What is a settlement agreement?
If you have agreed (or been asked) to leave your employment, you may have been offered a Settlement Agreement by your employer. A Settlement Agreement (previously known as a Compromise Agreement) is an agreement whereby you waive your rights to bring certain employment law related claims against your employer, and in return receive compensation.
What is in a Settlement Agreement?
There are certain criteria that a settlement agreement should follow. Settlement agreements are:
- Legally binding and therefore, the employee no longer has a right to bring a claim in a Court or Tribunal;
- Must be in writing;
- will likely cover a payment and/or reference clause;
- Usually include confidentiality provisions;
- May include restrictive covenants such as who you can and cannot work for after your employment has ended;
- Are entirely voluntary; and
- Can be offered at any stage of a relationship between employee and employer, or beyond.
Employers are usually the initiating party in any settlement agreement discussions as it forms a binding and contractual agreement that will terminate the relationship. There may be situations where a simple aspect of employment needs to be resolved. These issues can also be dealt with by a settlement agreement but would not necessarily terminate the relationship i.e. holiday pay entitlement.
Settlement agreements are dealt with on a without prejudice basis. This means that if the conversations are unsuccessful, the fact an employer was willing to settle in that form is not disclosable to a Tribunal. If a settlement agreement is offered to an employee, they should be given a minimum of 10 calendar days to consider the contents as discussed in the ACAS code of practice.
Why you need advice
If a settlement agreement is proposed, it must include any and all terms and particulars agreed upon in writing (including those which are of a statutory right) and then it must be taken to an independent adviser to ensure all aspects are clear and understood by the employee. The advice is provided to the employee but normally paid for by the employer. Once this has taken place, the advisor must confirm they have provided the advice and the agreement itself must name the adviser specifically.
How much will it cost?
The cost is traditionally paid for by the employer so it should cost you nothing at all. The common standard charge for such advice is £350.
We can help
We have a great deal of experience in assisting clients with Settlement Agreements. We have advised thousands of individuals in relation to settlement agreements and we have a great track record in increasing terms and payments. In the current climate we can offer a dedicated, thorough and quick turn-around of your agreement.
If you require any assistance with a settlement agreement or an employment law dispute, please telephone our team on 07720950920. We provide a free 20 minute consultation with new clients to help you decide the best way forward for you.