Settlement agreement after a restructure

A restructure removes roles, merges them, changes their content or moves them, and the employees whose roles are affected may be redundant, may be offered new roles they do not want, or may simply be the people the business would rather did not stay. A settlement agreement ends the employment of someone the restructure has displaced on agreed terms, but it has to be built on the right reason, offered at the right point in the consultation, and consistent with the treatment of the colleagues who stay. For £795, fixed, delivered in three working days, I draft the agreement for the employer with a note on the conversation; the £995 version adds the negotiation with the employee's adviser.

Who this is for

Employers in England and Wales reorganising a team, a department or the whole business, who want to settle with the employees the reorganisation displaces.

What matters in a settlement after a restructure

Whether the restructure is a redundancy or something else

A restructure produces a redundancy under section 139 of the Employment Rights Act 1996 where the requirement for employees to do work of a particular kind has ceased or diminished (a role removed, two roles merged into one), and produces a dismissal for some other substantial reason where the role continues but on terms the employee will not accept (a changed location, hours or duties) or where the reorganisation is a business reason that is not a reduction in work; the distinction decides whether a statutory redundancy payment is due and how the tax exemption applies, and the agreement should recite the reason accurately, because a restructure described as a redundancy that is really a replacement of one person by another is a dismissal the tax and the tribunal will see through.

The new structure, the pool and the roles that are offered

The employer should be able to show the old and new structures, the roles that have gone and the roles that have been created, the pool of employees affected, the criteria for selecting between them where there are more employees than roles, and the new roles offered to each affected employee (which the employee may accept, try under the statutory trial period of four weeks under section 138 of the Employment Rights Act 1996, or refuse, with the consequences for the redundancy payment depending on whether the refusal was reasonable); the settlement is offered to an employee who has been through that process or who indicates they would rather leave than take the new role, and the note helps the employer see where the process has reached.

Consultation and the point at which settlement is offered

The restructure requires consultation with each affected employee about the proposal, the new structure, the selection and the alternatives, and the settlement should be offered as one option within that consultation (an enhanced package for an agreed departure, alongside the new role and the possibility of redundancy on statutory terms) rather than as a substitute for it, in a protected conversation under section 111A of the Employment Rights Act 1996 or without prejudice where the employee has disputed the restructure; an employer that announces a restructure and hands out settlement agreements the same day has consulted about nothing and the agreements are the evidence.

Collective consultation where the numbers require it

Where the restructure involves proposals to dismiss twenty or more employees at one establishment within ninety days (counting those whose roles change on terms they may not accept as well as those whose roles go), collective consultation under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 is required with representatives before any dismissal, with the notification to the Secretary of State and the protective award for failure, and the Employment Rights Act 2025 changes the counting of the threshold on a timetable the regulations set; individual settlements can waive the protective award for the employee who signs under section 288 of that Act but do not remove the obligation, and the note says whether the numbers trigger it.

The package, the enhancement and the tax

The package comprises the statutory redundancy payment where the reason is redundancy and the employee has two years' service, an enhanced payment under the employer's scheme or negotiated for the restructure (applied consistently across affected employees, because a better deal for one is a discrimination or custom claim for the others), notice (worked, on garden leave or paid in lieu, with post-employment notice pay taxed as earnings under section 402B of the Income Tax (Earnings and Pensions) Act 2003), accrued holiday and benefits for a period, with the redundancy and compensation payments within the thirty thousand pound exemption under section 403 of that Act, the adviser's fees under section 413A, and the tax indemnity; the accountants confirm the treatment.

The reference, the announcement and the colleagues who stay

The agreement attaches the reference (the role was removed in a restructure, which is a reason that reflects nothing on the employee), agrees the announcement to the team and to clients, provides for the handover to whoever takes on the work, and contains confidentiality and non-derogatory terms within the limits the law sets (protected disclosures under section 43J of the Employment Rights Act 1996 and the Employment Rights Act 2025 restrictions on non-disclosure terms about harassment and discrimination, which take effect on a timetable the regulations set); the colleagues who stay watch how the leavers are treated, and a restructure settled fairly and consistently is one the remaining team accepts.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

We are merging two roles into one. Is the person who does not get the new role redundant?

Usually, since the requirement for employees to do that work has diminished, with the selection between the two made on fair criteria. The settlement recites redundancy as the reason and the statutory payment is due.

Can we offer settlement agreements on the day we announce the restructure?

Not as the only option. The restructure needs consultation about the proposal and the alternatives, with settlement offered within it. Agreements handed out on announcement day are evidence that there was no consultation.

We are changing twenty-five roles but only removing five. Does collective consultation apply?

Possibly, because employees whose roles change on terms they may not accept count towards the twenty. The note says whether the numbers trigger it and what the process then requires.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Settlement agreement on redundancy
• Redundancy policy

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.