What happens if my workplace closes? Redundancy pay and settlement agreements explained

What are your rights if your workplace closes?

With changes in working habits over the last few years and rising costs, some employers have made the difficult decision to close sites, for example, in Poole, Dorset, Bank of New York has recently announced the closures of the Poole office.

A workplace closure is likely to mean a redundancy situation unless an alternative role can be agreed at a different site or remotely.

To make a dismissal fair in a workplace closure, the employer will need to follow a fair redundancy process. This will usually involve the following:

• Warn employees of impending closure;
• Carry out some individual consultation; and
• Consider any alternative roles at other sites. If there are no alternatives, serve notice and confirm redundancy.

Redundancy rights and entitlements

In a redundancy situation an employee is entitled to:

• Notice which will be the greater of either one week per year of service up to 12 weeks, or the contractual notice; and
• Statutory redundancy payment (only for those over 2 years service). Calculated based on age, length of service and gross weekly pay capped at £719 per week.

You can calculate your statutory redundancy pay via GOV.UK.

Are you entitled to an enhanced redundancy payment and settlement agreement?

Some employers may choose to offer an enhancement to the statutory redundancy payment. If this is offered, it is standard practice for the employer to ask the employee to enter into a settlement agreement. A settlement agreement is an agreement that provides for the employer making a payment (up to £30k tax free) in return for the employee agreeing not to bring any claims or complaints against the employer.

Do you need legal advice for a settlement agreement?

If you are offered an enhanced redundancy payment or a voluntary redundancy payment it is likely your employer will require you to enter into a settlement agreement.

The settlement agreement (previously called compromised agreement) will also likely require you to take independent legal advice to have the agreement explained.

Our Employment experts have a huge amount of experience in reviewing settlement agreements with employees.

We understand that settlement agreements often need to be dealt with quickly, and therefore we can offer a same day service and are able to arrange appointments face-to-face in our South Coast offices or our London office, or by telephone or Microsoft Teams.

What to expect when reviewing your settlement agreement

We will run through the agreement with you in plain English from start to finish, to ensure that you fully understand the agreement. We can also help answer any questions that you may have about changes to the agreement or background.

How to sign your settlement agreement

Both you and your independent solicitor will need to sign the agreement. We can arrange for the agreement to be signed (electronically or via scan) and will return this directly to your employer on your behalf.

Who pays your legal costs for a settlement agreement?

It is usual for an employer to pay your legal fees for obtaining legal advice on a settlement agreement.

If you are happy with the settlement offered, we guarantee that we will cap our fees at the contribution offered by your employer. This means to have the agreement explained and signed off, you will not pay anything to us yourself.

Settlement agreement specialists

If you have been offered a settlement agreement, please do not hesitate to contact us on settlementagreement@ellisjones.co.uk or 01202 057754 to speak to a friendly and reassuring adviser from our Employment team.