Experiencing a dispute with your employer will be a stressful time and you will naturally have cause for concern for the future. There are methods that can resolve these matters amicably; one of which being by settlement agreement. While this may seem a straightforward document initially, it is crucial that you receive the right legal advice to ensure you do not unwittingly waive certain rights or damage any potential claim you may have against your employer.
We have many years of experience negotiating settlement agreements and can answer your questions in a practical way, offering our advice on what may lead to the best outcome. Here, we have endeavoured to address some of the common questions we are asked regarding settlement agreements. Should you wish to discuss anything further or you have additional questions, do not hesitate to contact our Employment Law team.
A settlement agreement can be used in a variety of situations in which there is a dispute between an employer and an employee. Generally, they are used as a way to resolve a matter without going to Employment Tribunal by offering an employee a way to exit the business on amicable terms with a compensatory figure attached.
Typically, an employer will offer a settlement agreement to an employee, however it is not unheard of for employees to request them from an employer.
Settlement agreements can be used in the following situations:
In signing a settlement agreement you will essentially be waiving your rights to bring an Employment Tribunal claim against your employer.
This can be an important consideration if the reason the settlement agreement has been offered is due to an ongoing grievance or dispute with your employer. You will need to discuss with your chosen legal advisor whether the settlement agreement would be more beneficial either financially and non-financially, or whether it could be better to pursue a Tribunal claim.
Once you have been offered a settlement agreement, you are legally entitled to a reasonable amount of time to review the document and consider the offer being made. Your employer should not put you under any undue pressure, and ACAS have advised that up to 10 calendar days should be allowed. However, due to the nature of these agreements, time is usually of the essence and so we will act quickly to ensure no opportunities are missed while taking everything into consideration and helping you reach the right decision.
In the situation that you are requesting a settlement agreement from your employer, it is crucial that you take legal advice before doing so, or before handing in your notice. This is not only due to procedural matters, but also due to the time limits that are involved in bringing a Tribunal claim.
If your employer has offered you a settlement agreement, you do not have to accept the initial offer. Upon reviewing your contract of employment and the circumstances surrounding the offer, we can negotiate on your behalf, either in regard to the compensatory offer or the non-financial clauses of the agreement.
Negotiation of this nature can be sensitive and rejecting an offer does carry certain risks. It is important that your advisor has the right experience to be able to manage this task with diplomacy, practicality and considering the commercial implications for your employer.
We will always provide our realistic and honest advice as to whether we believe it prudent to negotiate further, which could risk the agreement being withdrawn, or whether to accept the initial offer.
By signing a settlement agreement, as an employee you will be forfeiting certain rights. To ensure that you are not put at an unfair advantage when it is likely your employer will have received legal guidance in the drafting of the agreement, in order for a settlement agreement to be binding, the following requirements apply:
The detail within an agreement will vary depending on the situation at hand. The most common clauses in an agreement will include:
This will also depend on the circumstances surrounding the offer of the settlement agreement. Several factors that will be considered by your employer will include:
This can be a complicated area and we will discuss with you in detail the payments involved and any tax implications. Any payment you receive will be split into two areas:
Being offered a settlement agreement will come with many different questions, which we hope we have provided an answer for. If you have any additional questions or would like advice on your employment situation, contact a member of the Employment Law team today.