Compromise Agreement Settlements Set To Increase Amid Soaring Redundancy Payments
(Newswire.net -- February 9, 2013) Milton Keynes, Buckinghamshire, UK -- "Basic weekly pay" which is used to calculate basic entitlement for redundancy pay, certain other employment tribunal awards and in some compromise agreement settlements, has gone up from £430 per week to £450 per week, for each full year worked by an employee.
So from 1st February, an employee aged 33 and employed for 7 full years as at the date of termination of employment, is now entitled to receive a basic redundancy package of £3,150 (7 x £450), an increase of £140.00, on the basis that the employee's weekly pay is equal to or more than £450 per week (gross).
At the top end of the scale, the maximum compensatory award for an unfair dismissal claims increase from £72,300 to £74,200.
With the continuing economic uncertainty in the UK and the complex nature of UK employment laws, terminating an employees contract of employment lawfully and with any degree of certainty that employees will not sue for further compensation is the major concern for many employers.
Not surprisingly therefore, many employers are preferring the additional security provided in getting an employee to enter into an employment compromise agreement before terminating employees' contracts of employment.
However, compromise agreement must satisfy certain legal formalities for a compromise agreement to have the full force of the law behind it and to be recognised as legally binding. The most important legal requirement is that the employee obtain independent legal advice on the terms of settlement.
Employees need to be careful to ensure that they get competent and thorough legal advice before finalising settlement terms, since once an agreement is executed by the parties, there is rarely an opportunity later for an employee to undo and renegotiate terms of severance.
With UK companies under increasing pressure to make cost savings to remain profitable particularly with UK economic output continuing to stagnate, the past 4 years has seen a steady increase in the number of employers using tough trading conditions as an opportunity to restructure and lay staff off.
However, Graham Cardona of Cardona & Co solicitor, a employment compromise agreement expert cautions that "employers are still required to satisfy the legal definition of redundancy to lawfully terminate an employee's contract of employment on grounds of redundancy. Failing to do so, exposes employers to potential law suits".
Graham Cardona further speculates that this may be one factor driving the increase use of compromise agreements by employers seeking to shed staff, since compromise agreements give employers some security from legal action by employees.
At risk employees should therefore consider taking early legal guidance in situations of redundancy, particularly if the employer is asking outgoing members of staff to sign a settlement or compromise agreement.
For more information and guidance on what to do on presentation of a compromise agreement or how to negotiate terms of settlement you can visit http://cardonaandco.co.uk/compromiseagreement
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