Have you been offered a settlement agreement whilst on furlough leave?
Earlier this year, the Government brought in the Coronavirus Job Retention Scheme with the furlough initiative designed to help avoid redundancies by part funding employees’ wages if it was not safe for them to be in the workplace and they couldn’t work from home.
For many employers it has not been possible to avoid redundancies, but some have been offering employees a settlement agreement as an alternative to redundancy.
Briony McDermott looks at Settlement Agreements, furlough leave and COVID-19.
“A Settlement Agreement is a legally binding agreement between you and your employer. The agreement usually provides for the employer to make a termination payment in return for your agreement not to pursue any claims in a Tribunal or a Court.
“The employer will usually require you to keep the terms of the agreement, for example the amount and the surrounding circumstances of your contract’s termination, confidential.
“Settlement agreements prevent an employee from bringing an employment tribunal claim against their employer.
“Sometimes, employers offer an exit package in order to avoid going through a lengthy redundancy consultation procedure. This is particularly true if they are making a large number of redundancies in a short space of time.
“The consultation period could be up to 45 days if they’re making more than 100 redundant. Conducting a consultation period during the current COVID-19 crisis, whilst many staff are on furlough leave and maintaining social distancing, could be extremely problematic.”
How can Wake Smith help with a Settlement Agreement?
We offer same day appointments.
Advise on the effect of signing the Settlement Agreement.
Go through the alternatives available to you.
Provide fixed costs which will not exceed those paid by your Employer.
Is it really necessary to take legal advice?
In short – YES. An agreement whereby you waive your rights to bring employment claims is only legally enforceable if a solicitor or other certified person signs it off.
In addition, depending on your requirements, we can identify any claims of which you may not be aware, advise you on the merits of any potential claims, the amount of compensation you would be likely to receive at an Employment Tribunal and whether a settlement agreement is the right route for you.
Why do employers use Settlement Agreements?
Employers will offer a Settlement Agreement when they want to bring employment to an end on agreed terms. This is usually so that there is a clean break with no opportunity for you bring proceedings against them for more money.
Settlement agreements are common where the employer does not want to follow what could be a lengthy process, such as a performance management or a full redundancy process.
Also, where you have raised a grievance or other concerns, the employer may want to enter into a Settlement Agreement to avoid a claim for constructive dismissal and/or discrimination.
How much will it cost?
Your employer should pay a contribution towards your legal fees of between £350 and £500 (plus VAT) depending on the complexity and breadth of the issues. This is likely to cover your legal fees in a straightforward matter.
When will I receive my money?
Once the Settlement Agreement is fully executed, the termination payment is usually paid within 14-28 days. However, certain payments will be made through the payroll on the usual pay date such as outstanding salary and accrued holiday and bonuses or commission payments.
For further information and advice on settlement agreements call Briony McDermott at Wake Smith Solicitors on 0114 266 6660.
