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Settlement Agreements

What are they?

A Settlement Agreement is usually used when an employer wishes to terminate a contract of employment on terms that are mutually agreeable by both parties. The main purpose of having a Settlement Agreement in place is to eliminate the possibility of the Employee bringing any claims against the company either to an Employment Tribunal or to a Court, for money. It is usual for Settlement Agreements to be used in redundancy cases or where the employer does not want to follow a procedure that could take contact usquite some time or they would have to conduct performance reviews. There may also be outstanding grievances by the Employee and the employer wishes to resolve the grievances without having to actually have meetings and a conclusion. This is one way that an employer can prevent a claim for constructive dismissal, discrimination and unfair dismissal.

A Settlement Agreement used to be known as a Compromise Agreement. Practically speaking, some employers still refer to them as Settlement Agreements. The main difference is that in a Settlement Agreement, discussions about the offer of such an agreement cannot be used in an ordinary unfair dismissal claim unless there has been improper behaviour by the employer.

It is usual for the Employer to call the employee to a meeting on a ‘without prejudice’ basis. This means that any discussions that take place in that meeting cannot be used or referred to in a Court of law or in proceedings. The Employer will usually have a conversation with you and issue you with a Settlement Agreement. In order for an employee to find out if the Settlement Agreement is favourable to them or not, it is always better to seek advice. This is because what your employer is offering you, may not be favourable to you and you may well be able to secure more compensation if you went to Tribunal. However, it is highly unlikely that anyone will be able to discuss this with you over the telephone and you will need an initial meeting to discuss your potential claim. Your employer may threaten to dismiss you if you do not accept the Settlement Agreement but this type of behaviour is likely to constitute improper behaviour and the Tribunal can be told of this behaviour at a later stage.

There are various headings of compensation in a Settlement Agreement which range from notice pay, bonus, commission, and pension, medical insurance, life insurance and pay in lieu of notice. There are also various provisions in there regarding confidentiality, non-poaching and restrictive covenants. You may also wish to negotiate a reference, but it is important that you discuss any post- termination covenants with a professionally qualified individual.

How much will it cost?

Your employer usually pays for the advice taken in connection with a Settlement Agreement. The likely cost of you obtaining advice on a Settlement Agreement ranges from around £400 + VAT onwards.

We have our award winning Employment Law Solicitor who will be happy to advise you, assist you and sign your Settlement Agreement (if appropriate).† We act for Employees and for Employers.

We also offer a same day service for Settlement Agreements, subject to reasonableness. Our Solicitor will advise you of your options, whether or not you have any claims arising and if you are likely to win more compensation in Tribunal. We understand contact usthat some local Firms are simply booking clients in and signing the agreements as they are not experts in Employment Law but actually practice in other areas such as conveyancing. They are not able to apply the vast array of employment legislation to your situation because they do not have the knowledge. Don’t just instruct anyone, instruct an employment lawyer. Our Solicitor has over 18 years experiencing purely specialising in employment law.

Legal services are available to clients in Bedworth,
Burton on Trent, Nuneaton, Coventry and Birmingham.

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