If your job is being terminated, your employer will want to avoid issues such as arguments over severance payments or being taken to court. Your employer in such cases will usually offer you a settlement agreement.

The centre of the settlement agreement is that you will not pursue any employment law claims against your employer and in return for giving up the claims you will be given financial or some other form of compensation.

Settlement agreements may be proposed prior to undertaking any other formal process.

This will be binding under the law on you and your employer – in order to make sure you are aware of what you are committing to, it will be a requirement of the agreement to obtain independent advice.


What are the advantages of signing a Settlement Agreement?

  • You will know exactly how much money you will receive and when – this is referred to as “the compensation payment”.
  • Your employer will most likely cover your legal costs.
  • You have an opportunity to negotiate on the terms being proposed.


What makes a Settlement Agreement valid? 

  • The agreement must be in writing – this is a requirement under the law and is particularly necessary for a settlement agreement as they are intended to secure the position between you and your employer.
  • It must refer to what claims are being settled – this will appear in the agreement to be a long list of legal Acts as your employer will need to be clear about what claims you will not bring against them.
  • The employee must receive independent legal advice from a named adviser on the terms of the agreement – this advice will make sure you are aware of what you are agreeing to when you sign it and confirm who has advised you.
  • The agreement must state that your agreement meets the conditions regulating settlement agreements – this will make sure the agreement will offer the protections it should offer you and your employer.
  • The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim by the employee in respect of loss arising from that advice.


What kind of clauses will a Settlement Agreement include?

A Settlement Agreement will deal with a variety of points including:

  • the compensation payments you will receive and the level of tax you will pay, if any;
  • your termination date;
  • settlement of claims you may have under the law;
  • confidentiality;
  • return of all company property.

In some cases there may be requirements on you after your termination such as whether you can contact clients you dealt with or restricting you from working for a rival company.

If you are given any requirements like this we will be able to advise you on how this will affect you and your next job.


Who pays my costs for obtaining advice on my Settlement Agreement?

Although it is not a requirement under the law for your employer to pay your legal costs in relation to the settlement agreement, your employer will normally cover our fees leaving you nothing to pay.


What will your services include if I come to you with my Settlement Agreement?

  • We negotiate the best compensation package – we always try to obtain higher compensation than initially proposed unless you ask us not to;
  • We advise you on all the potential claims you may have against your employer;
  • We will ensure that the wording of the agreement provides you with the necessary protection;
  • We may ask your employer to include a reference in your agreement giving you peace of mind when looking for your new job;
  • We will deal with your compromise agreement speedily and efficiently;
  • We are available outside office hours;
  • We always explain the details immediately, in plain English and over the phone.


What does ‘without prejudice’ mean?

‘Without prejudice’ is a common law principle which prevents statements, whether written or oral, which are made in a genuine attempt to settle an ‘existing dispute’, from being put before an employment tribunal or other court as evidence in legal proceedings between those parties about that dispute.


Do I need to come to one of your offices?

No. We can do everything by phone and email.  However if you prefer we are more than happy to meet you in person.


How long will it take for everything to be concluded?

It could take anything from a few hours to a few weeks as this would depend on your circumstances and how much negotiation is required. In most cases the agreement will be concluded in a few days. We guarantee an efficient service.

About the author
Leave Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

clear formSubmit