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Is your employment coming to an end? Are you thinking of signing a settlement agreement with your employer?
If your employer has offered you a settlement agreement it is important that you receive the right legal advice. Here at Versus Law we offer support and advice on the terms of the agreement and whether the settlement offered is appropriate, to ensure you are getting the best possible deal.
Your questions answered here
What is a Settlement Agreement?
A Settlement Agreement (formerly known as Compromise Agreement) is a legally binding contract which sets out all the terms that have been agreed between you and your employer in order to bring your employment relationship to an end.
A settlement agreement is offered as an incentive and usually provides for a severance payment by the employer in return for your agreement to waive your rights to bring any associated claims in an Employment Tribunal.
The agreement will contain other terms including when the employment will be terminated, how you will serve your notice period, salary, benefits and expenses due up to termination, confidentiality and post termination restrictions and more.
Why do employers use Settlement Agreements?
Employers use settlement agreements when they want to terminate a contract of employment by mutually agreeing a clean break with you.
Settlement agreements can be used in many circumstances, such as the handling of grievances, issues regarding discrimination, long term sickness, performance management and redundancy. They enable employers to avoid the need to follow lengthy processes, before being able to terminate your employment.
Therefore, a settlement agreement is a way of ending the relationship swiftly and without the risk of you taking a dispute through costly legal proceedings with uncertain results.
Your employer will usually allow you 10 working days to sign and return the settlement agreement as this will allow you enough time to obtain independent legal advice.
Why do I need a Solicitors advice before I sign a settlement agreement?
By signing the settlement agreement, you are essentially signing away your employment rights, which will mean that you cannot pursue an employment related claim against your employer.
The settlement agreement will contain many other important terms in relation to the ending of your employment.
Therefore, in order for the settlement agreement to be valid, it is required by law that you obtain independent legal advice.
It is so important that you obtain the right legal advice, so your solicitor will be able to know what sort of claim you may have and whether the money being offered is appropriate. The solicitor will ensure that all other terms are included and are fair and check that the settlement agreement satisfies all other requirements to make it legally binding.
Quite often employees are happy with what their employer has offered and they just want to sign the agreement and move on and if that is you, then great.
Will I be responsible for the legal costs?
You will not be responsible for our legal fees for advising on and signing off your settlement agreement. This is because your employer pays for this service and there will be a clause in the settlement agreement specifically about legal fees.
The amount that an employer will pay is usually between £350 to £600 + VAT, depending on the complexity of the matter.
Once we have completed our advice and signed off the settlement agreement for you, we will send an invoice to your employer directly for the agreed fee and you will not be involved in this process.