Settlement Agreement Solicitors
Our expert settlement agreement solicitors will help you to achieve the best outcome without long delays, without hassle and without baffling you with unnecessary legal jargon.
What is a settlement agreement?
A settlement agreement is a document that an employer may offer an employee in order to make sure the employee doesn’t bring or continue with any claims against them. These documents can vary in length from a couple of pages to in excess of 20 pages, but they are often very detailed and use lots of legal jargon.
Why are settlement agreements used?
Settlement agreements are used by employers to ensure that an employee who is leaving their employment or who is in dispute with the employer settles any potential claims they could bring. In return, the employee usually receiving an agreed sum of money.
Why have I been offered a settlement agreement?
Even if you have agreed with your employer that you will not bring claims against them and even if the relationship between you and your employer is entirely amicable, you may still be asked to sign a settlement agreement to ensure that there is certainty over what is being agreed and to ensure that there can be no disputes in the future. Many employers decide that whenever an employee receives an offer of more than their minimum entitlements, they are always asked to sign a settlement agreement.
Can I request a settlement agreement?
It is possible for an employee to seek negotiations with their employer over the terms of a potential settlement arrangement. These negotiations can then sometimes result in a settlement agreement being offered to the employee. There are times when an employee raises a formal grievance and the employer responds by making the employee an offer under which they would be asked to sign a settlement agreement.
Do I have to agree to a settlement agreement?
No, you do not have to agree to accept what is being offered under a settlement agreement. On some occasions, it is possible to negotiate a better deal from your employer. Equally, where your employer is already offering you a generous sum, you risk the employer withdrawing the offer if you do not accept it. This is why it is all the more important that you receive sensible and expert legal advice on the offer. At Morecrofts, we will focus upon the offer that has been made to you and discuss with you whether it is a reasonable sum or whether we advise you to seek to negotiate an increase.
What should be included in the settlement agreement?
There are a number of core ingredients of a settlement agreement, which can be summarised as follows:
– If employment is ending, the termination date needs to be defined in the settlement agreement.
– The settlement agreement needs to set out the amount of any termination payment, details of any contractual payments and an allowance for legal fees in obtaining advice on the agreement.
– A long list of claims that the employee could potentially bring will be set out, but the agreement will state that the employee agrees not to bring those claims or that they are settled.
– The employee will be agreeing to return any items of property that belong to the employer when their employment comes to an end, unless it is agreed that the employee retains them either temporarily or permanently.
– There will be confidentiality provisions relating to non-disclosure of the settlement agreement and the requirement to protect confidential information.
– It is often the case that the employer will agree to provide a reference in respect of the employee under the terms of the agreement.
My employer has told me that they will pay my notice entitlement as part of the tax-free payment. Can they do this?
Until April 2018, it was possible to roll up payments in lieu of notice into the tax-free termination payments, up to a limit of £30,000. However, since that date, all amounts that equate to payments in lieu of notice have to be taxed. If your employer has promised you that they will pay this element tax-free, there are likely to be problems further down the line, because most settlement agreements provide that the employee ultimately will be liable to HMRC for any tax that is deemed payable on the termination payment.
Do I need to come to your office to sign a settlement agreement?
No. We frequently advise on settlement agreements by telephone or video call and there is no requirement that you meet us face-to-face in order to sign off the agreement. Of course, we are still happy to meet you face-to-face at one of our offices, if you wish.
How quickly can I get advice from you on my settlement agreement?
We can advise at short notice on settlement agreements and if it is particularly urgent, we can usually give the advice to you within 24 hours of your initial enquiry to us.