When dealing with employment disputes and terminations, settlement agreements and redundancy are two commonly used concepts. But what exactly is the difference between them? This article will explain the key differences between settlement agreement vs redundancy, so you can better understand your rights as an employee.

What is a Settlement Agreement?

A settlement agreement (formerly known as a Compromise Agreement) is an agreement between an employer and an employee outlining the terms of settlement for any type of dispute that has arisen in the workplace. It usually states that the employee waives their right to make any claims against their employer, such as unfair dismissal or discrimination, in return for a payment from their employer. The settlement agreement also outlines any other terms, such as a reference or payment in lieu of notice.

What is Redundancy?

Redundancy is when an employee’s job becomes redundant and the employer needs to make them redundant. This happens when there is no longer a need for their role within the organisation, due to restructuring or changes in the company’s operations. An employee may be offered redundancy pay if they have been employed with the same employer for two years or more.

Key Differences Between Settlement Agreement vs Redundancy:

1) Timing: A settlement agreement is typically used at any point during employment, while redundancy normally occurs at the end of an employment contract.

2) Payment: A settlement agreement usually involves an additional payment from the employer, while redundancy payments are based on certain criteria and may be calculated differently.

3) Outcome: The outcome of a settlement agreement is to settle any disputes between the parties, while the outcome of redundancy is termination of employment.

4) Eligibility

All employees can enter into settlement agreements, whereas only those who have been employed at least two years are eligible for redundancy pay.

If you’re unsure about which route to take when faced with a dispute or termination with your employer, it’s best to speak to an experienced employment lawyer at Wafer Phillips Solicitors for advice before signing anything. They can help explain settlement agreements vs redundancy in more detail, and advise on the best course of action for you.

Conclusion

Now that you understand the key differences between settlement agreement vs redundancy, you’ll be better equipped to make decisions about your employment rights and ensure you get the best outcome possible.

Frequently Asked Questions

What is the difference between settlement agreement vs redundancy?

The key differences are timing, payment, outcome and eligibility. A settlement agreement is typically used at any point during employment, while redundancy usually occurs at the end of an employment contract. A settlement agreement involves an additional payment from the employer, while redundancy payments are based on certain criteria and may be calculated differently. The outcome of a settlement agreement is to settle any disputes between the parties, while the outcome of redundancy is termination of employment. All employees can enter into settlement agreements, whereas only those who have been employed for two years or more are eligible for redundancy pay.

Do I need a lawyer to advise me on settlement agreements or redundancies?

Yes, it’s recommended you speak to an experienced employment lawyer at Wafer Phillips before signing anything. They can help explain settlement agreements vs redundancy in more detail and advise on the best course of action for you.