What is a settlement agreement?
A settlement agreement sets out in writing what you are entitled to as far as compensation. Settlement agreements, formerly known as compromise agreements, are often the best way to provide certainty for both parties upon termination. Once agreed upon they are legally binding between an employer and employee.
Key things to know about settlement agreements:
- It waives the employee’s rights to future claims in an employment tribunal.
- A lump sum of money, known as a severance package, is provided in return of the employee’s loss of future claim rights.
- The agreement will usually require that the settlement agreement details are kept confidential, with some limited exceptions.
- A clause stating your current employer’s willingness to provide you with a satisfactory reference can be included in a settlement agreement. As this is not a legal requirement, it is important to consider if this should be included.
To find out more about settlement agreements and where you stand if offered one by your employer, make an enquiry.
How much does a settlement agreement cost?
In most cases, the employer will pay a contribution for you to seek out legal advice.
Costs covered by employer contribution:
In cases where your employer has given you a settlement agreement, usually you will have a clause that stipulates your employer will contribute to your legal fees. This contribution usually covers your costs in full, meaning there will be no costs incurred by you.
Costs not covered by employer contribution:
If you are not happy with the offer made by your employer to terminate your employment and you want us to negotiate on your behalf, this will not be covered by the contribution, and you will need to pay a solicitor to undertake this further work.
How long does a settlement agreement take?
While a settlement agreement can often be turned around in 1 to 2 days your employer should not demand that it be signed straight away, as this can cause undue pressure.
The Advisory, Conciliation and Arbitration Service (ACAS) provide guidance for an employer to allow a minimum of 10 calendar days to seek legal advice, but this is at the employer’s discretion and not a requirement.
Ultimately, the sooner you approach an adviser to review the agreement, the sooner your case can be evaluated. If you have been offered a settlement agreement and would like advice on how to proceed make an enquiry with us today.
Get in touch.
Do you need a solicitor for a settlement agreement?
It is a legal requirement to seek the advice of one of the following before signing a settlement agreement:
- A qualified lawyer
- A certified trade union official
- An advice centre worker
These advisers must be covered by indemnity insurance and should be specialists in settlement agreements.
It is further a legal requirement that the solicitor signs the adviser’s certificate to confirm that the advice has been provided to you. This is because settlement agreements include complex and often restrictive terms and conditions which need to be fully understood.
Once the settlement agreement has been signed by both parties it is legally binding.
Why choose Myers & Co?
At Myers & Co our specialist employment solicitors handle settlement agreements every day so our experienced team will ensure your severance package is fair, reasonable and protects your best interests.
Our lawyers will examine the terms of your offer and help you decide whether you should sign the agreement, negotiate, or consider alternative action.
“I dealt with Sarah Everton and I can’t recommend her enough. Sarah helped me conclude a nasty employment case. Her compassion, empathy, knowledge and her complete understanding of my situation, helped us to navigate, the mudded waters my previous employer had created. I’d still be fighting them, without her help. Thank you, Sarah.” – K. Kelsey
Based in Stoke-on-Trent, Staffordshire, our specialist employment solicitors offer independent legal advice and representation on all types of employment law problems.
If you have been presented with a settlement agreement and you are now seeking honest and realistic advice on how to proceed, contact our employment law solicitors or call us on 01782 577000.
