective consultation rules apply and specific minimum consultation periods must be followed.
A settlement agreement is a formal written agreement between an employer and employee that sets out the terms and conditions for settling an employment dispute. A settlement agreement is not a necessary part of a redundancy process. Employees are not entitled to be offered a settlement agreement. In the context of redundancy or potential redundancy, a settlement agreement might be offered, but this is not guaranteed.
Common terms contained in settlement agreements include (but are not limited to):
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The date any proposed termination of employment will take effect
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Details of any payments to be made
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Agreement by the employee to waive their rights to bring any potential legal claims they might have against the employer
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Confidentiality and non-disparagement obligations
It is important that the employee is given reasonable time to consider any proposed settlement agreement. Acas’ Code of Practice on settlement agreements recommends that an employee is given at least 10 calendar days to consider a settlement agreement.
In order for any settlement agreement to be legally binding and valid, an employee must receive independent legal advice from a qualified adviser, usually a solicitor, on the meaning and effect of the settlement agreement.
This advice must be obtained before the agreement is signed.
Employers will commonly contribute towards the cost of that advice but there is no legal obligation to do so.
Consequently, employers often offer a nominal sum in order to encourage employees to seek the requisite legal advice.
It is important that employees choose their own adviser (i.e. the adviser must be independent of the employer).
For anyone at risk of redundancy and wanting to discuss their situation, whether seeking advice on a settlement agreement, or in relation to any other workplace issue, Blandy & Blandy’s expert Employment Law team is on hand to help.
The company also acts for employers of all sizes and advises on all aspects of Employment Law, so anyone requiring advice and assistance on behalf of a business in relation to managing a redundancy process or regarding any other workplace matter is advised to get in touch.
Blandy & Blandy is a leading law firm in the Thames Valley, with offices in Reading, Henley-on-Thames and Wokingham.
For further information or legal advice, visit: blandy.co.uk or call 0118 951 6800.
