What Is A Settlement Agreement?

What Is A Settlement Agreement ?A Settlement Agreement between an employer and employee is a legally binding agreement usually offered shortly before or after the termination of employment. These were once 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.

When offered a Settlement Agreement, it is your employers responsibility to ensure that you have received independent legal advice before signing. Otherwise, the agreement will not be enforceable. This is done to ensure that you fully understand the implications of entering into the agreement. It is also your employers responsibility to ensure that they give you a reasonable amount of time to consider whether to accept the terms.

ACAS, the independent, advisory, conciliation and arbitration service, have written a Code of Practice on Settlement Agreements which provides useful guidance on how these should be offered.

For many, a Settlement Agreement, is a positive step forward. However, you may have been surprised by the offer of a Settlement Agreement, in these circumstances, you may not feel like you have any choice but to sign.

At Seatons, we will make sure that we take the time to listen to you, and find out the background of why you were offered the Settlement Agreement. We do this in order to properly advise you as to whether it is in your best interest to sign.

There are some circumstances where we may be able to negotiate a larger sum of compensation, we may also be able to agree better terms such as a positive reference.

What Are The Benefits Of Signing A Settlement Agreement?

A Settlement Agreement can be an efficient and pragmatic way of receiving a settlement payment. They allow for a clean break with your employer and will allow you to move on from your past employment.

You will have complete piece of mind, as you will not have promised or warranted to do anything which might mean you are in breach of contract. Employment Settlement Agreements also allow for a clean break in your employment relationship

An expert solicitor will be able to check that the sum of money you are receiving is fair compensation and, if not, you will be given assistance negotiating a higher sum. It allows you to circumvent formal procedures such as a capability, disciplinary or redundancy process or face the expense and uncertainty of issuing Employment Tribunal proceedings.

What Are The Risks Of Signing A Settlement Agreement?

When you sign a Settlement Agreement, you waive certain rights that come with your contract of employment. For example:

  • You will not have the opportunity to keep your job through a fair workplace procedure such as capability, disciplinary or redundancy restructure process.
  • You may be terminating your employment for a much lower amount than if you were to refuse, and to make a formal claim against your employer.
  • Post-termination restrictions may be placed on you by the employer which may affect your ability to work in the future.
  • There are small stipulations which may entitle you to a much larger settlement, for example a negotiation may need to take place to see whether tax is payable.
  • Certain contractual benefits may be lost in this process. Examples of this could be a final salary pension or a permanent health insurance.
How Much Will It Cost?

Your employer will have included a clause in the Settlement Agreement, which sets out fixed contribution towards the cost of obtaining independent legal advice.

In most cases, this will be enough to cover all of your legal costs. However, there are some cases, where you will be expected to cover some of your fees. These are circumstances where we are negotiating with your employer for a higher sum of money.

If your Settlement Agreement needs amendments, we will ask the employer for a higher contribution and they should agree to this.

How We Will Help

Our expert Solicitors, will be able to give you the help and advice that you need so that you can move on, knowing that you have the best Settlement Agreement for you.

We will give you expert, tailored and independent advice. We are known as the Friendly Professionals and this is at the heart of everything we do. We will give you the help and advice that you need at, what can be a very difficult time.

We understand that this can be a very troubling and often emotional time for you. We will always take the time to sit with you and to fully explain the legal implications of your Settlement Agreement. We don’t use unnecessary legal jargon and we will work hard for you, the client.

If you have received a Settlement agreement and you are not sure where to turn, then look no further. Call Seatons today on 0800 3 10 11 12.

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