Settlement Agreements for Businesses

Are you a business owner or employer facing a dispute with an employee? It is common for such disputes to be resolved using a settlement agreement.

At Consilia Legal, we can support you as a business owner and employer with specialist legal advice on how to create a settlement agreement that is legally compliant and includes terms that suit your business.

Speak to our team today for expert advice and support relating to this employment dispute and ensure that you navigate this process in the right way and with a result that benefits the business.

What is a settlement agreement?

A settlement agreement is a legally binding contract formed between an employer and an employee.  They are most commonly used to protect a business when ending the employment of an individual on agreed terms, or to resolve an ongoing dispute with an individual. 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 his or her rights to bring any claims covered by the agreement to an employment tribunal or civil court. A settlement agreement reduces the risk for business against future claims in these circumstances.

When to use a settlement agreement

Businesses would use a settlement agreement to end the employment of an employee on terms that suit all parties, so in this situation a settlement agreement formalises an understanding that is mutually agreed upon by the employer and the employee. A settlement agreement can also be used to resolve an ongoing dispute, in terms of avoiding claims, and to avoid the costs and potential adverse publicity of a dispute going to tribunal or civil courts. Such disputes can include issues over redundancy situations, disciplinary issues, performance issues, workplace issues (such as harassment or discrimination grievances) and long-term sickness absence.

What makes a settlement agreement legally valid?

In order to be legally binding, a settlement agreement must:

• Be in writing and be signed by the employee.
• Be agreed by the employee having received independent legal advice on the contents of the agreement from a specialist employment law solicitors, or a certified and authorised trade union member. This advisor must be insured and must be identified in the agreement.
• Relate to a specific complaint or proceedings.
• State that the statutory conditions regulating settlement agreements have been met. Employers should also check that settlement agreements comply with current laws and best practice.

The benefits of a settlement agreement for businesses

For a business, the benefits of a settlement agreement include:

• Avoiding legal action and preventing lengthy union discussions.
• Providing a legal contract that can be upheld in court in the future, should it become necessary, just like any other contract.
• Providing legal certainty on the terms under which employment agreements are made, to prevent future claims and further disputes. This also ensures disputes and employment terminations can be managed easier in terms of HR and compliance.
• Minimising the adverse impacts of lengthy legal disputes in terms of time spent, bad publicity and financial costs.
• Confidentiality clauses can protect sensitive information and the reputation of the business.

Professional employment law support for businesses negotiating a settlement agreement

When facing an employment issue involving a termination of employment or a workplace dispute, it is essential that your business has expert legal representation. As well as promoting fair and reasonable practices in resolving such disputes, it is important that the business acts compliantly and professionally. At Consilia Legal we can provide your business with specialist legal support with settlement agreements to:

• Help you understand your legal position and your duties as an employer.
• Help to draft a binding settlement agreement that benefits the business, is fair and reasonable and protects the business against the risk of future claims.
• Negotiate with an employee on your behalf to secure the appropriate terms for the business.
• Help to mitigate risk in terms of how an employment dispute can damage a business.
• Communicate with your employee throughout proceedings.

Need more information? Read our settlement agreement Q&A for employers.

Our employment law solicitors at Consilia Legal can provide specialist legal advice relating to settlement agreements and help to protect your business both now and in the future.

Call our team today on 0113 322 9222 or email enquiries@consilialegal.co.uk