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Settlement Agreements For Employees

What are settlement agreements?

They are documents which set out details of an agreement to settle potential Employment Tribunal claims or other court proceedings.  Settlement agreements (previously known as compromise agreements) are usually entered into between employers and employees.  Commonly, settlement agreements provide for employees to leave their employment upon the basis that the employer pays them a compensation payment dependent on the emloyee waiving their Employment Tribunal claims.

Why do you need a solicitor?

For a settlement agreement to be valid in waiving an individual's right to bring a claim at the Employment Tribunal or other court, it must be in writing and the employee must have received advice from a relevant independent adviser (usually a solicitor or certified trade union officer) on the terms and effect of the agreement and the employee's ability to pursue claims in an employment tribunal or other court.

The independent adviser must have a current contract of insurance or professional indemenity insurance covering the risk of a claim by the employee in respect of loss arising from that advice.

When are settlement agreements used?

They are commonly used to bring an employment relationship to an end in a mutally agreed way.  Whilst the initiative for a settlement agreement often comes from the employer, employees can sometime initiate settlement agreement discussions, e.g. where the employee has decided that they have no future with the current employer and wish to negotiate a settlement which will provide them with a sufficient sum whilst they look for alternative employment.

Settlement agreements are seen as achieving a 'clean break'.  They can be used to reach a final conclusion for a dispute at work.  While settlement agreements commonly provide for the employee's employment to come to an end, they can also be used to resolve a dispute, e.g. relating to holiday pay which does not result in an end to the employment relationship.

How we can help

There are statutory rules and ACAS guidelines which relate to how settlement discussions should be carried out and the obligations that need to be met to ensure that the discussions about a potential settlement agreement cannot be referred to in any subsequent unfair dismissal proceedings. We can advise you about how to conduct the discussions, whether they are initiated by your employer or by you.

We can advise you upon the amount of compensation and any other benefits that are being offered and can negotiate improved terms of settlement, including increased compensation, improved benefits, and reduced onerous obligations, e.g. restrictive covenants.  We can also negoitate on your behalf with a view to ensuring that the settlement agreement includes an obligation upon the employer to provide you with a reference which will be important in the future.

Due to strict statutory requirements it is important to ensure that a settlement agreement is legally compliant.  We will advise you whether the settlement agreement is legally compliant and also advise you on the meaning and effect of each and evry clause in the settlement agreement.  They are often complex and written in legalistic terms - we can explain the meaning and effect of the clauses in a plain and straightforward way.

Why choose Sampson Coward?

Your settlement agreement will be handled personally David Coward, a solicitor with over 25 years' experience of dealing with employment law cases.  He has advised upon hundreds of settlement agreements and negotiates improved terms of settlement for employees on a regular basis, resulting in increased compensation payments of many thousands of pounds over the years.  As someone who has extensive knowledge of settlement agreements, he is not only able to advise upon clauses in an agreement, but importantly he is also able to identify the omission of clauses that would be to an employee's benefit and which would normally form part of a settlement agreement.

We are able to meet clients at our offices in central Salisbury and can also conduct meetings via Skype or Facetime, which is often convenient for those not based locally.

How much does advice on a settlement agreement cost?

The cost of our legal advice depends on the complexity of the agreement and whether we become involved in negotiating improved terms of settlement.  However, it is common practice for employers to contribute towards the employee's legal fees relating to a settlement agreement and often our fees are paid in their entirety by the employer.  In any event, we will provide you with an estimate of our fees at the outset and will update you on any change to the estimate so that there are no surprises for you relating to our fees.

David Coward
David Coward

Head of Employment Law

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