Settlement Agreements are legally binding contracts which can be used to resolve ongoing workplace disputes or they can be used to end an employment relationship. They are voluntary and generally include some form of payment to be made to the employee. In essence, once a valid Settlement Agreement has been signed by both parties, the employee is unable to pursue or make any Employment Tribunal claims.
What must a Settlement Agreement include?
Settlement Agreements are often lengthy and you may find that there are a number of clauses included within it. Such clauses could relate to your termination date, pension entitlements, waiver of claims by the employee, return of property etc.
However, there are specific conditions which must be included within Settlement Agreements to ensure they are legally compliant. A Settlement Agreement must adhere to the following conditions:-
- The agreement must be in writing.
- The agreement must relate to a particular complaint or proceedings.
- The employee must have received advice from a relevant independent adviser, such as a solicitor.
- The independent adviser must have a current contract of insurance or professional indemnity covering the risk of a claim by the employee in respect of loss arising from the advice.
- The agreement must identify the adviser.
- The agreement must state that the applicable statutory conditions regulating the settlement agreement have been met.
How can we help you?
Generally when you receive a Settlement Agreement, you will have a contribution towards your legal fees which is payable by your employer. Therefore, you may find obtaining legal advice is free to you.
When you receive a Settlement Agreement, will will ask you to make an appointment with us so that we can take your instructions. During our appointment we will discuss the following:-
- We will take a detailed background to the situation.
- We will advise you on any potential claims you may have.
- If we identify a potential claim, we will estimate the value of that claim.
- If a claim is identified, we cross reference the value to your Termination Payment and advise you on the amount you are being offered.
- We go through the specific clauses of the Settlement Agreement and advise you on their meaning.
Negotiating Settlement Agreements
As referred to above, it is common for some form of payment to be made to the employee as part of the Settlement Agreement. It is common for the party who has instigated settlement discussions to provide a draft settlement agreement and naturally, that party may draft the terms to be more favourable to them. It is therefore important that you negotiate on any key clauses or ask for certain clauses to be removed or modified, if you are unhappy with them before signing the Settlement Agreement. In addition, it is crucial to identify any potential claims available to you as you need to ensure the Termination Payment which is being offered adequately compensates you for waiving your Employment Law rights.
If you require any Employment Law advice or if you have received a Settlement Agreement, please do not hesitate to give us a call on 01522 440512.
Lucy Stones, Specialist Employment Solicitor
Lincs Law Employment Solicitors