Just received an employment settlement agreement? Our nationally recognised employment team led by Paul Grindley, provides specialist advice on Settlement Agreements (formerly known as Compromise Agreements) in the UK.
Paul and his team are always happy to talk through any queries you may have on your employment settlement agreement or the negotiation process. They offer same day advice, on whether the settlement offered is appropriate, and if not what your options are.
Most employers will pay the legal fees in order to allow an employee to seek advice on a proposed employment settlement, so often all your legal costs are covered. We are currently assisting a number of employees from Asda, British Gas, Morrisons and Vodafone with their settlement agreements.
Settlement agreement negotiations take many different forms. Here are some examples of how they occur and what is likely to happen as a result.
Redundancy consultations often lead to the offer of a settlement agreement. The employer needs to reduce overheads and probably has a legitimate reason for selecting certain employees to be considered for redundancy. During this process the employer may ask if anyone would consider voluntary redundancy, or upon finalising who may be made redundant may offer a settlement agreement.
Why do employers offer settlement agreements?
A settlement agreement enables an employer to make a payment to an employee knowing that they can not (save for very specific circumstances) come back and claim more. This means it gives the employer certainty, and therefore must be worth their while paying more than the basic amount provided for in redundancy law. As a result this often allows for negotiations to take place to agree the figure to settle your compensation for losing your job.
What are settlement agreement negotiations?
They are talks between employee and employer seeking to agree the amount of money, type of reference and restrictions on working. There are occasions when the removal of restrictive covenants is more important than the money itself. An example might be where the employee wishes to set up their own business which might be in breach of their employment contract.
How much should the settlement agreement be when offered in a redundancy situation?
There is a usually a big difference in payment if the settlement is offered on a voluntary basis or at the the end of the redundancy process. If it is voluntary, the figure is often significantly more than you could expect if made redundant. Please see our redundancy calculator to compare the two figures. It may even be possible to negotiate a higher settlement agreement figure, as the reason for offering voluntary redundancy is to ensure the smooth running of the business. Any redundancy consultation causes uncertainty and potentially affects productivity.
However if the settlement agreement is made after the redundancy consultation, the figure offered is usually only a little more than the statutory minimum redundancy amount. In these cases, if is often worth negotiating, as your employer has shown their hand by wanting to have the protection of a settlement agreement, and that must be worth more than just a small amount more than the statutory minimum.
There are also occasions when an employer has done something so serious to potentially breach an employee's contract, and they have a right to bring a claim against them. A negotiated settlement agreement enables both sides to agree a compensation package for the employee losing their job and therefore prevents the cost and uncertainty of an Employment Tribunal.
Likewise an employee may have acted in someway that was so serious that an employer could consider them to have breached their contract and dismiss them as a result. A negotiated settlement agreement in this case would enable an employee to have some payment, and still provides the employer with certainty.
Whatever your situation, it is important to obtain the best legal advice when commencing settlement agreement negotiations. Our team of expert employment lawyers, led by nationally recognised Paul Grindley is here to help you. Call 0113 218 5459 for a free initial no obligation chat or email firstname.lastname@example.org.
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.
Although you do not have to accept a Settlement Agreement offered by your employer, once you have signed the document, it is seen as 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 agreement and cannot be revoked.
For these reasons it is a legal requirement that you receive independent legal advice from a qualified solicitor who is adequately insured.
You are not obliged to enter into a Settlement Agreement if you do not wish to do so. If you would like to negotiate the terms of the Settlement Agreement it is possible to make a counter offer. If negotiations are unsuccessful, depending upon the circumstances, the employee can decide whether they wish to issue a claim in the Employment Tribunal. The time limit for bringing such a claim is three months less one day from the date of termination/last act of discrimination. If the discussions regarding the Settlement Agreement are “off the record” they cannot usually be referred to in any legal proceedings.
Although it may appear that Settlement Agreements only benefit employers, with expert advice from our Settlement Agreement solicitors here in Leeds, you can ensure that all issues between you and your employer are resolved and you receive a fair and appropriate settlement.