A Settlement Agreement is a written contract between an employer and an employee. It will usually involve the employee receiving a payment from the employer in exchange for settling all actual and potential claims against the employer.
Settlement Agreements are most commonly used to bring an employee’s employment to an end on an agreed basis. However, they can also be used to settle workplace disputes. Settlement Agreements can therefore offer both employer and employee a clean break. They can also be used to avoid the cost and time of handling any workplace disputes and any potential employment tribunal claims arising from them.
Usually, an employer will be the one to offer a Settlement Agreement. However, there are circumstances where an employee can approach their employer to suggest one, for example, if they’re experiencing issues in the workplace and are threatening to bring claims against their employer.
These discussions about offering a Settlement Agreement should be made on a “without prejudice” basis (meaning off the record) or as part of a “protected conversation” (again meaning off the record). This will mean that the Settlement Agreement can’t be mentioned as part of any court or tribunal claims or hearings.
Although all circumstances are different, some of the payments commonly made under a Settlement Agreement are:
These are some of the important clauses to include:
An employee should be given a reasonable amount of time to consider the terms of a Settlement Agreement, and this will vary from case to case. However, the guidance says that employees should be given at least 10 calendar days to consider a Settlement Agreement.
Potentially yes. In addition to receiving financial compensation, an employee might request other terms that would benefit them, such as an agreed reference or an agreed leaving announcement.
Yes, in order for a Settlement Agreement to become effective, an employee must receive independent legal advice on it. This ensures that the employee understands the Settlement Agreement and its effect on their ability to bring future claims against the employer.
It is common, and expected in most cases, that the employer will pay a contribution towards the employee’s costs in getting advice on the Settlement Agreement from a solicitor. This contribution will often range from £250+VAT up to £1,500+VAT, depending on how complicated the Settlement Agreement is.
Most Settlement Agreements will contain confidentiality clauses, meaning that the settlement or what has been agreed in the Settlement Agreement can’t be shared with anyone other than the employer and the employee. It’s common for the Settlement Agreement to include some exceptions to this rule however, for example, to allow both parties to tell their solicitors and accountants, and to allow the employee to tell their spouse, partner or close family.
If you need any advice on Settlement Agreements, please contact a member of our employment law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”
Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”
We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”
An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”
PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”
We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”
Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”
My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”
Darwin Gray have acted for myself and my company over a number of years and at all times we have been treated with a professional manner yet maintain a common-sense approach at all levels. We couldn’t recommend them more highly.”
We have been clients of Darwin Gray for many years; they’ve always dealt with all of our legal matters with such professionalism. They work around us, even during awkward hours, and we feel confident we can always rely on them.”
Darwin Gray has been acting for Siltbuster for more than ten years. We would have no hesitation in recommending Darwin Gray to other organisations small or large.”
From the very first conversation, I had no doubt that Darwin Gray should be the firm to receive our instructions on this matter. I would have no hesitation in recommending Darwin Gray.”
We regularly instruct Darwin Gray. Their service in dealing with our transactional matters and disputes is always professional, prompt and efficient.”
Darwin Gray guided me through a long and extended process that would have been much more difficult had it not been for their patience and constant support.”
Excellent and efficient service. Great result achieved, highly professional and transparent on pricing. Would recommend.”
Superb legal service provided. Exceeded expectations. They went above and beyond in order to provide the best service possible.”
Very professional and understanding. They were a calming influence in a very troubling situation and they brought it to a very successful conclusion”
We have used Darwin Gray and have been seriously impressed. The personal approach is what Darwin Gray are excelling on and is the reason why we will continue to work with them in the future.”