Employment Solicitors – Settlement Agreements for Employees
What is a settlement agreement?
A settlement agreement, which can also be called a severance or redundancy agreement is a legally binding contract drawn up by an employer to bring a contract to an end on agreed terms and prevents an employee from suing their employer after they have received a sum of money for agreeing not to bring certain claims against their employer.
Once a settlement agreement has been signed an employee waives their rights to take their employer to court, make an employment tribunal claim or any other type of claim listed in the settlement agreement.
Why use Rotheras Employment Solicitors for your Settlement Agreement?
It is a legal requirement for an employee to obtain independent legal advice before signing a settlement agreement. At Rotheras our employment solicitor Natalie Abbott has a wealth of experience advising clients on settlement agreements. Natalie can go through the agreement with you to ensure you understand everything that it covers, as well as making sure your contractual, common law and statutory rights are protected in the agreement.
How we can help you with a Settlement Agreement?
- We can check over the terms within the agreement as well as potentially negotiate a higher settlement sum on your behalf
- We understand that in some cases you may need to sign a settlement agreement within a short space of time, so we will work promptly to arrange an appointment and go through the agreement with you
- If your settlement agreement also includes a share purchase agreement, then where required we can work alongside our commercial team to ensure you receive separate specialist advice
Settlement Agreement Solicitor – Trusted Legal Advice from an Award Winning Nottingham Law Firm
Your employer might ask you to sign a settlement agreement so they have security that you will accept the settlement and not take them to court or pursue legal action for further compensation. Settlement agreements are often used as a means of bringing employment to an end on mutually agreed terms and to avoid the need for a stressful consultation or internal management process.
Your employer will usually contribute to the cost of getting legal advice although this may be capped (usually between £200 and £500), so it is worth finding out the legal advice fee limit.
Your employer should not pressure you to sign the settlement agreement straight away but should give you at least 10 days to decide whether you want to sign the agreement.
If you believe the settlement agreement is fair and offers you the level of compensation you expect then you can accept it, but since a settlement agreement needs to be checked over by a qualified solicitor before signing in order for it to be legally binding, it can help to have them look over it and make sure it protects your rights. In some cases, your solicitor can negotiate a better deal for you.
Yes, you do not need to accept the first offer that your employer gives you and you may wish to negotiate the amount of compensation and the terms if you are not happy with them. However it is also important to remember that the terms of the settlement must be agreed by both parties and depending on the circumstances, your employer might be able to fairly dismiss you or you might not get a better offer.
At Rotheras we can help you to get the best agreement for you, including negotiating the amount of compensation you will receive and considering what effect the agreement might have on your future job prospects.
Firstly, it is important to make sure the agreement covers your basic contractual and statutory rights and then look at what your employer is offering you in addition. The decision as to whether it is fair will also be based on the facts relating to why your employer has chosen to end your contract. Your solicitor will be able to help you decide whether it is fair or not and whether your case is strong enough to take to a tribunal or court and what you might be awarded if you were to go to a tribunal rather than using a settlement agreement. If you are happy that the offer is fair your solicitor will sign off the agreement to ensure you receive the settlement sum promptly. If your solicitor does not think the amount of money being offered is satisfactory, they can negotiate on your part to get a fair sum, which could include raising a grievance.
A compromise agreement is the former name for a settlement agreement. There is little difference between the two apart from the fact that under the terms of new settlement agreements, discussions about the offer of a settlement agreement cannot be used in an ordinary unfair dismissal claim unless the employer has shown improper behaviour.
Compensation is usually paid within 7-28 days of all parties signing the settlement agreement or your last day of employment (whichever is later), but other payments such as outstanding salary, accrued holiday and bonuses may be paid through payroll on the usual payroll date.
Yes, you need a qualified solicitor to check over the settlement agreement and sign it off in order to make it legally binding. Also a solicitor can go through the settlement agreement with you to make sure it is fair, as well as advising on whether the amount being offered is fair and what if any claims you may have against your employer arising out of your employment or its termination.
You will still need to seek advice from a solicitor as this is a legal requirement, however it also provides the opportunity for your solicitor to review the agreement and make sure the terms are reasonable and your rights are protected.
If either party breaches the agreement, then a claim can be brought to the courts for breach of contract. The agreement can be breached in various ways, such as the employer failing to pay an agreed sum of money or the employee bringing a claim against an employer despite agreeing not to in the terms of the agreement.
Yes, you can ask your employer for a settlement agreement in cases where you feel like you are being managed out of the office or where there are tensions between you and your employer which are unlikely to be resolved. Although you might also be able to make a claim against your employer for constructive dismissal, it may be mutually beneficial to offer a settlement agreement to your employer instead, and result in you leaving the company faster and getting more compensation.
Unlike redundancy, a settlement agreement waives an employee’s rights to bring legal action against an employer. However, a settlement agreement can be used in redundancy and an employee might opt to sign a settlement agreement over taking a redundancy package if it means they get more money.
If you are happy with the terms agreed in the contract and we feel it is fair and protects your rights, then the agreement could be settled within days. However, if your solicitor feels some of the wording needs changing within the agreement or they can negotiate a bigger sum of money for you then they will need to go back to your employer and await their response.
Depending on the amount of compensation you receive, you might not need to pay any tax. Usually the first £30,000 of payments made in a settlement agreement are tax free, but you will need to pay tax on payments for salary and holiday entitlement.
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Posted on 11/17/2020