Corporate Redundancy Settlement Agreements for Employees

If a settlement agreement is raised before redundancy is formally announced, it can feel confusing - or even premature. However, in corporate roles this is common.

Employers often introduce settlement agreement discussions early to manage uncertainty and avoid disputes later.

For employees, this matters because early conversations often shape the final outcome, even if nothing has been formally confirmed yet.

At this stage, it’s easy to assume nothing is fixed.

In reality, this is often when:

• Exit structures are decided

• Proposed compensation is shaped

• Timing around notice and termination is discussed

Understanding what’s happening - and what isn’t yet final - helps you avoid agreeing to terms too early without realising their long-term impact.

April marks the start of the new tax year, and this can affect how different settlement agreement payments are treated.

For employees, the key issue isn’t the redundancy date itself - it’s when payments are made and what the settlement agreement locks in.

Around April, even small timing differences can affect:

• Which tax year payments fall into

• How notice pay and compensation are treated

• When money actually reaches you

These outcomes are often determined by settlement agreement wording agreed weeks or months earlier.

That’s why understanding timing before signing matters far more than many employees expect.

A redundancy settlement agreement usually includes several separate payments, each treated differently.

These often include:

• Salary up to the termination date

• Accrued but untaken holiday pay

• Notice pay or payment in lieu of notice (PILON)

• Statutory or enhanced redundancy pay

• An additional compensation payment for waiving claims

Employees often focus on the headline figure, but how the total is broken down - and when each element is paid - can make a significant difference to the final outcome.

Understanding this structure early helps you spot issues that are much harder to fix later.

For more on understanding Settlement Agreement payments, read our blog: Settlement Agreement Payments Explained: What You’re Owed, What’s Negotiable & How Compensation Works (UK Guide)

Redundancy pay is usually assessed for tax purposes based on when it is paid, not when redundancy is discussed.

Where a settlement agreement is involved, payment dates are often fixed in advance. Once agreed, they are rarely flexible.

If April is approaching, this can affect:

• Which tax year payments fall into

• How much you take home

• Whether changes are possible at a later stage

This is one of the most common areas where employees wish they had asked questions earlier.

Signing a settlement agreement usually means agreeing not to bring certain employment claims.

These can include:

• Unfair dismissal

• Breach of contract

• Discrimination claims



In redundancy situations, this often means you are giving up the right to challenge whether the redundancy process was fair or whether redundancy was genuinely necessary.

That’s why compensation is offered - and why understanding the value of the rights you’re waiving is important before agreeing to the terms.

To learn more about your rights in a Settlement Agreement, read our blog: What Are My Rights in a Settlement Agreement? Unfair Dismissal & Legal Rights Explained (UK)

Settlement agreements give employers certainty, but they also signal that terms may be open to discussion.

For employees, recognising this can help you understand why an offer has been made, identify which points may be flexible, and raise questions before assumptions become fixed.

Early understanding doesn’t mean confrontation, it means clarity.

Certain clauses in a settlement agreement have a bigger impact than they appear at first glance, including:

• Termination date

• Payment dates

• Waiver of claims

• Confidentiality and references

These clauses are often agreed early and carried through unchanged. Once signed, they are very difficult to revisit - even if circumstances change.

This is where many employees lose leverage without realising it.

For more information on clauses, read our blog: Confidentiality & Non-Disclosure Clauses in Settlement Agreements: What You Can Say and What You Can’t

Employees facing redundancy in the run-up to April often make avoidable mistakes - not because they are careless, but because they don’t realise how early some decisions become fixed.

Common examples include:

• Focusing only on the headline payment
  This can mean overlooking how the settlement is broken down, when payments will be made, and how much you actually take home after tax.

• Not checking which tax year payments fall into
  Where payments cross into a new tax year, this can affect deductions and timing, sometimes resulting in a less favourable outcome than expected.

• Confusing redundancy pay with notice pay or PILON
  These payments are treated differently, and misunderstanding the distinction can lead to unexpected tax deductions or cash-flow issues.

• Assuming settlement agreement terms can be changed later
  In reality, termination dates, payment timing and compensation are usually fixed once the agreement is signed, even if circumstances change.

• Waiting too long to get independent legal advice
  By the time advice is taken, key terms may already be locked in, limiting what can realistically be challenged or improved.

Understanding these risks early gives you the opportunity to ask the right questions before anything is agreed - helping you protect your financial position, preserve flexibility where possible, and avoid the frustration of hindsight.

When you are being asked to sign a Settlement Agreement, you are usually being asked to waive important employment rights.

The advice you receive at this stage can make a significant difference, both financially and in terms of your future options.

Ellis Hass acts exclusively for employees, with a particular focus on Settlement Agreements and redundancy situations.

Our specialist Employment Law Solicitors advise employees at all levels, from straightforward exits to more complex redundancy and Settlement Agreement matters.

The team will explain the wording in clear, practical terms, helping you understand:

• Which employment rights you are being asked to waive
• Whether the compensation reflects your circumstances and any potential claims
• How timing decisions may affect pay and tax considerations

Employees choose Ellis Hass because of the firm’s:

• Extensive experience advising employees on Settlement Agreements
• Clear, jargon-free advice that helps you understand your position
• Supportive, responsive approach during what can be a stressful time
• Strong reputation built on professionalism, trust and client feedback
• Practical initial advice, with employers often contributing towards legal fees

This combination of experience and support helps you understand what you are agreeing to before you sign.

Signing a Settlement Agreement is a significant decision. It can affect your employment rights, your future options and your ability to bring certain legal claims.

If you are unsure whether the offer is fair, concerned about the rights you may be waiving, or simply want advice before agreeing to anything, you do not have to work through it alone.

At Ellis Hass Solicitors, we act exclusively for employees, helping you understand the agreement, what it means in practice and what may need further discussion before you sign.

Our specialist Employment Law Solicitors have extensive experience advising employees on Settlement Agreements, explaining legal wording in plain English and, where appropriate, discussing whether any terms may need to be negotiated.

Whether you want to understand which employment rights you are giving up, check whether the terms reflect your situation, or make sure nothing important has been overlooked, our team can talk you through your options and help you make an informed decision.

Employers often contribute towards legal fees, so it is worth checking what contribution is included in your agreement.

If you would like advice before signing, arrange an initial advice call with our Employment Law Team.