Staff cuts and Settlement Agreements - the changing face of the oil and gas sector

The oil industry is a key employer for the UK. However, the ongoing strain of a subdued oil price is taking its toll.

With prices still hovering around the $50 a barrel mark, it is estimated that - at the turn of the year - there were 230,000 oil jobs in the UK, down from the lofty heights of 330,000 oil workers at the peak of the industry in 2014.

Oil And Gas Settlement Agreements Compromise Redundancy North Sea Scotland Employment Law

The UK North Sea is one of the oldest oil basins in the world and is also one of the most expensive for oil producers. Consequently, the UK North Sea has been hit particularly hard by the oil slump: the number of people claiming out-of-work benefits in the northeast of Scotland has risen disproportionately to the rest of the UK as the industry sheds staff to cope with low oil prices.

While the sector tries to trim its costs, oil and gas tends to be somewhat more generous in its redundancy packages than the statutory redundancy requirements. As such, it's common for "settlement agreements" (formerly "compromise agreements") to be used, setting out the package on offer while at the same time compromising the individual worker's ability to make a claim against their employer in respect of their employment or its termination.

Severance packages

By law, in order for the document to be legally binding, there is a legal requirement that a "relevant independent adviser", usually a solicitor, review and explain the terms of the Settlement Agreement to an individual before they sign it. Typically employers provide a contribution to cover legal fees.

Quick turnarounds are often needed…

Turnaround times are often tight for finalising Settlement Agreements – employers, having made the decision to let staff go, want to conclude things as quickly as possible - and you may need to secure legal support fast. 

How we can help – get in touch

We can almost always accommodate same-day appointments particularly given our wide geographic spread with offices in Glasgow, Edinburgh, Inverness and Lerwick.

We will explore any potential claims you may have (such as unfair dismissal, discrimination claims, a right to a redundancy payments, etc) and what you will be giving up by signing the agreement. In some circumstances, we can explore the possibility of negotiating a better exit package with your employer.

All of the solicitors in our Employment Team specialise in employment law so you can be sure you are receiving the best possible advice.

Whether or not you work in the oil and gas sector, if you have been offered a Settlement Agreement by your employer we're happy to provide advice. Please contact our Settlement Agreement line on 0141 227 9680.

The small print: This blog is for information purposes only and should not be construed in any way as providing legal advice.