May 12, 2020
The coronavirus pandemic is changing and has already changed the world as we know it, in so many ways. Few would argue that the global lockdown has been necessary. This doesn’t detract from the fact the crisis has caused massive disruption to the economy and for businesses and employees alike.
In the UK as many as 9 million workers are expected to be or have been, furloughed by their employers, meaning that they have been placed on ‘temporary leave of absence’ from their employment. Many employers have taken advantage of the Government’s Coronavirus Job Retention Scheme. Under the terms of this scheme, employers can apply for a grant that will pay 80% of a furloughed employee's wages up to a maximum of £2500 per month.
Some employment law solicitors and other commentators envisage that in the coming weeks and months, as businesses attempt to stutter through the aftermath of the lockdown, businesses of all sizes will look to restructure. Re-structuring almost inevitably leads to job losses. Some of those who have been furloughed (and some of those who haven't been) may find that their positions become redundant.
At the same time, there is a universal acceptance that both business owners and their workers are hapless victims of the pandemic. There is likely to be an acceptance of the fact that some jobs will inevitably be lost and therefore a desire on both sides to deal with the parting of the ways in an as amicable, quick and mutually beneficial manner as possible. The Settlement Agreement may just be the ideal vehicle to facilitate this.
A Settlement Agreement is a written contract between an employee and their employer. It is a legally binding agreement. Settlement agreements are used to outline the agreed terms on which the employee’s employment has been terminated.
Prior to entering into the agreement, the parties will have negotiated between themselves, detailed terms to be included in the written agreement. These terms usually provide for a severance payment to be made by the employer to the employee as consideration for the employee agreeing not to pursue a claim through the Employment Tribunals process. It is also common for one of the terms of the agreement to be that the employer will provide the employee with a reference.
Settlement Agreements by their very nature mean that both parties to the agreement have mutually agreed to this method of terminating an employee’s work contract. It is no coincidence that they used to be known as ‘Compromise Agreements’.
Here are Spencers solicitors 9 key facts to be considered by both employers and employees before they enter into Settlement Agreements.
When considering taking legal advice on the terms of a proposed Settlement Agreement, it's vitally important to seek out the services of a specialist employment law solicitor.
If you are an employer who is thinking of offering a Settlement Agreement to an employee and you need legal advice on drafting an agreement, then our expert Employer Solutions team are the people to speak to – it’s the same number 08000 93 00 94.
Posted in: Employment Law