Are you facing redundancy or an employment dispute with your employer and need legal advice on the terms of a settlement agreement (formally known as compromise agreements).
Employment disputes are commonly resolved using a settlement agreement, and at Consilia Legal we have a team of expert employment law solicitors who can offer specialist legal support with settlement agreements. Equally they can be used when an employee receives an enhanced payment on a redundancy exercise.
Contact our team today and we can provide expert advice and guidance relating to your employment dispute and can help produce a settlement agreement that suits your individual needs and circumstances as an employee.
What is a settlement agreement?
A settlement agreement is a legally binding contract formed between an employer and an employee. It can be proposed by either party at any stage of an individual’s employment.
A settlement agreement is most commonly used to end employment on agreed terms, or to resolve an ongoing dispute, such as a dispute over holiday pay or maternity pay. An important element of a settlement agreement is that in exchange for certain terms regarding their departure, or ending a dispute, an employee agrees to waive their rights to bring any claims covered by the agreement to an employment tribunal or civil court.
When would you use a settlement agreement?
There are many different scenarios in which a settlement agreement can be used, but the most common are:
- To facilitate a smooth exit from employment with agreed terms.
- To resolve ongoing disputes with an employer, such as holiday, sick or maternity/paternity pay, or wage disagreements.
- Frequently used in redundancy and TUPE scenarios.
How does a settlement agreement work?
It is important that a settlement agreement meets certain criteria which makes it valid and therefore legally binding. These conditions include:
- It must be in writing.
- It must be signed by the employee.
- The employee must have received independent legal advice on the contents of the agreement from a specialist employment law solicitor, or a certified and authorised trade union member. This advisor must be insured and must be identified in the agreement.
- The settlement agreement must relate to a specific complaint or proceedings.
- The agreement must state that the statutory conditions regulating settlement agreements have been met.
Please read our helpful 7 Steps To Success With Settlement Agreemeents for more information.
Considerations when entering into a settlement agreement
Negotiation – There is usually a negotiation process during which both sides can state their proposals or counter-proposals, before an agreement is reached. Or until it is decided that no agreement can be reached.
Voluntary – Entering into a settlement is voluntary for all parties. Neither party has to agree the terms of a settlement agreement or even enter into discussions about them. Until the agreement is signed by both parties, either party can withdraw from discussions.
Confidentiality/Off the record – Conversations about settlement agreements are normally conducted on a ‘without prejudice’ basis, ensuring that conversations remain confidential in future legal matters. Therefore, where the parties are unable to reach an agreement, the settlement discussion cannot usually be referred to as evidence in an employment tribunal or in other court proceedings.
Time limits – If no settlement agreement is signed or finalised, the employee must adhere to strict deadlines when filing legal claims on the matters involved in the settlement agreement discussions:
- For most claims, within three months minus one day from the end of employment.
- For discrimination claims, within three months minus one day from the date of the alleged discriminatory act.
If you are in without prejudice discussions whilst considering bringing a claim against your employer/former employer, you should consider starting ACAS Early Conciliation Proceedings in order to ‘stop the clock’ on the Tribunal deadline.
Legal Fees – It is not a legal requirement to do so but often Employers will make a contribution to an employee’s legal fees. The average contribution to legal fees from employers is £500 plus VAT. As part of negotiations, you can request an increase in the contribution from your employer.
What can you request from a settlement agreement?
We would expect a settlement agreement to include the following terms:
• Payment of salary and benefits until an agreed termination date;
• Payment in lieu of notice (if you are not required to work your notice period);
• Payment in lieu of accrued but untaken holiday;
• An ex-gratia payment – this is a payment for compensation of loss of employment; and
• Mutual confidentiality and non-derogatory comments obligations.
You can make requests that you would otherwise not be awarded in an Employment Tribunal:
• A reference from your employer;
• To retain certain items of company property;
• Outplacement Support; and
• A company announcement regarding your departure.
Professional employment law solicitors to help with your settlement agreement
At Consilia Legal we have a team of highly experienced and professional settlement agreement solicitors based in Leeds, Harrogate, London, York and Sheffield. We can help individuals in all employment issues, and in this case can:
- Help you understand your legal rights as an employee
- Help to draft a binding settlement agreement
- Negotiate with an employer on your behalf to secure the terms that suit you
- Establish evidence to support your case
- Communicate with your employer throughout proceedings
Speak to our employment law solicitors at Consilia Legal for expert help and support with settlement agreements as an individual.We also have a useful settlement agreement Q&A to help answer some of the most common questions.
Please call 0113 322 9222 or email enquiries@consilialegal.co.uk
