What Is A Settlement Agreement And Do I Need To Take Legal Advice?
Here at Lincs Law Employment Solicitors, we have seen an increase in the number of our employee clients being offered a Settlement Agreement. Unfortunately, our clients do not always understand what a Settlement Agreement is and, more importantly, what their rights are. Please read on for more information.
What is a Settlement Agreement?
A Settlement Agreement is a specific type of legal contract between you and your employer.
A Settlement Agreement will (usually) do the following things:
- It will bring your employment to an end.
- It will set out certain financial and non-financial incentives you will receive from your employer upon your employment ending.
- It will confirm that once you have signed the Settlement Agreement you are prohibited from bring various employment law claims and actions against your Employer.
- It may set out further restrictions that your employer expects you to comply with once your employment had ended.
A Settlement Agreement can only be entered into on a voluntary basis by both parties. This means that you cannot be forced or made to sign a Settlement Agreement.
If your employer invites you to a meeting which they call a ‘Protected Conversation’, this may be an indication that they are planning to discuss your employment coming to an end, and often, a Settlement Agreement. For more information on Protected Conversations please see our blog https://lincslaw.co.uk/blog/my-employer-has-asked-for-a-protected-conversation-what-should-i-do/
Why Has My Employer Offered Me A Settlement Agreement?
An employer will request that you enter into a Settlement Agreement when they consider that the working relationship between you both should come to an end.
If your Employer is going through a redundancy procedure, they may offer those candidates who have been chosen for redundancy a Settlement Agreement.
Likewise, if you are having difficulties or problems at work in respect of performance, grievances or misconduct, your employer may suggest your employment is terminated by a Settlement Agreement rather than going through a performance review or disciplinary action.
What is important to remember is that you cannot be forced to enter into a Settlement Agreement. Therefore, if you chose not to sign your employment will continue until your employer formally dismisses you.
Can I Ask My Employer For A Settlement Agreement?
Yes, you can start a conversation with your Employer to discuss a Settlement Agreement, but it is important that you enter into these discussions in the correct way.
Whenever you are negotiating a settlement package it is important that these discussions are always ‘Without Prejudice’. Without Prejudice discussions are conversations that neither party can refer to later before a Judge, Tribunal or Court. Therefore, such discussions and correspondence allow all parties to have honest and frank exchanges without being concerned that they might effect their claim later on.
If you email your employer to discuss a Settlement Agreement, it is important to ensure that the top of your email has the wording “Without Prejudice & Subject to Contract”. Likewise, if you want to enter into these discussions verbally, you need to ensure that you start your conversation by saying “This is a without prejudice discussion/conversation”.
Once it has been asserted that these discussions are Without Prejudice, you can then discuss with your employer your reasons for wanting to leave your employment and make suggestions regarding your exit package . Please note, even if you start discussions you are still not under any obligation to sign the Settlement Agreement. It is still a requirement for you to take independent legal advice and enter into the Settlement Agreement voluntarily.
If your employer refuses to enter into negotiations or you cannot agree the terms of a Settlement Agreement, then your employment will simply continue as if the Without Prejudice conversations never happened.
Do I Need To Take Independent Legal Advice?
For a Settlement Agreement to be a binding and legal document you must take independent legal advice on the Settlement Agreement you have been offered before you can sign it.
The reason for this requirement is that by entering into the Settlement Agreement you are giving up some important and fundamental rights that you have as an employee. Therefore, it is critical that a qualified solicitor explains to you the nature and effect of the Agreement you are signing.
It may be the case that further consideration and negotiation is needed. For example:
- if the financial incentives you are being offered are not appropriate and proportionate given the legal rights you are giving up
- If any additional restrictions are too onerous
As such it is important to take legal advice in order that you can be certain that entering into the Settlement Agreement is the best course of action for you.
It is common practice for your employer to contribute towards your legal fees for this appointment. The Settlement Agreement itself will include a clause which stipulates how much the employer is willing to pay in legal fees.
A Settlement Agreement Appointment with Lincs Law Employment Solicitors
Here at Lincs Law, all our employment solicitors are specialist in advising on Settlement Agreement appointments.
During the appointment, we will first take a background of your employment history and what circumstances have led to you being offered a Settlement Agreement.
Based upon this information, we will then advise on whether there are any potential employment law claims you have against your employer.
We will then go through the entire Settlement Agreement with you, one clause at a time and clearly explain what each clause means and what obligation it puts on you.
You will then receive detailed written advice in which we confirm what was discussed during our appointment.
It may be the case that once we have gone through the Settlement Agreement, some amendments or alteration are required. It might well be that we advise the compensation or package of payments you have been offered is insufficient. If this is the case, we shall discuss with you the necessary next steps.
Let Lincs Law Employment Solicitors Help You
If you would like further help and advice in respect of Settlement Agreement, please call us on 01522 440512 for a free, no obligation, initial phone enquiry. For more information, please visit our website at https://lincslaw.co.uk/services/settlement-agreement/
Specialist Employment Solicitor
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