Settlement Agreement Advice for Employees

Employment disputes can be time-consuming, expensive and emotionally draining for both employers and employees, which is why most workplace legal conflicts are now resolved with settlement agreements, rather than through an employment tribunal.

As an employee, accepting a settlement agreement can resolve the dispute and get you compensation much faster than taking your claim to an employment tribunal. It can also save you the stress and hassle of attending a formal hearing, while helping you to maintain a more positive relationship with your employer or former employer.

If your employer or former employer has offered you a settlement agreement to resolve an employment claim or to head of a potential future claim, it is important that you get independent, expert legal advice. This is a requirement for the settlement agreement to be valid and also helps to make sure that the terms of the agreement, including any payment you receive, is fair to you.

At Graham Evans & Partners, we are highly experienced in advising employees of all levels on settlement agreements. We can review any settlement agreement you have been offered by your employer and give you an honest opinion on whether it represents a fair deal for you. Where necessary, we can negotiate with your employer to secure a better settlement.

Where we believe the settlement agreement is not fair to you and your employer is not willing to agree an enhanced offer, we can also advise you on the process of taking your claim to an employment tribunal. Our employment lawyers can then guide you through every stage of the tribunal process, giving you the best chance of a positive outcome.

For independent legal advice on a settlement agreement offer by your employer in Swansea, Bridgend or Neath Port Talbot, please get in touch.

What is a settlement agreement?

A settlement agreement is a written agreement between employer and employee. They can be used to resolve an employment dispute or avoid the potential for an employment dispute. Settlement agreements replaced the formerly used compromise agreements in July 2013

Settlement agreements are often entered into when termination of an employment contract occurs, such as in a redundancy situation. They can also be used to resolve a dispute with your current employer e.g. over discrimination or harassment.

The main aim of a settlement agreement is to prevent an employee from bringing legal claims against the employer relating to employment and/or its termination. Usually the employer will agree to pay a sum of money in return for giving up these rights, which is usually an enhancement on the statutory entitlement.

Should I sign a settlement agreement offered by my employer?

Whether or not the amount offered under a settlement agreement is appropriate for you to give up your right to make legal claims will depend on factors, including:

  • the circumstances in which the settlement agreement is offered
  • the amount you earn
  • how soon you expect to get a similarly paid job (where relevant)
  • the strength of any claim you may have, and
  • the time, resources and potential costs involved in litigating any claim(s) you may have as an alternative to signing the settlement agreement

What should a settlement agreement include?

Settlement agreements vary from employer to employer, but many will include:

  • A breakdown of the compensation to be paid and how this will be treated for tax purposes
  • Agreement that the payment is in settlement of ALL claims arising from your employment and an assurance that you will not pursue legal claims in the future
  • Keeping the settlement agreement confidential and not making disparaging remarks about the other party
  • Other assurances or promises given by you
  • An agreed reference, usually only factual

Independent legal advice for settlement agreements

For a settlement agreement to be valid you must receive independent legal advice from a solicitor on its terms and effect on your rights to bring a claim. The solicitor must sign the settlement agreement to say that this advice has been given.

Usually your employer will make a contribution towards the cost of the advice. The lowest contribution is usually £250 plus VAT.

Whenever we advise on a settlement agreement, we endeavour to keep our charges within the employer’s contribution. Generally, our charges will only exceed the employer’s contribution in cases where extensive negotiation or drafting work is needed.

Contact our settlement agreement lawyers in South Wales

For clear, practical advice on a settlement agreement in Swansea, Bridgend or Neath Port Talbot, please get in touch.