FAQ's

A Settlement Agreement is simply a contract designed to bring employment to a close on agreed terms. When ending an employment, it is common for the employer to want to ensure that the employee does not move forward to an employment tribunal, so therefore there is usually a fair financial package, a reference and protection for reputations given in exchange for the employee agreeing not to bring any claims against the employers.

The employer must advise the employee to get independent legal advice for the settlement to be legally binding.

The main issues to consider:

• Do you have any potential claims?
• What they are worth?
• What are your career plans going forward?

Settlement agreements are given as a way of bringing employment to an end. Without speaking with you, we cannot advise about your circumstances. It could be for any one of a number of reasons. The most important thing for you is to get sound, practical and balanced advice.

You are required to take independent advice from a qualified solicitor on the terms and effect of a settlement agreement before it can be considered legally binding. Therefore, your employer needs you to take independent legal to ensure that you have received legal advice about all potential claims arising out of your employment and the termination.

• A breakdown of the payments you will receive when your employment contract ends and which sums will be free of tax
• Confidentiality clauses relating to your employment, information you have been party to during your employment and also confidentiality about the terms of the Settlement Agreement
• You will usually be required to promise not to make negative comments about your employer and your employer will agree not to make negative comments about your employment with them
• Restrictive Covenants – these are clauses that may stop you approaching previous clients on behalf of a new employer or stop you approaching your current employer’s staff. If you have restrictive covenants in your current employment contract, these will be repeated in the Settlement Agreement. However, new restrictive covenants may be added so you will need legal advice to ensure you are not hampered from new employment or starting up your own business, depending on your plans
• The Settlement Agreement will contain a list of statutes under which you will agree not to bring a claim. These will include the Employment Rights Acts, Discrimination Acts, etc. An employer needs to list these

If you are unsure of or have any queries regarding terms in a Settlement Agreement, call us or use the contact form on this page to discuss the specific terms.

Once you sign an agreement, it will be binding and you will not be able to change your mind without significant financial consequences, so you should be entirely sure that you are happy with the settlement terms before you sign.

The basic rules for a settlement agreement to be binding are:

• It must be in writing
• It must set out specific issues such as complaints or a legal claim
• The employee must have received independent legal advice on the terms and effect of the proposed agreement, as well as on its effect on the employee’s ability to pursue any claims in an employment tribunal

In most cases, signing a settlement agreement is a good idea because they tie up all the loose ends. In Employment Tribunals, the main part of any compensation award is future lost earnings, and focusing on your career plans should be a priority because, if you can find a job, that will be an asset going forward, whereas tribunals can be costly, stressful and you are not guaranteed to win or get an award that is more than the compensation you have been offered.

You are required to take independent advice on the terms and effect of a settlement agreement before it can be considered legally binding. We can help explore the circumstances leading to the settlement agreement being offered and advise you of your options.

Yes, you can, although as with any negotiation, the outcome is never guaranteed, but in some cases, it is worth the time and additional cost (to you) of doing so. There are various factors may strengthen or weaken your negotiating position, and we will explore the background to see what your position is. Some of these may include the following:

• The circumstances leading to the termination
• Has the termination process so far been amicable or acrimonious?
• Has the employer followed all the applicable rules for terminating your contract?
• What are the prospects of you finding another job quickly?
• The employer’s position to handle litigation: finance and personnel resources

Your employer may set a deadline for signing your settlement agreement but if it arises as a result of a protected conversation, you must be given at least 10 days to think about the offer and obtain advice before signing.

We prioritise your Settlement agreement and ensure that it is returned within 24 hours, and certainly before the deadline. If it is not possible to do so, we will communicate with your employer or with HR personnel and request an extension.

Although you do not have to accept a Settlement Agreement offered by your employer, once you have signed the document, it is seen as a full and final settlement of any potential claims you may have against your employer.

If all the required formalities are fulfilled, such agreements are legally binding and cannot be revoked without financial implications for you.

For these reasons, it is a legal requirement that you receive independent legal advice from a qualified solicitor who is adequately insured.

Yes. It is possible to approach your employer on a “without prejudice” (off the record) basis to investigate whether they would be willing to negotiate the terms of your exit from the business. This may be an appropriate course of action if you:

• are unhappy at work
• have received an unsatisfactory outcome to a grievance and feel unable to continue in the work environment
• face disciplinary action or performance management
• believe you may have grounds to bring a claim against your employer in the Employment Tribunal