There are various reasons why employers look to the security of a settlement agreement when wishing to terminate an employee’s contract. This could be due to redundancy, disciplinary or performance issues, or to resolve an ongoing dispute within the business.
It is crucial that you approach this situation with the delicacy required and that you are aware of the possibilities but also your legal obligations attached to a settlement agreement.
Our Employment Law department have years of experience of not only assisting with the drafting and negotiating of settlement agreements but also advising in the initial stages. We have answered a variety of the most frequently asked questions, however we would always advise that you contact us to discuss your situation so we can provide tailored advice to achieve the best outcome for you and your business.
A settlement agreement is a legally binding contract between an employer and an employee, often used to resolve disputes or potential claims. It is vital for employers as it helps minimise the risk of litigation, protects business interests, and ensures a swift and mutually agreeable resolution to employment-related issues.
When drafting a settlement agreement for your employee, it should cover the essential components to protect your business and provide a comprehensive resolution. Typically, a settlement agreement includes the following:
The first step comes before you have even offered your employee the settlement agreement. You should seek advice from an experienced employment lawyer about the situation at hand in order to understand your options, the legal implications and consequences. We can work with you based on your unique circumstances, identify potential risks, and then devise an effective strategy to protect your interests while ensuring you remain on the right side of employment law.
Once agreed that a settlement agreement is the right path, we will draft the settlement agreement to be passed to your employee’s legal advisors. We will present a fair and favourable offer and, should this be rejected or counter-offered, we will negotiate, keeping you appraised of the conversations along the way to ensure we remain aligned with your goals.
In the unfortunate event that a dispute arises despite having a settlement agreement in place, or a settlement agreement is not signed and a Tribunal claim arises, our experienced litigators are ready to provide strong representation and support throughout the legal process.
The costs associated with a settlement agreement can vary depending on your situation. When considering the financial implications for your business, there are three main areas to consider:
We can provide guidance on determining an appropriate offer and assess the potential outcome of any Employment Tribunal proceedings, ensuring a fair deal for the termination package.
Settlement agreements are typically finalised within a relatively short timeframe. If both you and your employee are satisfied with the terms and the offered compensation, we can usually complete the necessary work within a matter of days. However, if negotiations are involved, the duration will depend on how promptly each party responds. In most cases, we anticipate that agreements can be concluded within a couple of weeks.
The ACAS Code of Practice emphasises the importance of giving employees a reasonable period of time to consider the proposal. The length of this period will depend on the specific circumstances of the case. As a general guideline, a minimum period of 10 calendar days should be allowed for your employee to consider the formal written terms of the settlement agreement and to seek independent advice, unless both parties agree to a different timeframe.
As an employer, drafting the right settlement agreement and making the most appropriate offer will be crucial in its success, allowing both you and your employee to move on. To discuss your situation with a member of our Employment Law team, contact your local office today by using the Contact Form, emailing moc.n1695683429ellub1695683429rekra1695683429p@ofn1695683429i1695683429 or using one of the phone numbers below: