Settlement Agreement Solicitors

An employment settlement agreement is essentially a legally binding contract between an employer and their employee, which usually brings the employee's employment to an end and or settles a workplace dispute or  other claims (including unfair dismissal claims) and thereby relieves the company of any liability or future legal action.

Examples of a workplace dispute could be when an employee is discriminated against, unfairly dismissed, or has their employment contract breached.

In order to avoid this situation, along with any associated legal costs and any potential damage to the reputation of the employer's brand, the company might be keen to offer the employee a financial settlement.

If the employee signs the settlement agreement, then they will receive that amount of money but will waive their right to bring an employment claim against the company.

Conversely, there does not need to have been a dispute.

An employer and employee can have a 'without prejudice' conversation. This means any discussions are inadmissible if the employee were to bring an unfair dismissal claim or another employment-related claim.

An employer may want to avoid having to follow the usual disciplinary or redundancy procedure, or an employee may want to leave the company on amicable terms and have an 'elegant exit' before the employment relationship becomes strained.

A compromise agreement is another term for a settlement agreement.

Compromise agreements are legally enforceable contracts established between a company and an employee, wherein the employee consents to let go of potential claims while the employer usually commits to providing financial compensation.

Occasionally, additional benefits may be incorporated into the compromise agreement for the employee's advantage, such as a mutually agreed upon reference letter.

Because signing a settlement agreement will mean that you lose the right to bring a legal claim against your employer, you need to seek legal advice from an independent solicitor (or other qualified person) to ensure that the settlement agreement is legally valid.

There are often pros and cons to accepting a settlement agreement, and these very much depend on your individual situation.

You should not feel pressured to sign a settlement agreement quickly: it is often better to go and take time to consider the offer and take legal advice.

You are under no obligation to answer immediately, and while the employer may be able to withdraw the offer, they most likely will be as eager for a resolution as you are.

Keep in mind that the ACAS Code of Practice on Settlement Agreements recommends that employers provide at least ten days for employees to consider their offer, and this is the minimum timescale in the context of a 'protected conversation'.

Getting legal advice can help you understand whether you wish to accept or reject the offer and whether there is any scope to improve the offer or its terms so that they better suit you.

We can provide you with an expert opinion on:

• Whether the settlement agreement is fair;
• What a reasonable settlement agreement is, in the context of your circumstances;
• Whether there are any other options available to you;
• The strength of your case, whether you would likely win if you didn't sign the settlement agreement and pursued a claim in the Employment Tribunal instead; and
• The potential value of that claim.

If your employer offers you a settlement, don't be afraid to make a counteroffer.

Employers often leave room within their budget to increase the offer if necessary. This, of course, means that, yes, there may be scope to negotiate a settlement agreement.

The key to a good negotiation, however, is not to try and 'beat' the other party, which will only create ill will and make the negotiation considerably more difficult. Instead, you should seek to reach an outcome that everyone is happy with. It will also make it that much easier and faster to come to an agreement.

Consider what is reasonable: What are you giving up? Do you have a strong claim? How long may it take you to find a new job on a comparable salary? How much can the organisation afford? Essentially, what is a reasonable settlement agreement in the circumstances of your case?

One very useful step is to have an idea, in your mind, of how much you would be willing to accept and how much you would ideally aim for. You will likely end up settling somewhere in between.

If you need settlement agreement advice, speak to a settlement agreement lawyer from Myerson Solicitors.

Because you need to go through the terms of the settlement agreement with an independent and qualified lawyer, there will be a cost associated with this.

The cost varies depending on the complexity of the agreement and whether you are looking for any assistance in negotiating the terms and the value of the offer.

In most circumstances, because the employer is aware that you are obliged to get independent legal advice, they will contribute towards some or all of your legal fees.

You should check the terms of the settlement agreement for details as to how much your employer is prepared to contribute towards your fees, if any.

For more information, please read our Guide to Settlement Agreements.