These are the questions currently running through employees minds when severing their employment today. Whilst the Employment Rights Act 2025 extends the time limit from bringing most claims, such as unfair dismissal, from three to six months in October, Tribunals are already reporting a wait of up to four years. Perhaps more people will be prepared to negotiate hard a good settlement agreement now?
Business confidence is very poor sparking a large increase in settlement agreements high street solicitors are reporting in conditions not witnessed since the pandemic. London appears to be being hit heavily, notably east London, and those under 35. The hospitality and retail sectors are particularly affected.
The Victim and Prisoners Act 2024 which comes into force on the 1st October 2025 makes clear in statute that non-disclosure agreements such as settlement agreements cannot be enforced in so far as they seek to prevent victims from reporting crime to the police.
Under section 17 of the Victims and Prisoners Act 2024, non-disclosure agreements signed on or after 1 October 2025 will not be enforceable against victims of crime in relation to the disclosure of information about relevant conduct to the following groups and for the following purposes:-
Police or other bodies which investigate or prosecute crime, for investigating or prosecuting the relevant conduct
Qualified lawyers, for seeking legal advice about the relevant conduct
Regulated professionals (including regulated healthcare professionals), for obtaining professional support in relation to the relevant conduct
Victim support services, for obtaining support in relation to the relevant conduct
Regulators, for cooperating with the regulator in relation to the relevant conduct
To a person authorised to receive information on behalf of any of the above, for the relevant purposes mentioned above
A victim’s close family, for the purpose of obtaining support in relation to the relevant conduct.
The compensation and termination rates from the 6th April 2025 for settlement agreements will be:-
Maximum basic award for unfair dismissal £21,570
Maximum compensatory award for unfair dismissal £118,223 (or 52 weeks gross pay if less)
Maximum statutory redundancy payment £21,570
A weeks pay £719 per week.
New legislation is due to come into force forcing employers to take a more proactive rather than a reactive approach to sexual harassment. The Worker Protection (Amendment of Equality Act 2010) Act 2023 comes into force this October. Damages for harassment are unlimited. A successful tribunal claim for sexual harassment, under the new legislation, can attract an additional compensation uplift of up to 25%. This significantly increases the potential exposure to financial liability for businesses.
Here is a summary of some recent significant cases:-
The Supreme Court ruled that employees who have been underpaid for their holidays can claim for the shortfall even if more than three months has elapsed between those underpayments. This increases the employers financial liability who are calculating holiday pay incorrectly.
The Employment Appeal Tribunal handed down a judgment on when employees behaviour on social media outside of the workplace can instigate disciplinary action by their employers. A sensitive matter as employees want to add their voices to the virtual debate.
The Supreme Court decided that in accordance with the European Convention on Human Rights Deliveroo cyclists are not employees.
The fall in the number of construction contracts has been evidenced by a 25% insolvency increase in building firms since the pandemic.
Escalating inflation, delays in significant infrastructure projects, a drop in the construction of new homes and the cost increments of materials are the chief culprits here.
Unfair dismissal and redundancy pay will increase from the 6 April 2023:-
The maximum amount of “a week’s pay” for the purpose of calculating a redundancy payment or for various awards including the basic or additional award of compensation for unfair dismissal will increase from £571 to £643.
The limit on the amount of the compensatory award for unfair dismissal will increase from £93,878 to £105,707.
The cost of living crisis sweeping in increasing interest rates and the prospect of recession is contributing to an unprecedented rise in redundancies compared to this time last year. Solicitors are therefore reporting a demand in their services for the scrutiny of settlement agreements. It should be remembered that settlement agreements can only relate to the specific issue being settled. A settlement agreement cannot be used to settle all or any matters in a generic sense.