From Furlough to Redundancy – and the use of Settlement Agreements

As we start to make our way out of lockdown, many people will also be returning to work following a period of furlough. The Coronavirus Job Retention Scheme (the scheme setting out the guidance on furlough) was introduced by the Government to try and reduce the number of redundancies where many businesses were forced to close their doors. Whilst the scheme has assisted in retaining many employees with the introduction of an 80% grant towards wages, since the 1st July 2020 the scheme has begun to put more onus on the employer to contribute financially towards retaining employees. As a result, many employers are now having to make big decisions about the future of their business’.

Over recent weeks we have seen an increase in the number of clients who have been offered Settlement Agreements by their employers. In potential redundancy situations, an employer may offer an additional compensatory sum in addition to the statutory redundancy pay in order to dismiss that employee and prevent the employee from bringing a claim in the future in the Employment Tribunal. The compensatory sum is offered in full and final settlement of any claim, including unfair dismissal or wrongful dismissal.

In order for a Settlement Agreement to be legally binding between the employer and the employee, the employee must take legal advice on the terms and the implications of that agreement. This allows the employee the opportunity to speak with a professional legal advisor to ensure that the terms of the settlement are fair, and to also raise any concerns which the employee may have in relation to the events leading up to the settlement agreement being offered to them.

Unfortunately, over the coming weeks and months we do expect to see an increase in the number of redundancies, and where employers do not want the risk of a claim in the Employment Tribunal, an increase in settlement agreements being offered also.

If you are an employer it is important that you follow a fair process in any redundancy situation, and where a settlement agreement is used, that this is legally compliant. Employers are also expected to pay the legal costs of the employee obtaining legal advice. At O’Donnell Solicitors we can advise on the steps which should be taken in a redundancy situation, and where appropriate we can assist in negotiating settlements with employees and in preparing legally compliant settlement agreements.

Alternatively, if you are an employee who is facing a possible redundancy situation, or if you have been offered a ‘without prejudice offer’ for a settlement, then O’Donnell Solicitors can advise you on your legal options, ensuring that your employer has followed a fair process and that any offer of settlement is fair. If you are offered a settlement agreement then we can advise you on the terms and the effect of entering into that agreement, negotiating any terms where appropriate, and guiding you through the process.

At O’Donnell Solicitors we can advise both employers and employees on redundancy situations and Settlement Agreements. For further advice, contact Suzzanne Gardener on suzzanne@odonnellsolicitors.co.uk or on 01457 761 320.