January 12, 2019
Case Studies
Employment Law
Our settlement agreement lawyers are experts in advising employees and employers on settlement agreements. Our settlement agreement lawyers are Marc Jones and Imogen Finnegan who are experts in employment law matters. If your employment is coming to an end, it can be an uncertain and confusing time. Figures from the World Economic Forum suggest that 7.1 million white-collar jobs could be made redundant by 2020. If this happens to you, your employer may offer you a settlement agreement. This blog explains what a settlement agreement is and gives you practical tips on how to manage one.

Settlement Agreement Lawyers – The basics of the contract

Formerly known as a compromise agreement, a settlement agreement is a legally binding contract made between an employer and an employee used to resolve an issue in the workplace. Most commonly used in the case of redundancy or when an employee’s employment is being terminated, settlement agreements lawyers are often tasked to draw up a contract to provide an alternative to the employer and employee going to the employment tribunal. In most settlement agreements an employee will formally agree not to pursue certain claims against their employer in return for a termination payment of some description. The settlement agreement will contain a clear breakdown of the payments which have been agreed and will also state whether any of them are to be made to the employee free of tax. Usually, the first £30,000 of compensation will be tax-free. Once a valid settlement agreement has been signed, an employee will be unable to make an employment tribunal claim about any of the claims listed in the agreement. It is recommended that settlement agreement lawyers draw up the contract because if the agreement is unclear or misses certain clauses the agreement reached between the employer and employee can unravel.

Settlement Agreement Lawyers: Practical tips

Know how much you’re entitled to (roughly!)
If you’ve received a financial offer, you need to know whether or not it’s fair. If you have a strong potential claim against your employer, then you are more likely to get a higher termination payment. If you do not, then there is not much incentive for your employer to pay you a large sum. You should consider what potential claims you could bring, how likely it is that those claims would succeed, and how much you would be likely to recover if they did. The length of time that you have been working for your employer may also be taken into consideration. Our settlement agreement lawyers can advise you on what you are entitled to.
Don’t be scared to negotiate
Before entering into settlement discussions with your employer, you should take some time to work out what you want to achieve and how you’re going to do it. Think about what’s most important to you and similarly, what you can do without. It may be helpful to think outside the box when negotiating a settlement agreement and consider whether there are any non-financial terms that you would like to include. A good, agreed reference is often part of a settlement agreement. Our settlement agreement lawyers are experts at negotiating settlement agreements.
Try and reach a deal
Remember, settlement agreements are voluntary. You do not have to enter a settlement agreement and you should be given a reasonable amount of time to consider the proposal. According to the ACAS code of practice, you should get a minimum of 10 calendar days to consider a settlement agreement, unless you and your employer have agreed otherwise. There are, however, several advantages to reaching a settlement agreement, particularly if the alternative is going to the employment tribunal. A settlement agreement provides certainty, is confidential, and can be concluded within only a couple of days. In contrast, bringing a claim to the employment tribunal may take months, be costly, and you may not come out with the deal that you were expecting.
Get independent legal advice
Settlement agreements can often be long, complicated documents. Our settlement agreement lawyers can help you consider whether you’re getting a good deal and whether you have any grounds for a claim against your employer. Settlement agreement lawyers can also help with the negotiation process. Getting independent legal advice is also a statutory requirement. An employee must receive advice on the terms and effect of a proposed settlement agreement, as well as its effect on the employee’s ability to pursue their statutory rights. If you do not, your settlement agreement will not be valid.

Settlement Agreement Lawyers: The legal bits

The exact contents of settlement agreements are largely down to the parties and will vary depending on what each party wants. Usually a settlement agreement will set out the arrangements on termination, details of the settlement payment, and provisions on confidentiality. If you breach a confidentiality clause by speaking out about the agreement and/or its terms, your employer will have the right to bring a breach of contract claim against you and you may have to pay them damages. For a settlement agreement to be valid, it must also comply with six statutory requirements. These are: • The agreement must be in writing. • The agreement must relate to a particular complaint or to particular proceedings. • The employee must get legal advice from settlement agreement lawyers on the terms and effect of the agreement and its effect on the employee’s ability to pursue any rights before an employment tribunal. • The settlement agreement lawyers must have a current contract of insurance, or professional indemnity insurance, covering the risk of a claim against them by the employee in respect of the advice. • The agreement must identify the settlement agreement lawyers. • The agreement must state that the above conditions have been satisfied. The most common claims that employers will seek to protect themselves from are claims of discrimination, unfair dismissal, wrongful dismissal, breach of contract and harassment. An employer will want to waive as many claims as it can, but there are some claims which cannot be waived. These include certain statutory employment rights claims, claims in relation to accrued pension rights, and claims for personal injury that might be caused in the future. Whether you’re an employer or an employee, it is in your best interests to ensure that you have a well negotiated and well drafted settlement agreement. If you have any questions about settlement agreements please contact our settlement agreement lawyers Marc Jones or Imogen Finnegan.