Settlement Agreements for Legal Advice call us on 01925 937070
What is a Settlement Agreement?
Settlement Agreements (previously called Compromise Agreements) are legally-binding agreements which are often used to bring an employment relationship to an end.
By entering into a settlement agreement an employee agrees to waive their rights to bring a claim or claims against their employer in an employment tribunal or court in exchange for a lump sum, known as a termination payment or compensation payment.
Why Have I Been Offered a Settlement Agreement?
Sometimes a settlement agreement can come out of the blue, in which case your first reaction might be shock. Losing your job, especially when it is unexpected, can leave you feeling confused, anxious and frustrated.
There could be a number of reasons why your employer
has suggested a settlement agreement.
They may wish to avoid having to go through the time and expense of following formal procedures, such as consultations and selections in redundancy situations.
The settlement agreement may be offered as an alternative to formal disciplinary proceedings (e.g. where there is a performance or conduct issue about which there is disagreement).
It may be a way of avoiding the risk of an employee bringing a claim in the employment tribunal, e.g. where there has been a procedural defect by the employer in not following their own disciplinary policy.
Alternatively, it may be that you have been off sick for a while and cannot or do not wish to return to work. Perhaps you have been unhappy in your job for some time, due to, for example, overwork, excessive targets, bullying or a change of management.
Termination by Mutual Consent
It is sometimes the case that an employee and their employer have simply agreed to part
ways, perhaps because the job hasn’t worked out due to unforeseen circumstances.
In such cases the parting may be amicable and both parties simply wish to formalise the arrangement by entering into a written agreement.
Up until the time that a Settlement Agreement has been finalised it will be subject to the 'Without Prejudice' rule which means that (except in very exceptional circumstances) it cannot be produced in court in evidence as a Judge will not be allowed to look at it.
However, once an employee has taken legal advice, obtained an 'Advisor's Certificate' from his or her solicitor and the Agreement has been signed and dated by both the employer and the employee it the Agreement then becomes legally binding.
Settlement Agreement Solicitors
Settlement agreements are often complex, lengthy and heavy with legal jargon, usually because they have been drafted by the employer’s solicitors with the primary purpose of protecting their client.
It is therefore best to choose a lawyer who is experienced in reviewing and providing legal advice on settlement agreements to ensure that nothing in the small print is overlooked and that your interests are fully protected.
Same Day Service
If all the terms are agreed and you need a quick turnaround, you've come to the right place!
Utilising technology enables us to review the Settlement Agreement, provide the statutory advice, sign the Advisor's Certificate and email it to your employer the same day.
There is no extra charge for this, but we would just ask that you do contact us before 12 noon if you require our same day service.
Call us on 01925 937070 or complete our Contact Form below to request a Call back.
Straightforward, practical advice on settlement agreements. No legal jargon.
Timely advice. Your employer will usually set a deadline for the settlement agreement to be finalised. If the deadline is not met your employer may withdraw the offer. We can therefore offer you an early appointment to ensure that deadlines are not missed.
The convenience of email or telephone or consultations.
Costs guarantee. Whilst your employer will insert a clause into the settlement agreement that they will make a contribution towards your legal fees you will want to be sure when choosing a legal representative that you do not fall into the trap of receiving an unexpected legal bill yourself. We guarantee that this will never happen if you choose us.
In the unlikely event that the contribution from your employer will not cover our fees, we will (with your permission) contact your employer to seek an increase. If you do not wish us to do this or your employer refuses, then any additional fees will only be incurred by agreement with you in advance. We will only ever advise this course of action if the benefits to you outweigh the additional costs, so you will never end up out of pocket by following our advice.
Compensation for Loss of Employment
The advantage of a settlement agreement is that it provides for a clean break between the parties. You agree not to pursue any claims in the Employment Tribunal or County Court against your employer in exchange for a lump sum (often referred to in the settlement agreement as a ‘termination payment.’)
The first £30,000.00 of a termination payment can be paid free of tax and without deductions for national insurance contributions. Redundancy payments are included in the tax-free lump sum.
You should also be paid all salary and other benefits due, such as accrued holiday pay and payment in lieu of notice pay (PILON) to the termination date (although these benefits are contractual as opposed to compensatory and are therefore taxable).
Employment References and Announcements
It can be useful, if you are going to be looking for another job, to agree a Reference with your employer in advance. This should be incorporated into the settlement agreement as, otherwise, your employer is not legally obliged to provide one.
In certain circumstances it may be appropriate to agree with your employer the wording of a formal announcement so that your colleagues can be informed about your departure in terms that you are happy with. This then needs to be attached as a schedule to the settlement agreement in the same way as an agreed Reference, to give it legal effect.
Employers will sometimes pay for outplacement support as part of the settlement agreement. This service can be useful if you feel you need to brush up your cv writing or interview skills, which is often the case if you have been in the same job for a number of years.
Settlement Agreements Compromise Agreements – Cheshire
Our head office is based in Warrington but we are easily accessible from Liverpool, Manchester, Chester, Wigan, Newton-le-Willows, St. Helens, Widnes and Runcorn (Junction 8 of the M62).
Due to Coronavirus our office is closed to visitors, but don't let this put you off as it will not affect our ability to provide an uninterrupted service.
Contact us now by email at [email protected], or by telephone on 01925 937070. Alternatively, complete our Contact Us Form and we will call you.
If you have been made redundant or have another employment law problem you can visit the Employment Law section of our website to find out more Employment Law at DSM Legal Solicitors.
Some examples of what can go wrong if you don’t take the right advice
Signing away all your rights.
In one case an employee inadvertently signed away his rights to pursue his ongoing personal injury claim worth thousands of pounds.
Taking the employer at their word.
An employee who signed a settlement agreement on the strength of what was promised by her employer was shocked when the employer refused to honour his promise. Unfortunately for the employee the employer was well within his rights to do this as the settlement agreement contained a clause which stated that the settlement agreement constituted the entire agreement between the parties and superseded any other agreement, whether written or oral.
Signing the settlement agreement on the assumption that that the employer won’t mind if the employee has found another job.
In some settlement agreements there will be a clause stating that the employee warrants that by signing the settlement agreement they have not been offered or accepted another job or any form of consultancy etc at the time of signing the settlement agreement which would provide them with any form of income. The employer here was well within his rights to demand repayment of the termination payment upon discovering that the employee had signed an untrue statement due to the fact that he had already accepted another job when he signed the settlement agreement. It is likely that the employee was not aware of the clause as it is one that is often overlooked.
A settlement agreement is a very effective way of enabling both parties to have a clean break and move on by creating certainty.
However, it is important that you fully understand the consequences of signing the agreement as once signed you will be taken to have read, understood and agreed to its terms and it can be very difficult, if not impossible to overturn.