What is a Settlement Agreement?
A Settlement Agreement (previously known as a “Compromise Agreement”) is a legally binding agreement following the termination of your employment.
Settlement agreements are often given to employees when they are being made redundant. However, they can also be offered to employees if an employer thinks they are performing badly in their job or are guilty of misconduct. In some cases, an employee will be aware that their boss is unhappy, while for others, being offered a settlement agreement can come as a shock.
Essentially, an employee is given money or severance pay in return for not bringing a claim against their employer. Each settlement agreement will vary but usually the documents will include clauses that deal with: the claims to be settled; the payments you will receive and the relevant tax issues; a confidentially/gagging clause (so you can’t bad mouth your employer) and any agreed reference from your employer. Once signed by both the employer and the employee and certified by an independent solicitor, a settlement agreement becomes legally binding.
How we can help
When you’re pulled into a meeting and asked to leave your job, it can be a shock. Later on, it can be hard to recall exactly what was said. The best advice is therefore to make a note about what happened and what was said as soon as possible. The next thing to do is get some decent advice. An employer will usually pay the legal costs for you to see a solicitor or qualified adviser independent of the employer as it is a legal requirement for the settlement agreement to be contractually binding on the employee.
An employment solicitor can help you consider whether you’re getting a good deal and whether you have any grounds for a claim against your employer – such as discrimination or unfair dismissal. If you’re facing a period of unemployment, you need to be able to meet your household living expenses until you get another job. One of the considerations you need to make is whether the money that is being offered is enough.
You need to consider why you are being offered the agreement and what rights you are being asked to waive as a result of you signing. Armed with this knowledge, you can often save legal costs by negotiating yourself directly with your employer and in our experience, you often end up with a better deal, which may include a bigger payment.
The employer will often insist that the settlement agreement be signed by a particular date, but you are not legally obliged to sign a settlement agreement and if you don’t sign the agreement, then your full employment rights are reserved for you to make a claim against your employer.
To see some typical terms of a settlement agreement and our advice on them, please click here.
I consulted Justin Sadler, of Barrett & Co, in respect of an Employment Law matter. I found he had an excellent knowledge of the subject area; and the outcome achieved, was more or less as he had indicated. I would therefore have no hesitation in highly recommending him. In addition, I found him to be most personable and it is so much easier to do business with someone you like as well as respecting their expertise.
Good firm as I used them for debt collection of significant six-figure sum. Well worth the money paid as it was a fraction of the amount owed. Justin Sadler handled the case for me. You get what you pay for.
We are an International Sports Federation and needed assistance with getting our Federation incorporated as a Company with Limited Liability. We were walked through the whole process with incredible professionalism but also a lot of understanding and flexibility in the various services required. Jane Whitfield did a wonderful "hand-holding" exercise and once we had completed our incorporation she again walked us through the whole process of registering as a Charity. This process was also completed successfully. As the person that worked very closely with Barrett Co and Jane in particular, I can testify not only to the professionalism, but also the friendly and efficient way in which the whole process was dealt with until completion. We are looking to walk a long road with this company as we deal with further legislative requirements.
I’ve known Justin Sandler for some years now having advised on some employment redundancy issues plus some property boundary challenges for recently My first engagement with Barrett & co being in 2005 when I moved into the Reading area. Highly recommend for friendly and competitive charged advice and support .
Justin Sadler supported me through the process of agreeing a compromise / settlement agreement with my employer. He was very understanding both of my position and of what the legal position was. He asked lots of questions to make sure he understood the fact pattern and then put my case forward to get the best deal possible. I was very happy with the overall outcome and the significantly increased offer we received from the employer. I would happily use Justin again and would recommend the use of him and his team.