A Settlement Agreement between an employer and employee is a legally binding settlement usually offered shortly before or after the termination of employment. These used to be known as Compromise Agreements. You will be required to waive your right to bring legal claims such as unfair dismissal or workplace discrimination in return for an agreed sum of compensation.
If you have been offered a Settlement Agreement, your employer has to make sure you receive independent legal advice before signing, otherwise the agreement will not be enforceable. The reason behind this is to ensure you fully understand the implications of entering into this agreement. They also have to give you a reasonable amount of time to consider whether to accept the terms offered. Acas wrote the Code of Practice on Settlement Agreements which provides useful guidance on how these should be offered. For more information, you can also refer to their Guide.
Your Settlement Agreement may be a positive step forward for you. However, you may have been offered a Settlement Agreement totally ‘out of the blue’ or in circumstances where you do not feel you have any choice but to sign.
We always take the time to listen to you to find out the background to the offering of this Settlement Agreement in order to properly advise you as to whether it is in your best interests to sign. In certain cases we may be able to negotiate a larger sum of compensation and/or better terms including a positive reference.
Alternatively, we may advise that you would obtain a much better settlement by lodging or continuing with a grievance, capability or disciplinary process or even commencing Employment Tribunal proceedings.
Your employer should have included a clause in the Settlement Agreement which sets out a fixed contribution towards the cost of you obtaining independent legal advice. In straightforward cases, this contribution should be enough to cover all of your legal costs. If it is not, because your Settlement Agreement needs amendments, then we would always return to your employer to ask for a higher contribution. However, in cases where we need to negotiate a higher amount of compensation on your behalf, you will be required to contribute towards your own legal fees.
Where negotiations break down, we may be able to offer a Damages Based Agreement, which is where we receive a percentage of any compensation you receive as a result of taking further action. This may include bringing a formal grievance or issuing proceedings.
Our Settlement Agreement solicitors will advise on the fairness of the sums offered, the tax implications and ensure any references to be provided are accurate and legally compliant.
If you are considering signing a Settlement Agreement please contact us. We are more than happy to have a free initial chat with you to point you in the right direction. The contribution provided by your employer will ensure that we are able to fully assess your situation.
At the first meeting we will be able to advise you as to whether the compensation offered by your employer is fair. For example, if we believe you have a claim such as a workplace discrimination or unfair dismissal claim, we will assess its potential value. We will also consider whether the terms of the Settlement Agreement are reasonable. We will also provide guidance on the tax implications of the figures put forward in the Agreement.
We recognise that it is always your decision as to whether you sign or not. Our written advice will mean you are able to make an informed decision about how you wish to proceed.