What is a settlement agreement?

A settlement agreement is a legally binding agreement between an employer and employee. Usually, the employee accepts a sum of money in return for agreeing not to bring certain legal claims against the employer.

Settlement agreements are most often used to end an employee’s contract of employment on agreed terms, but they can also be used to settle a dispute in an ongoing employment relationship. The agreement waives the right to bring a claim against the employer in the future.

Properly drafted settlement agreements are legally binding. The principal behind a settlement agreement is that the employee has received independent legal advice before signing the agreement and understands the terms of the agreement and its effects upon their ability to present a complaint to an employment tribunal.

The employer would usually contribute towards the cost of the independent legal advice.

If you’ve been offered a settlement agreement by your employer, book an appointment to speak to our expert employment lawyers for quick, effective advice on the term and effects of the agreement. Call us on 0330 041 5869 or request a call back.

Can an employee request a settlement agreement?

Usually, the employer will offer the employee a settlement agreement, though there are circumstances upon which you may request one yourself. You may be experiencing issues which have made you consider claiming for constructive dismissal. In such instances, a settlement agreement may offer you a more swift exit from the organisation with the maintained ability to claim financial compensation.

Your employer may already be aware of the overriding issues that have influenced your decision and most are willing to oblige to help you leave without having to take the matter further to employment tribunal.

We’re here to offer help and advice on any workplace issues you may be experiencing. Call us on 0330 041 5869 or request a call back.

What should you ask for in a settlement agreement?

Other than financial compensation, employees can negotiate other terms in their agreement which benefit their interests. For example, it may be important to you to ensure your employer will provide a reference to future employers. Before signing the agreement you can agree the wording of the reference as well as specify a period within which the reference must be provided.

Additional request can be handled during negotiation, allowing employees to put forward their personal circumstances and how workplace conditions and treatment have affected their time of employment. Presenting such matters may entitle you to larger sums of compensation and allow you to retain items associated with your employment.

It’s important to note that employees should receive independent legal advice before signing their settlement agreement in order to fully understand the terms and its effect upon their ability to present a complaint to an employment tribunal.

For independent legal advice on your settlement agreement call us on 0330 041 5869 or request a call back.

What happens if a settlement agreement is breached?

If you sign a clause that you’ve breached or will breach in the future, your employer may argue they no longer have to fulfil their side of the agreement. You can be refused the settlement payment or your employer may try to reclaim money that has already been paid as a result.

The agreement will usually contain a confidentiality clause which restricts you from speaking negatively about your employer and could also include a restrictive covenant which prevents you from working for a direct competitor for a particular length of time. It’s important to thoroughly review these terms to ensure you’re not accused of breaching the agreement.

Get independent advice on the terms and effects of your settlement agreement and make sure that it’s on favourable terms for you. Speak to one of our expert employment lawyers today. To book an appointment, call us on 0330 041 5869 or request a call back.

What happens if you don’t sign a settlement agreement?

If you choose not to sign the agreement, your lawyer can advise you of the consequences, which may include termination of your employment. You should also be aware that your employer will not make a contribution to your legal fees in you don’t sign.

If you decide not to sign your settlement agreement and wish to pursue a legal claim against your employer, there are strict time limits in place. The time frame to pursue an employment claim is usually three month less one day from the date your employment terminated, but you may need to lodge a claim quicker if, for example, you complained of unlawful discrimination before your employment ended.

To pursue a claim, you’ll first need to notify ACAS, who then offer early conciliation to try to resolve the dispute. If the claim doesn’t settle, ACAS will issue a certificate to confirm that the mandatory conciliation process has concluded.

For advice about pursuing a claim against your employer talk to our specialist employment lawyers on 0330 041 5869 or request a call back.

Why might you receive a settlement agreement whilst off sick?

If you’ve been absent from work due to a terminal illness, you’re protected against disability discrimination under the Equality Act 2010, though instances may occur where you’re no longer able to work in your current role due to the deterioration of your health. You may be able to resign in return for an ex gratia payment accompanied by a settlement agreement to prevent you from bringing a disability discrimination claim against your employer.

Seeking legal advice before signing a settlement agreement is an essential requirement. Our employment law specialists will ensure you receive a fair settlement with assistance and expert advice on negotiating your terms. Call us on 0330 041 5869, or request a call back.