Settlement Agreements

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Have you been issued with a settlement agreement by your employer?

A settlement agreement (including Compromise Agreement) is a legally binding contract that usually provides for a severance payment by the employer in return for your agreement not to pursue any claims in a Tribunal or a Court.

The employer will often require you to keep the terms, for example, the amount and the surrounding circumstances of your contracts termination, confidential.

Do I definitely need a solicitor?

Employers frequently insist on certain formalities when reaching a settlement. This typically means that as an employee, you will be asked to seek independent legal advice from settlement agreement specialist solicitors. The reason for this is to ensure you understand the terms of the agreement. Settlement agreements must be drafted in the correct legal terms. A properly drafted and negotiated settlement agreement can be a very effective way to ensure that you are adequately compensated for the termination of your employment, without the need to bring a formal claim against your employer.

If you are offered a settlement agreement, you should get expert legal advice as soon as possible. For the agreement to become binding, advice on the terms of the agreement must be given from an independent solicitor – i.e., you must have it fully explained to you. The solicitor who advises you must also sign the agreement to certify that appropriate advice has been given.

What happens if I don’t seek legal advice?

It’s really important that you do get it looked over by a professional. As mentioned already, it’s actually essential to ensure the agreement is legally binding, and to be sure that you aren’t agreeing to anything you shouldn’t. A settlement agreement solicitor will be able to explain the terms of the agreement and any clauses that you will need to abide by. For example, if your employer has placed restrictive covenants in the agreement, these might have an impact on your future job prospects.

What do I need to know before signing an agreement?

By signing a Settlement Agreement, it is likely that you will be giving up your rights to bring a claim against your employer in the future. It is very important, therefore, to take advice at the earliest opportunity before signing anything.

At Crystal Law, we advise you on the content of the Settlement Agreement before you sign it. This advice can include whether the settlement offer is adequate, whether the terms and settlement are fair and reasonable, as well as discussing restrictive covenants and their implications. We can also seek to agree on you being issued with an employment reference, which you can use for future job applications.

Negotiating on your behalf

As well as providing advice on Settlement Agreements and Compromise Agreements offered by your employer, we can also help you to make the first move by seeking to initiate a conversation with your employer to see whether there is scope to negotiate a severance package. Before taking such a step, we will ensure that there are grounds to seek such a move and assess the value of any potential claims to ensure we have a good basis for negotiations. We offer fixed fees for this service that we can discuss with you.

Is a settlement agreement the same as a compromise agreement?

In July 2013, the government changed the name of compromise agreements to settlement agreements. Whilst the two kinds of agreements are similar, compromise agreements could only be offered in instances where there was an ongoing dispute. In contrast, settlement agreements can be used in any situation.

You might also see settlement agreements referred to as severance agreements. This is because employers are starting to use settlement agreements in place of redundancy packages. If this is the case for you, a compromise agreement solicitor will be able to advise you if the agreement is fair.

Get in touch with our employment experts who can offer professional settlement agreement advice.

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