As we rapidly move towards the end of the Coronavirus Job Retention Scheme (CJRS) and get ready to step into the Job Retention Scheme (JRS), many employers will be faced with questions of the financial stability of their business’. Whilst the CJRS has placed a greater financial burden on employers since the 1st August 2020 when employers were required to pay tax and NI contributions, the JRS, which comes into force on the 1st November 2020, requires employers to pay employees who are on short term reduced hours, remuneration for the reduced hours worked, plus a third of their hours not worked. The expansion to the Job Retention Scheme which affects those industries which are closed due to government restrictions, will see employers paying a third of the usual salary to employees whilst their doors remain closed. More information on the scheme can be found here.
In August 2020 as employers’ financial contributions increased under the CJRS, our Employment Law Department saw an influx of instructions for Settlement Agreements where employees were dismissed by their employer but were offered a compensation sum in return for the assurance that no claims could be made against the employer. Many employers are minded to offer settlement agreements to employees to ‘draw a line’ under the dismissal and remove the risk of litigation in particular where an employee may have been unfairly dismissed.
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 as we see the introduction of the JRS, 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 Richard Dobson Mason on firstname.lastname@example.org or 01457 761 320.