Redundancy and settlement agreements in COVID-19

Oil platforms and shipping boat

Sadly, the current necessary restrictions on businesses to limit the spread of Covid-19 have led to an increase in employers needing to make their workers redundant. 

This is happening across Scotland in businesses where a downturn is expected to last in the long term - and where the UK government’s Coronavirus Job Retention Scheme will not be able to help ease financial pressures.  

This has particularly affected industries that have already been facing difficult trading conditions, such as the oil and gas sector in Aberdeen where the existing strain has have been exacerbated by the Covid-19 outbreak. 

Where redundancies are proposed, employers will sometimes suggest that employment is brought to an end through a settlement agreement. This often happens in a voluntary redundancy situation or where the employer has policy of making an enhanced redundancy payment.

Can you be offered a settlement agreement after furlough?

Simple answer, yes. Furlough is a short term alternative to redundancy through the CJRS but there is no guarantee this will protect jobs longer term.

If your employer ultimately needs to make some employees redundant because of a longer term downturn, then a settlement agreement could be proposed to you.

Can you add furlough leave to a settlement agreement?

Yes – this will mean you will continue to be paid your wages through the CJRS until the employment termination date in the settlement agreement.

So what is a settlement agreement?

A settlement agreement is a legal contract where an employee gives up the right to pursue any future legal claims such as unfair dismissal following redundancy.

Why should employees accept settlement agreements?

One of the incentives used for employees to accept the terms is a higher payment than would normally be received through statutory redundancy terms. 

However, you MUST get independent legal advice on the terms in a settlement agreement for it to be valid.  

Advice should always be taken from a specialist employment law solicitor to avoid the risk of you agreeing to unfair terms or missing out on payments you are entitled to. 

It is also important to consider any ongoing conditions of your employment that will still exist but may not be referred to in the agreement.  

Digby Brown have specialist employment law solicitors who are experienced in providing advice on settlement agreements, negotiating termination payments and drafting changes to the terms where required.

Our employment team helped a client to negotiate the terms of a settlement agreement and provided us with feedback through Trustpilot to say:

“An excellent service from Ross at Digby Brown Solicitors. Good advice to navigate safely through complicated employment issues and a good result achieved.

"Ross was responsive, empathetic but also gave sound guidance and throughout professional.”

Another client commented “Great Service from Digby Brown with straight forward recommendations provided. Made the process really easy.”

If you need advice in relation to a settlement agreement, then please contact us. 

For help with other employment related matters during COVID-19, please visit COVID-19 - your employment rights to get answers to some frequently asked questions.