Coronavirus could see increase in Settlement Agreements

On behalf of Attwaters Jameson Hill posted in Employment Law on Tuesday, April 7th, 2020

The coronavirus pandemic has brought entire industries to their knees and had a huge impact on the ability of businesses to pay their staff. Despite government assistance via the Coronavirus Job Retention Scheme, there has been a surge in redundancies, which could in turn lead to a rise in claims for unfair dismissal or discrimination.

To avoid the stress and expense of taking complaints before an employment tribunal, employers and employees have the option to sign a Settlement Agreement.

What is a Settlement Agreement?

A Settlement Agreement is a type of contract whereby an employee agrees not to take any future legal action against their employer in return for some form of compensation. They are usually used where employers wish to terminate a contract on mutually agreed terms, without the risk that an employee will bring a claim before an Employment Tribunal in future. They are also used where an employer wishes to avoid a long and drawn-out separation process, as would be the case with redundancy.

They aren’t always used prior to the termination of a contract, however; they can also be used to settle disputes while an employee is still working for their employer.

What will be included in a Settlement Agreement?

Typically, you would expect to see two pieces of information:

  1. The value of the compensation to be awarded to the employee
  2. A summary of the legal claims to which the employee has waived their right to bring against their employer in the future.

Timescales for the payment of compensation or, in some circumstances, the requirement for a written apology, are other elements that may feature in the Agreement.

Advice for employees

It is essential to take legal advice before signing a Settlement Agreement. If you sign a Settlement Agreement without consulting a solicitor, then the Agreement won’t be legally binding and you could still take legal action against your employer in future.

A solicitor can also assess the strength of your claim and advise whether you should accept the Agreement or take your case before an Employment Tribunal. Our expert term is extremely experienced in assisting employees in the negotiation of Settlement Agreements, but equally specialise in representing litigants in court.

There is nothing to stop you rejecting a Settlement Agreement, but if you don’t and your case is not strong enough, you may be dismissed fairly without any chance of compensation. Therefore, your solicitor will be able to advise you on the option that will be of most benefit to you.

Advice for employers

Similarly to employees, it is essential that employers seek legal advice prior to offering, or signing, a Settlement Agreement. A solicitor will be able to assist you in drafting the Agreement, advise on any contractual terms that may apply, and represent you before an employment tribunal if the employee refuses the Settlement Agreement. They’ll also advise on the level of compensation appropriate to the case.

You should also factor in the cost of the employee’s legal counsel, for which you will likely be expected to pay. 

If your employee’s claim is COVID-19-related, and they refuse to sign a Settlement Agreement, then it is vital to consult an employment lawyer. Tribunals are likely to closely scrutinise your reasons for the treatment of your employee in light of the current circumstances.

We can help

Whether you are an employee or employer, our expert team can advise you on your rights and obligations regarding Settlement Agreements, and will strive to secure the best possible outcome for both parties. Just contact enquiries@attwaters.co.uk or call 0330 221 8855.

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