Settlement agreement, maternity leave and unemployment

KittyB52 wrote: »

I had not received any legal advice before signing the original agreement, but have since taken legal advice and submitted a claim through ACAS Early Conciliation and we reached an agreement for which I received an additional payment. The initial 'settlement agreement' was indeed legally 'iffy' to say the least, but I was not aware of this at time of signing.

My question was would I be entitled to any benefits in my current situation, as I received maternity pay as a lump sum (as part of the settlement agreement) and am technically unemployed rather than on maternity leave.

Normally, if your employment ceased then what you received was compensation for the loss of your job and not maternity pay as such.

Generally (with a valid settlement agreement!) you would get a payment in lieu of notice of one week for each year of service up to twelve (unless your contract says more) plus an agreed sum as compensation. The payment in lieu of notice is taxable but the compensation (up to £30K) is tax free.

It may affect your entitlement to benefits as you have, by definition, intentionally made yourself unemployed by agreeing to a settlement.

However, the fact that your "settlement agreement" was invalid may well complicate both aspects of this. It may be that the new early conciliation settlement is now the tax free settlement. It may also be that this would now be regarded as an unfair dismissal situation and therefore not attract a benefits sanction.

I'm afraid your really need professional advice on this.

KittyB52 wrote: »

It was listed in the agreement as payment for maternity leave, or at least, it was specified that the amount was intended to cover the pay I would have received if I'd stayed in employment and taken maternity leave.

Yes but you didn't stay in employment. You resigned in exchange for a settlement which they stupidly failed to make legally binding. Hence the reason you were able to make a further claim against them.

That in itself is very odd and unusual. Most employers, even very small businesses, realise that the only way to protect themselves from exactly this is via a formal SA.

I'm not an expert of benefits (or anything else come to that!) but it is hard to get past the argument that you choose to leave and make yourself unemployed. Had you been unfairly dismissed and subsequently won a tribunal or settled out of court that would be another matter. Generally, as I understand it, unless you resign on documented medical grounds or are unfairly dismissed then some period of sanction is applied before you can claim JSA? Maybe other will know more.

Would CAB be able to offer any assistance? Or ACAS? I had to pay for legal advice for early conciliation and am not really in a position to pay for another solicitor...

Possibly the CAB as far as benefits are concerned. Certainly worth asking but it may well need to be referred up to a higher adviser as it is far from clear cut.

Presumably tax was deducted from the PILON but not the other money? That too will need addressing as if your entitlement was to two months notice then anything else, regardless of what they called it or what it was "for" should hopefully be compensation and tax free (up to £30K).

Best of luck!

lesley74 wrote: »

Whether you can claim benefits may depend on what the 'settlement agreement' was for. I think perhaps that's not the correct term for what you have done even via ACAS - could it be a COT3?

Did you resign during the process? Did you claim constructive dismissal? Even if you didn't, then perhaps the reason for leaving being work related stress (if you can say you had no option really) might make you eligible for benefits.

I would suggest you start looking for work if you are ready, and at the same time approach DWP and try to sign on and see what they do. Just be honest. You might be eligible due to circumstances.

Sorry but no, it doesn't.

By definition a settlement agreement is something the employee doesn't have to accept. So they have voluntarily chosen to give up their job in exchange for a financial settlement and / or reference. They could refuse and continue working. If they are then dismissed and they consider it to be unfair they can take it to a tribunal (if ACAS conciliation fails).

Any settlement agreement with be strictly without admission of liability.

This particular case is unusual in that it appears the settlement agreement was invalid, as the OP wasn't legally advised before signing. Hence the reason they have been able to re-open the matter. This is where it gets complicated, both regarding entitlement to benefits and also the tax position.

If the DWP or HMRC get awkward about entitlements the OP is going to need advice from either a solicitor or an accountant. Hopefully the CAB can provide sufficient advice otherwise it could get costly.