Employment law advice in Wimbledon, South West London, Epsom and Surrey

What is a settlement agreement?

A settlement agreement is a document containing legally required wording which settles disputes between you and the person or organisation for whom you were going to work, currently work or used to work.  We will refer to that person or organisation as the ‘employer’ although, strictly speaking, you may have never been their employee.

Under the terms of a settlement agreement, the employer usually agrees to make a payment to you in exchange for you waiving your rights to present, or continue with, any work-related claim in an Employment Tribunal or Court.  However, a payment is not necessary to create a binding settlement agreement, nor is it relevant in every case.

Termination of your employment can be a particularly difficult and concerning time, involving a host of financial and career concerns. Our expert solicitors will be able to discreetly advise you to reach the very best settlement, allowing you to move on to your future employment.

Here are some commonly asked questions we receive about settlement agreements:

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A valid settlement agreement is what an employer will insist on, because without it, they will not be able to legally rely on your waiver of your work-related rights, and that waiver is principally what you employer is paying you for.  It also benefits you because it contractually binds the employer to make the payment and/or carry out other agreed arrangements.

The law requires that before you validly waive your work-related rights, you must have first obtained advice from a qualified legal adviser on the terms and effect of the settlement agreement, which includes regulated solicitors such as those at Peacock & Co.

The employer is the party that wants and needs your waiver to be valid, so they normally offer to pay a contribution towards the legal fees that you incur in obtaining the required advice.

Where that contribution is grossly insufficient, we are often able persuade the employer to increase their contribution to cover a greater proportion, if not all, of your legal fees.

Settlement agreements can usefully deal with matters that, even if your case were successful at the Employment Tribunal, a judge could not order your employer to do. This could be, for example, agreeing a reference, retaining the employer’s equipment that may assist in a future job search (laptop, mobile phone etc.), continuing health cover if you are in the middle of being treated or cancelling any restrictions on working for a competitor, to name but a few.

Our solicitors will ensure that all aspects of the relationship are taken into account, and as far as reasonably possible, provide for those matters in the settlement agreement.

You do not have to agree to a settlement agreement, but often it is in your best interests to do so.  Rejecting a settlement agreement may only leave you with the option of making a claim, which will be neither cheap nor risk free even if you have a strong case.  That cost, both emotional and financial, has to be weighed in the balance, even if you do not feel the offer is good or good enough.

Very often, renegotiation is the recommended approach, but our solicitors will provide you with the expert analysis you need to make the right call.

In legal terms, if you refuse to sign a settlement agreement then the dispute remains unresolved, but you will have reserved your rights to sue the employer for any claims that you have.

In practical terms, a refusal to sign an agreement usually just means that whatever was going to happen before the settlement agreement was presented, will happen.  For example, the disciplinary or grievance or redundancy process will continue on its course and reach a conclusion.

If you do not in fact have a claim with merit, then turning down a settlement agreement may mean that you are missing out on a free pay out and the ability to resolve the dispute on your own terms, but our solicitors will provide you with the expert analysis you need to make the right call.

A good settlement agreement is simply one that you are happy with, but your needs and expectations will be different to others.

In purely financial terms, a good settlement agreement provides you with broadly the same amount of money that you might have been awarded after a successful Employment Tribunal trial after deducting the estimated legal fees you would have spent in achieving that outcome.

However, the level of financial compensation is, for some, less important.  Often, non-financial benefits that an Employment Tribunal could not order the employer to do, have a high innate value, such as retaining a work mobile telephone number or cancelling a restriction on working for a competitor after you leave.

Our solicitors will focus on your needs and negotiate a deal with a view to meeting them as closely as possible.

There are a handful of claims which cannot be settled under a settlement agreement at all, or in limited circumstances. These might include pension rights, or workplace injuries where the symptoms only manifest themselves after the employment ends.

There are a further handful of claims that can only be settled through the government’s conciliation agency known widely by the acronym Acas.  One common example are claims resulting from an employer selling its business and assets and the employees working in that business being transferred to the buyer’s business.

Where those exceptional claims are relevant, we will bring them to your attention, but it is the employer’s responsibility to ensure they are dealt with, whether through Acas or otherwise.

The short answer to this is no, but the full answer is that an NDA will likely form part of the settlement agreement. NDA is the abbreviated term for Non-Disclosure Agreement.  In other words, it is an agreement to keep certain specified information confidential as between the parties, which is not the sole purpose of a settlement agreement.

There will almost certainly be an NDA style confidentiality clause in a settlement agreement in relation to your ability to discuss the terms of the settlement agreement and the circumstances leading up to its execution.

Our solicitors do not just do a read through the terms of the agreement and explain to you what it states.  First, our solicitors review your case and all of your circumstances.  We assess the merits of any actual or prospective claims and value them with a view to establishing any leverage you may have to improve the offer.

Only then do we meticulously check that all the payments have been correctly calculated in accordance with the law or your contract and your other concerns have been addressed.   Our solicitors will then, if required, argue your case and propose amendment to the terms to ensure that you have a watertight deal that you are completely satisfied with.

Our expert solicitors can discreetly advise you to reach the very best settlement, allowing you to move on to your future employment. Contact us: