Employment Settlement Agreements are open legally binding contracts that usually contain the terms of a deal or settlement arranged and agreed between you and your employer. These agreements are often used where it has been agreed to terminate your contract of employment, or to resolve a dispute with your employer.
Once the document in question has been signed by both parties, and has a signed adviser’s certificate attached to it, the employee will not be able to bring any claims that the employee has agreed to waive within the agreement against the employer, such as an unfair dismissal claim.
For this reason, it is essential you use Settlement Agreements in the right way, and taking independent and rational advice from a Settlement Agreement Legal Adviser who will know and understand the right course of action is imperative. For more information and an explanation of the process surrounding a settlement agreement, please refer to our Settlement Agreements page.
How Do Settlement Agreements Work?
If you are in a position whereby your employer initiates a conversation based on ending your employment relationship, you are entitled to enter into a ‘settlement agreement discussion’. Such discussions are often referred to as ‘protected’ or ‘without prejudice’ discussions, and are confidential.
If at any point during this discussion you disagree, that’s fine. You can never be forced to agree to the terms of a Settlement Agreement. You should go about getting the best resolution possible, safe in the knowledge that your employment law rights will always be retained and safeguarded.
You will need to weigh up what you are offered versus your future loss of earnings until you find alternative employment. If you do have another job to go to, your previous circumstances and the relative strength of your case will inevitably determine the amount you are offered.
With any financial Settlement Agreement, there will need to be an understanding based upon the moral obligations both parties have. A written reference is often the first thing that’s agreed upon – employers are not legally bound to provide a favourable reference. However, if it is attached to the Settlement Agreement, the terms are different.
Also, you should consider bonus payments and other benefits or perks that came with the job that you are going to lose.This can provide support and leverage for your argument in achieving a favourable settlement.
Settlement Agreements usually operate with the understanding of a prior process,and a series of discussions which lead up to the end of the employment relationship. During these discussions it is often good practice for employers to let a second person sit in – if for nothing other than to operate as a mediator and progress settlement talks.
Often both parties make proposals and counter proposals during the negotiations of a Settlement Agreement. A minimum of 10 calendar days should be given to the employee to consider any proposal.For more information on how to act in the event of Settlement Agreement discussions, the ACAS service has produced a guide and code of practice agreement that is set out on their website.
There are many potential benefits to be had by negotiating a Settlement Agreement with your employer. It is, however, a requirement for you to receive independent advice from a Legal Advisor. The Settlement Agreement will not be a legally binding agreement unless the document has an attached adviser’s certificate signed by the Legal Adviser. Because it is mandatory for you to obtain independent legal advice, many employers will pay a contribution towards your legal costs.
We offer a fixed fee advice system – more information can be obtained by contacting us on: 01634 811 118 or email our employment law specialist, Chris Eastland on chris.eastland@kslaw.co.uk