If you have been offered a settlement agreement, you might have some questions about what happens and how signing such an agreement will affect your working life.
Whilst there is a lot of information online about settlement agreements, there are some specific questions we are often asked by clients. This post looks at some of the things our clients and all employees should know when it comes to negotiating or signing a settlement agreement.
An Employee's Guide to Settlement Agreements
If you have been told that your current period of employment is coming to an end, this can lead to a substantial amount of worry and uncertainty. If you are offered a settlement agreement, you may be unclear about how you should respond and what your rights and entitlements are. The agreement itself can also cause confusion – why is such an agreement necessary and what do the clauses contained within it mean?
This blog article from the solicitors at Gordon Turner Employment Lawyers provides guidance for employees who find themselves in such a position. We regularly provide clear, straightforward, compassionate advice to help employees protect their personal position and to ensure that a fair and equitable agreement is reached with their employer.
What is a Settlement Agreement?
A settlement agreement is a legal document confirming the terms of the settlement reached between an employer and their employee at the termination of their employment. One of the most important functions of this agreement is that it prevents an employee from making any subsequent claims against their employer at an employment tribunal. Employees will typically receive a financial pay-out in return for signing a settlement agreement.
Is a Settlement Agreement Legally Binding?
Yes, these agreements will be legally binding provided that certain conditions are met. The agreement must be in writing and relate to a claim that an employee could subsequently bring against their employer (e.g. unfair dismissal, discrimination or unpaid wages). There is also a requirement that an employee receives independent legal advice before signing a settlement agreement.
When Will a Settlement Agreement be Used?
Settlement agreements can be used in any situation when a period of employment has come to an end. They are commonly used when an employee has been dismissed from their position, but some employers will choose to use a settlement agreement when an employee has left on amicable terms, just to be safe.
Should You Try and Negotiate the Terms of a Settlement Agreement?
It's up to you. Some employees will be happy with the package they have been offered and want to sign the agreement quickly and move on with their working life. Others may feel that the offer made to them is unfair, and in such circumstances, it would be appropriate to negotiate. An employment solicitor can advise you on the best strategy for you. In many cases, this can involve threatening to take your employer to an employment tribunal but if this happens employees should be aware that the tribunal process can take many months to conclude and cause added stress and anxiety. There is also no guarantee that the tribunal panel will decide in your favour.
How Long Do You Have to Decide Whether to Accept the Terms of a Settlement Agreement?
There is no clear rule about how long your employer must give you to consider the terms of a settlement agreement, but good practice guides suggest that employees should be given ten days to think over a written agreement and to seek legal advice.
Read our Settlement Agreement FAQ for futher advice.
Contact Our Specialist Settlement Agreement Solicitors Canary Wharf, London, Birmingham, Manchester & Preston
If you require advice and assistance regarding Settlement Agreements, speak to one of our experienced and dedicated employment lawyers today. Call us or fill in our form now:
London: 020 3322 8452 | Manchester: 0161 850 4095
Preston: 01772 963 039 | Birmingham: 0121 728 6518