Can Settlement Agreements rescue businesses facing COVID-19 redundancies?

8 Dec 2020
by Sharma Solicitors

There is a way for employers to make redundancies to survive the COVID economic hit and avoid legal hassles that come with it.

Good employment law solicitors point to a special arrangement called  Settlement Agreements.

Despite the promise of vaccines, the need to find alternatives to redundancies are clear. Employers are considering redundancies due to the reduction in the government’s job support subsidies.

As a result, the president of the employment tribunals for England and Wales, Judge Barry Clarke, has warned of an explosion of legal  challenges to job redundancies.

Settlement Agreements could reduce the likelihood of employers going to employment tribunals.

Settlement agreements

A Settlement Agreement, or compromise agreement, is a deal between an employer and employee that ends a contract of employment.

In return for a benefit, employees agree not to pursue legal claims of unfair dismissal, constructive dismissal. The Agreement is written up in a document and may also include ‘confidentiality clauses’ that stops the employee from talking about it.

An employee can still claim for a personal injury not known about at the time of the Agreement or to pursue a legal dispute about pensions.

Such agreements benefit the employee by offering them a tax-efficient payment, enabling them to request a job reference, while ensuring the agreement prevents their ex-employer from criticising them or their work in the future.

Key settlement points

Costs involved in an agreement will vary but issues that will affect a financial part of the Settlement include:

  • – length of time the employee has worked for the employer
  • – circumstances around the furlough, government schemes and COVID-19
  • – cost of a normal redundancy,
  • – potential cost of a legal claim.

The employer will often contribute to the cost of the employee’s independent legal advice and to cover the advice given in the agreement.

The employer needs to consider which  legal disputes could be raised be the employee and how much it would take to buy off those potential claims.

Employees are typically interested in Settlement Agreements when the payment is higher than redundancy.

Tagged

business COVID-19 employers employment solicitors Employment Tribunal redundancy settlement agreements unfair dismissal

Related News Stories

Executive faced a ruined career after botched sacking

Executive faced a ruined career after botched sacking

An advanced mental health practitioner was recently awarded over £60,000 after he was sacked without a fair process. An employment…

Read more
CBI scandal: what if your employee is accused of a serious crime?

CBI scandal: what if your employee is accused of a serious crime?

The CBI has been rocked by accusations of rape and sexual misconduct. With its reputation in tatters, members leaving by…

Read more
F-words at work – OK, but saying ‘baldie’ – not

F-words at work – OK, but saying ‘baldie’ – not

Swearing at work was ruled acceptable by one employment tribunal judge, while another gave out £71,000 in compensation when a…

Read more
Employer punished for unfair sex assault dismissal

Employer punished for unfair sex assault dismissal

Government agency bosses used a flawed procedure when firing a top foreign envoy for a sexual harassment accusation. The British…

Read more
Employers face legal traps over home working

Employers face legal traps over home working

Employers risk making poor and costly decisions in response to employees asking to work from their homes. Two cases have…

Read more
Employers are punished for sacking bad workers

Employers are punished for sacking bad workers

A judge slapped down an employer who failed to follow a fair procedure when sacking a nurse for being racist.…

Read more
Managers’ confused performance assessment leads to big payout

Managers’ confused performance assessment leads to big payout

A well-known clothes store's flawed promotion and assessment process landed them with a £96,208 judgement at an employment tribunal. Bristol…

Read more
Frustrated manager’s decision leads to unfair dismissal

Frustrated manager’s decision leads to unfair dismissal

An employer lost an unfair dismissal case after summarily sacking an employee rather than go through a fair procedure. London…

Read more
Protected conversations expedite dismissals

Protected conversations expedite dismissals

The government has increased the scope for employers to sack employees without the threat of court cases. The new law…

Read more
Tesco gets burned by its fire and rehire tactics

Tesco gets burned by its fire and rehire tactics

A high street giant’s attempt to cut their staff bill was slapped down recently due to employment law. The High…

Read more
Tribunal defends  cross-dressing engineer

Tribunal defends cross-dressing engineer

A landmark court ruling has boosted employment lawyers’ chances of protecting ‘sex change’ workers from harassment and unfair dismissal. Birmingham…

Read more
Government demands employees return to work  – but not just yet

Government demands employees return to work – but not just yet

Government have changed their advice on telling employees to return to the workplace due to a spike in virus infections.…

Read more
Job redundancy or unfair dismissal

Job redundancy or unfair dismissal

The looming end to the government’s job subsidies in November will lead to some cynical bosses using redundancy to victimise…

Read more
Sickness sacking is valid without medical expertise

Sickness sacking is valid without medical expertise

A rail company did not need extensive medical evidence to sack an employee for being too sick to work. Employment…

Read more
Court upholds sacking over a Christmas overtime row

Court upholds sacking over a Christmas overtime row

An employment tribunal in November 2016 decided that a company fairly dismissed a worker when her refusal to do overtime…

Read more
Good employer loses appeal in migrant right to work case

Good employer loses appeal in migrant right to work case

Foreign workers have a right to appeal if they face dismissal over doubts about their UK residency status, appeal judges…

Read more
Jaw-jaw before war-war

Jaw-jaw before war-war

New legislation compels people in a workplace dispute to talk before going into legal battle in a court. Whether they…

Read more

    Sharma Solicitors is Regulated by Solicitors Regulation Authority (SRA Number: 403199)