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Redundancies and Settlement Agreements During Coronavirus - Advice for Employees

One of the areas hit hardest by the coronavirus crisis is the employment sector. Unfortunately, a consequence of the pandemic has been reductions in wages and hours, as well as severe job cuts for many workplaces throughout Scotland.

Now that the UK Government’s furlough scheme is set to finish at the end of the month, and despite the recent announcement of a Job Support Scheme, there are concerns that the winter months could bring significant redundancies. As such, it is vital that employees know how to protect their interests if they are offered a deal to end their employment.

In this article, we have provided an overview of how settlement agreements are used in the redundancy process and what you should consider if you have been offered this type of contract. If you are an employee with questions about redundancies and settlement agreements, please contact our team by calling us on 01292 289 584 or completing the online enquiry form for personalised advice.

What is a settlement agreement?

With businesses under immense pressure to financially protect themselves now and for the long-term, many may be considering redundancies and settlement agreements. A settlement agreement is a legally binding contract entered into by an employee and employer, which sets out mutually acceptable terms on how to resolve a workplace issue. Often they are used to end the employment relationship, for example if there are disciplinary or job performance issues, but they are also common as part of the redundancy process.

Why might your employer offer you a settlement agreement during the redundancy process?

Settlement agreements provide a significant degree of protection to employers when making redundancies. Most contracts will include a clause in which the employee agrees to waive their right to bring any legal action against their employer. This means if a problem has arisen in the employment relationship or during the redundancy process, the employee cannot make an unfair dismissal or similar claim to an employment tribunal. In return, the employee will be compensated.

Redundancies can be difficult for both parties and can cause a range of emotions – which are likely to be heightened during these uncertain times. Settlement agreements make commercial sense to many businesses, particularly in the current circumstances, because they protect themselves against drawn out and costly tribunal claims if problems occur or if past disagreements resurface during the redundancy process.

If your employer has offered you a settlement agreement, get in touch with our team today.

Are there advantages to accepting a settlement agreement?

One of the biggest benefits of a settlement agreement is that you will receive an enhanced redundancy package. This could be a very welcome prospect for many employees in the current economic climate.

If you have problems with your employer, a settlement agreement allows you to work through these issues in a more relaxed and less time-consuming manner than in a tribunal. It also gives you more certainty and control over the outcome. Settlement agreements aim to bring a clean and amicable end to the working relationship, allowing you to walk away from the situation in a positive and dignified way.

Another positive these contracts bring is the opportunity to negotiate the terms with your employer. This means any important issues for you, for example receiving a good reference, can be discussed and worked into the agreement.

Things to consider before accepting a settlement agreement

Accepting a settlement agreement can feel daunting, especially as you cannot change your mind once you sign the contract. Instructing the help of an employment lawyer will ensure the terms of the agreement are fair. A legal professional will also negotiate with your employer on any areas that fall short of this.

To decide whether the deal is reasonable, your solicitor will consider certain aspects, including:

  • The reasons why you are being offered a settlement agreement
  • How long you have worked for the employer
  • Whether you have a valid claim against your employer and the potential value of that claim
  • The financial package you are being offered and its tax implications
  • Any other incentives you have/have not been offered, e.g. holiday entitlement or a reference
  • The extent of any confidentiality clause included

As an employee, you are under no obligation to accept the initial terms offered in the settlement agreement. A process of discussion is normal to ensure both parties are happy with the terms before signing. A specialist employment law solicitor can help you decide what you want to include in the agreement as well as assist with negotiating.

Do I need legal advice for a settlement agreement?

Settlement agreements are complex documents and their terms are binding. Consequently, the contract will only be considered valid if you have received independent legal advice. In most cases, your employer will pay for your legal costs.

At McLennan Adam Davis, our redundancy and settlement agreement lawyers have helped many employees to negotiate and formalise successful contracts that bring the employment relationship to an end. We will explain every aspect of the agreement to you clearly, including what your employer is proposing and what those terms mean for you now and in the future.

It is vital that you do not feel pressured into accepting an end-of-employment deal offered by your employer. We will protect your rights and interests throughout negotiations and will only advise that you sign the contract if we are completely satisfied that it is the best deal for you.

Contact our Redundancy and Settlement Agreement Lawyers Ayr, Kilmarnock, Stranraer, Saltcoats and throughout Scotland

Our employment lawyers understand these are stressful times for many employees. Our team are here to ensure you secure the most favourable outcome. To find out how we can help with your redundancy, settlement agreement or any other employment matter, please contact us on 01292 289 584 or complete our online contact form

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