IPA Pilots - Independent Legal Advice? 

Independent Legal Advice? 

In the current climate, some employees are exploring the option of taking voluntary redundancy (VR).  If an employee is successful in an application for VR they will be expected to sign a settlement agreement, waiving their rights to bring a claim in an employment tribunal or court of law in relation to the employment and/or its termination. 

The IPA has significant experience advising on these agreements.  Most recently when asked to advise, we spotted what appeared on first reading to be an innocuous sentence in the agreement, but on reflection potentially undermined the entire agreement.  This had not been noticed by the company, their solicitors, the recognised union, or their solicitors. 

Because employees are signing away their legal rights, they are required to take independent legal advice from a ‘relevant independent adviser’.  This means taking advice from a professional who has not been involved in the process and should not have a vested interest in the agreement.  This will avoid any claims of conflict of interest or duty.  The adviser is required to advise on the terms and effect of the agreement, not whether what is being offered represents a good deal.  The exception to this, in our experience is where an employee is being asked to sign a settlement agreement, and the payments being made represent no more than what the employee would be entitled to in law in any event.  So why is that person being asked to waive their legal rights, not just in terms of termination payments, but all employment rights (with very few exceptions)? 

An employer might recommend an adviser, and there is no issue with that.  But what about the situation where the adviser has been involved in the process?  If the agreement has drafting errors, or if the terms are unreasonable, but have been agreed with that person, or a party taking advice from that person, is the advice independent?  They aren’t going to challenge something that they have helped create and/or approved. 

Whilst it might seem a helpful gesture for an employer to recommend a certain adviser, both employers and employees should be cautious of this approach.  Employees should be given adequate time to make their own informed decision and should not be penalised if they choose not to use the recommended adviser.  As part of the process, the employer will pay the legal costs of the employee taking advice.  If the employer tries to make this conditional upon the employee using a specific adviser, questions should be asked as to why that is the case. 

It may be that the adviser meets the definition of a ‘relevant independent adviser’ contained within the legislation but remember that once both parties have signed the settlement agreement, it is binding and there is no going back. 

The Independent Pilots (Financial Services)

The Independent Pilots (Financial Services) Ltd was set up for the IPA and are specialist Chartered Financial Planners dedicated to providing the very best tailored advice for our members.

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