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Settlement Agreements: One Year On

Settlement Agreements replaced Compromise Agreements in July 2013 and I am pleased to report that most solicitors and HR managers have got the hang of the name change. However, many practitioners are still not following the Acas Guide to Settlement Agreements.

Insufficient time allowed to accept the agreement

This recommends that the employer gives the employee 10 days to consider whether to accept the Settlement Agreement. And yet we receive many enquiries from anxious employees who have been presented with a Settlement Agreement, out of the blue, and have only been given a few days to find a solicitor to sign this off and return it.

Ignoring the background context

We are also still seeing a large number of Settlement Agreements where the offer made is in the context of a background of complaints about discrimination. The HR manager or Consultant do not seem to have warned their clients that they are not entitled to protected conversations in these instances. In some cases, the act of offering termination could be seen as an act of victimisation by the Tribunal. For example, where the employee has raised a grievance abut discrimination, prior to termination being offered.

Follow a fair process

We emphasise to our employer clients that Settlement Agreements should be used to terminate the employment contract in conjunction with following a fair process. For example, if there is a background of performance issues, the employee will be placed on a capability review. Or if there is a conduct issue, a disciplinary process should be instigated.
This means that, for example, if the employee argues that the offer to terminate is a discriminatory act or turns down the offer because they want more money – a fair process (which may or may not lead to dismissal) can still be followed.

Options – the ‘less than two years’ service’ option may not apply

Unfortunately, many employers still believe that as their employee has less than two years service they can dismiss at will. However, discrimination and other categories of dismissal such as whistle-blowing do not have any service requirement whatsoever.
Settlement Agreements can be requested by an employee and therefore putting options to an employee about how they might want to leave the business may be a safer route, as long as there is no undue pressure.
There are a number of case studies on our website for both employers and employees, which will help you understand how to ask for or offer a Settlement Agreement.

If you require advice about either signing off a Settlement Agreement or providing one then please contact our employment team on 01273 609911 or contact Fiona Martin, Head of Employment Law or email fiona@ms-solicitors.co.uk.


About the author

Martin Searle Solicitors


Founded in Brighton in 2004, Martin Searle Solicitors is an award-winning law firm providing specialist legal advice and support in employment law for employers and employees, as well as expert guidance and legal advice in community care law.

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