If you have been offered a settlement agreement, then it can be an extremely challenging and overwhelming time not knowing what the next steps are and how to navigate the process. We spoke to some professional solicitors who have experience dealing with settlement agreements in Essex and across the UK, to get their top tips for how to handle a settlement agreement.
What is a Settlement Agreement?
A settlement agreement is a legally binding contract between an employer and an employee which is used to resolve or avoid workplace disputes. Usually, these agreements will set the terms for the employee’s termination and offer financial compensation that the employee receives in exchange for agreeing to give up their right to go to a tribunal now or in the future. These are almost always confidential and as a legal document, both parties must adhere to the contract.
1. Seek Independent Legal Advice
One of the single most important aspects of any settlement agreement is to engage the services of an experienced solicitor who can help to guide you through the process and provide reliable, accurate advice to secure you the best possible terms. It is also advisable that you use a specialist in settlement agreements who will have specific, relevant knowledge and experience of this particular area of employment law and be better suited to advise you on the potential risks and complexities involved.
Another reason to seek independent advice is that a settlement agreement can only be recognised by law if a suitable solicitor, adviser or certified trade union signs it off.
2. Don’t Rush Any Decisions
It is not uncommon for some employees to feel under pressure to come to a quick decision with their settlement agreement due to the short time allowance given, which is generally around 10 days. Some circumstances around settlement agreements can be upsetting and worrying for those involved, so it is important not to rush or make any hasty, emotion-based decisions that aren’t right for you, without taking the proper time to go over your options.
You should speak with your solicitor or independent advisor who will be able to talk through your options with you, consider the formal written terms and decide if what they are offering is fair and that you are comfortable with the agreement.
3. Consider Things from Both Sides
It is likely that being an employee, you have in-depth knowledge of your employer and the company which can be helpful to factor into your decision making.
- Are they going through a period of change?
- Do you have potential claims for employment tribunal?
- Has your employer acted unfairly or unreasonably?
- Do you believe you have been discriminated against?
- Have you raised concerns that could amount to a whistleblowing claim?
- Do you have grievances against the company?
These are some examples of the things that you should discuss with your solicitor so that they can find out if there are elements to this case which could help to strengthen your potential claim.
4. Negotiate Effectively
In most cases, the settlement agreement offered to you by your employer is not set in stone and in a lot of cases, if you are in a good position, then your solicitor may think that it is fair to negotiate the terms. For things like – the financial settlement amount, agreed reference wording, termination dates, garden leave, pay in lieu of notice or other aspects, it might be reasonable to adjust or make changes before you sign.
5. Be Realistic and Pragmatic
It is important to be open-minded and flexible in your approach so that hopefully both you and the employer can quickly reach a mutually beneficial agreement that works for everyone and avoids long, drawn out and costly legal proceedings. This doesn’t mean that you must agree to everything or even sign the contract at all if it is not the right thing to do for you and your circumstances, but make sure that you are aware of all the possible outcomes from whatever decision you make.