What is a Settlement Agreement
Settlement agreements are legally binding contracts. They’re usually negotiated and entered into when an employee leaves work. They’re used to provide certainty about the terms under which the employment relationship will come to an end.
Settlement agreements waive claims that an employee may have against an employer. In return for compensation, the employee agrees not to bring any work-related claims against their employer in an Employment Tribunal or otherwise. Where such potential claims exist, entering into a settlement agreement mitigates risk for the employer and protects it from potential liabilities.
For an employee, waiving their rights also provides certainty. It brings closure to protracted disputes and allows the employee to exit a business on mutually agreed terms- that are potentially more favourable than would be otherwise.
The terms of the settlement will depend on the circumstances. It can take multiple rounds of negotiation before the agreement is finalised. Settlement Agreements are not legally binding without obtaining legal advice first. The law requires that for a Settlement Agreement to be a valid and enforceable contract, an employee must receive independent legal advice from an independent legal adviser i.e. a solicitor.
Negotiating the terms is done on a “without prejudice” basis. This means that details of the negotiation can’t be used by either party in court in the future if the negotiation fails and a claim proceeds. This allows the parties to be able to negotiate freely.
How we can help
We regularly advise, negotiate and conclude Settlement Agreements on behalf of both employers and employees.
Employers
We work with you to swiftly assess risk and take decisive action to help protect your business from the financial and reputational liabilities that arise from potential Employment Tribunal claims. Claims against employers can arise in various situations like:
- Workplace disputes
- Restructuring and redundancy exercises
- Dismissal situations
- Disciplinary and grievance procedures.
We will identify any claims that an employee may have against you. We’ll set out the practical steps you need to take to mitigate risk, ensure confidentiality and protect yourself from competition once the relationship ends. We provide clear legal advice, with your commercial interests at the forefront of our recommendations.
Our service includes:
- Identifying and advising on the merits of claims and the risk to your business;
- Recommendations for the financial and non-financial terms to be included in the Agreement
- Drafting the settlement agreement
- Advice and guidance on how to have “protected conversations” with the employee
- Negotiating the settlement agreement with the employee’s solicitor.
- Advising on how to utilize settlement agreements in restructuring and collective redundancy situations.
- Drafting group settlement agreements.
Employees
We know that getting the best deal is the crux of the matter. We work with you at every stage to make sure your best interests are protected, ensuring that you only ever waive your rights under terms that are fair to you.
Our services include:
- Identifying and explaining to you the claims you may have and advising you of the merits;
- Taking your instructions on your employment history to understand what else you may be entitled to;
- Assessing the financial components of the offer to make sure the compensation being offered to you is fair and reasonable;
- Explaining the terms of the offer made to you and advising on its implications;
- Reviewing the draft settlement agreement and advising on amendments in your favour;
- Robustly negotiating the terms of the settlement agreement with your employer to achieve a better financial offer or other more favourable terms.
If you are an employer looking to exit an employee on a settlement agreement or an employee who has been offered a settlement agreement, please ring us on 01753 861 115, email us at enquiries@charles-coleman.com or fill in our contact form and we will be happy to help.
