Experiencing a dispute with your employer will be an unnerving 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 settlement agreement 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 Settlement Agreement Solicitors within our Employment Law team.
A settlement agreement, formerly known as a compromise agreement, serves as a legal contract between you and your employer outlining the terms and conditions for ending your employment relationship. By signing this agreement, you agree to forgo your right to bring any claims against your employer in exchange for a monetary settlement.
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:
By signing a settlement agreement, both you and your employer agree to settle any potential claims against each other, providing a clear, swift and agreed-upon resolution.
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.
Seeking independent legal advice is a crucial part of reviewing your settlement agreement as, without this step, your agreement will not be legally binding. Here is an overview of the process involved in seeking advice for signing a settlement agreement:
Obtaining legal advice for a settlement agreement is a necessary requirement for it to be legally binding and effective. In most cases, employers will contribute to your legal fees and provide an initial budget, typically ranging from £300 to £500 plus VAT. Judicial guidance from the Court suggests that £500 plus VAT is likely to be a reasonable fee for advice on such agreements.
If you and your employer agree on the proposed settlement amount without the need for extensive negotiation, it is likely the fee contribution will be sufficient. However, if further negotiation is required, whether regarding the proposed amount or specific clauses within the agreement, additional legal fees may be incurred.
We will provide you with an estimate of the expected costs and can, as appropriate, engage in discussions with your employer to seek an increased contribution toward these fees. If your employer refuses to increase their contribution, any additional costs will need to be covered by you. Any additional charges that could be incurred will not be actioned without your agreement. We aim to provide transparent and fair pricing, ensuring that you receive quality legal advice while minimising any financial burden on your part.
Settlement agreements can be concluded swiftly, depending on the circumstances. If you are satisfied with the content of the agreement and the proposed settlement amount, we can generally complete the necessary work within a matter of days. Under employment regulations, specifically the ACAS Code of Practice, it is recommended that your employer gives you a minimum of 10 days to consider the agreement, however this is not mandatory and you can make decisions in a shorter period of time if you are comfortable doing so.
The speed of the process also depends on how promptly your employer responds during any negotiation phase.
If you find yourself under pressure from your employer to expedite the process or if you have a specific deadline that you need to meet, please do discuss that with us.
Our priority is to ensure that the settlement agreement is concluded efficiently, while also ensuring your best interests are protected.
During the review of your settlement agreement, we will guide you through each section, ensuring that you have a clear understanding of its contents. Some of the key clauses that we will draw your attention to include, but are not limited to:
By signing a settlement agreement, 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:
This will 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:
Signing a settlement agreement is entirely voluntary, and you have the right to decline the proposed terms. We can help you understand the potential consequences of rejecting the agreement, assessing the risks, discussing alternative options, and guiding you towards the most appropriate course of action.
If you do not wish to sign the initial agreement offered, you can negotiate on the terms. We can help you evaluate the terms, identify areas of negotiation, and engage in constructive discussions with your employer to secure a better outcome.
It is important to recognise that negotiating a settlement agreement carries some inherent risks, as the agreement is not finalised until both parties sign it and the solicitors’ certificate is completed. Requesting to negotiate could lead to your employer withdrawing the offer entirely or they may not be open to negotiate to the extent you were hoping. Before putting forward a counter proposal to your employer, we will help you review the risks and benefits of either seeking to negotiate, accepting the offer or whether you may achieve a more favourable outcome through an Employment Tribunal claim.
Once you have signed a settlement agreement, you generally waive your rights to bring any further claims related to the specified issues. However, you should review the agreement carefully to ensure it covers all potential claims and is fair in its provisions. We will meticulously examine the agreement to ensure your interests are protected and that you are not disadvantaged by signing the document.
As explained, receiving the right legal advice from an experienced Employment Law Solicitor is crucial if you have been offered a settlement agreement. To discuss your situation with a member of the team, contact us today at your local office by using the contact form, emailing moc.n1695682869ellub1695682869rekra1695682869p@ofn1695682869i1695682869 or calling one of the following numbers: