Settlement Agreements 2019-03-07T12:35:53+01:00

Settlement Agreements

Settlement agreements are often used to resolve disputes between an employee and employer. Disputes often arise during the course of disciplinary processes initiated by employers or grievances raised by employees.

If you have been given a settlement agreement, or are in the middle of negotiating one, give us a call to see how we could help. We can often arrange appointments at short notice, including weekends and evenings in central London and Wimbledon areas.

Resolving your dispute using a settlement agreement

Using a settlement agreement is a common way to resolve a dispute between employee and employer. It brings certainty, saves time and money for both sides of the dispute.

For employees, resolving their dispute through terms set out in a settlement agreement will mean that they know what they will get for agreeing not to sue the employer. They will save the money they would otherwise spend on legal fees and they will avoid the stress, time and money on taking their fight to an employment tribunal, where they might not win.

For employers, settlement agreements give them certainty that the employee cannot pursue claims against them in the courts.  They benefit from avoiding the costs and management time being diverted towards defending tribunal proceedings.

For a settlement agreement to be legally enforceable, employees must get independent legal advice on the terms and effect of the agreement from a solicitor. We can advise you on the terms of your settlement agreement.

Can the terms in a settlement agreement be negotiated?

It is normal to negotiate amendments to the wording in the initial draft settlement agreement presented to employees.

Whether an employer would move on the compensation payment on offer depends on the initial offer relative to the merits of the employee’s complaints and the value of any potential claim. Where there is a valid legal argument to justify an increase on the amount on offer, employers will usually consider the arguments in deciding what to do.

What are the benefits of a settlement agreement for dispute resolution?

For an employee, employment tribunal litigation involves substantial legal costs, time, stress, work and litigation risk in pursuing a matter to a tribunal. A claim lodged in an employment tribunal often takes several months to conclude. The settlement of a dispute through a settlement agreement therefore means the employee can avoid this. However, in return for the negotiated settlement, the employee must be prepared to accept a sum lower than that which could be expected in a successful employment tribunal claim.

For an employer, the settlement of a claim saves the legal costs of defending an employment tribunal complaint, management time and can be a means to mitigate reputational risk.

What exactly is a settlement agreement?

A settlement agreement is a legally binding contract between an employer and employee that sets out the terms on which the employer and employee agree to settle the dispute between them. Settlement agreements are used to agree the terms on which an employee’s employment will end or settle many other types of employment disputes, for example, discrimination and wages claims.

For a settlement agreement to be legally enforceable, the employee must receive independent legal advice from a solicitor, or other approved person, on the terms and effect of the agreement. For this reason, most employers will usually pay for the legal costs of the employee receiving advice on the terms and effect of the agreement.

What are the common terms in settlement agreements?

Settlement agreements often run into many pages. They contain numerous terms, including the following:

• the terms upon which the employee agrees to give up his or her right to bring employment tribunal claims against the employer – usually this is through compensation payment;
• the date by which the compensation payment will be paid;
• a clause setting out any outstanding wages due, including holiday pay;
• a clause where both employer and employee agree not to make critical comments about each other;
• a clause waiving the employee’s right to bring a personal injury claim (except for claims unknown at the time);
• a confidentiality clause; and
• an agreed reference;

Additionally, for a settlement agreement to be valid it:

• must be in writing;
• must relate to a particular complaint or proceedings;
• must be voluntarily entered into; and
• the employee must have received independent legal advice on the terms and effect of the agreement from either a solicitor or other authorised independent adviser;

How can Remedy Solicitors help you with your settlement agreement?

As specialist employment law solicitors in London, we are highly experienced in dealing with settlement agreements. We can advise and negotiate on your behalf on the terms of your settlement agreement. The principal at the firm, Ashok Kanani, with over ten years’ experience in the area of employment law, and can advise you on merits of any potential claim you may have and its value.

We can arrange appointments at short notice and at times to suit you. The fees for the advice on the terms in the settlement agreement are almost always paid for by the employer.