What is a settlement agreement
As mentioned above Settlement Agreements were formerly known as Compromise Agreements, and in simple terms, they are legally binding contracts made between an employer and employee to end a person’s employment on agreed terms.
An employee usually waives their right to bring any claims against their employer in consideration of receiving a compensation payment and possibly other benefits too.
When drafted following the relevant legislation Settlement Agreements are legally binding. It is a specific requirement of Settlement Agreements that the relevant legislation is complied with.
One of the requirements provides that the agreement will only be valid if the employee has taken independent legal advice on the terms and effects of the Settlement Agreement and in particular the effect on the employee’s ability to pursue their employment rights. In most cases, the employer will also contribute to the employee’s legal costs of obtaining legal advice.
Freeman Jones Solicitors Liverpool have experienced employment law solicitors to advise you in this area.
Why should you sign a settlement agreement?
A Settlement Agreement often has benefits to both the employee and employer.
Employment tribunals can be stressful, acrimonious, and lengthy. Many employees would prefer to avoid the uncertainty and worry associated with tribunals and instead reach an amicable agreement.
Settlement agreements, therefore, present an opportunity for disputes to be resolved quickly and with minimum fuss to the satisfaction of both parties. Our employment law solicitors in Liverpool can advise upon Settlement Agreements offered and also have experience of drafting them on behalf of Employers.
The benefit to the employer is that they have the certainty that the employee can no longer take them to an employment tribunal or pursue them through the courts.
The benefit to the employee is that they receive a financial package without the costs or risks of taking the case to an employment tribunal or pursuing expensive litigation.
Also, a Settlement Agreement can include terms that would not be capable of being ordered by an employment tribunal or court. Examples of this would be :
- a reference;
- an agreed exit announcement;
- the provision of outplacement support (paid for by the employer) and
- an extension of existing benefits health insurance, bonus schemes, etc.
The terms of Settlement Agreements are often negotiated and it is therefore important to have an experienced employment solicitor on your side, to ensure that you achieve the best possible settlement.
This is, of course, the easiest option. Our expert and experienced settlement agreement solicitors in Liverpool, advising you upon your Settlement Agreement may legally advise upon the document and suggest that you sign the same. This advice may be provided for many different reasons but, generally speaking, it is because you either do not have any claims to be made against your employer (for example, unfair dismissal) or because the money that has been offered by your employer will compensate any claims you have satisfactorily.
Before signing the Agreement, one of our specialist Settlement Agreement lawyers will take the time to advise you to ensure that you understand the circumstances surrounding the termination of your employment. The solicitor will also talk you through the terms of the Agreement so that you understand exactly what it is you are signing.
Our Settlement Agreement solicitors in Liverpool can also sign the advisor’s certificate to confirm that you have been provided with independent legal advice. Thereafter, our employment law team can arrange for the Agreement to be sent to your employer for them to sign (if they have not already done so) and they will also be invoiced for payment in the usual way.
It could be that one of our employment law and Settlement Agreement solicitors advise that the termination package offered by your employer is not satisfactory or that the Agreement has not been worded correctly. In those circumstances, we may suggest that we negotiate the offer with your employer. It is also entirely possible that you may have already decided before seeking advice that you wish to negotiate and seek a more favourable settlement before receiving advice.
Amongst other things, our dedicated team of settlement agreement solicitors in Liverpool can assist you in seeking:
- A larger sum;
- Additional benefits; and/or
- Amendments to the wording of the Agreement.
Once further negotiations are entered into, your employer might agree and produce a new document for you to sign, reject your request but make a counteroffer with alternative figures/offers, revert to us and confirm that the offer is non-negotiable or withdraw the Agreement altogether; however, it is rare for an employer to withdraw the Agreement completely. We can, of course, provide you with expert advice concerning the response/offer your employer reverts to us with.
It could be that once you have received legal advice from our Liverpool employment lawyers, you decide to reject the Agreement on the basis that this is the best option for you; however, this is rarely a step that ought to be taken. We will usually only advise that you take this step if the breaches of employment law are very serious and the termination package offered by your employer is completely insufficient in compensating you. It is usually reserved for serious discrimination claims.
If you choose to reject the Agreement and new terms cannot be negotiated and agreed with your employer, the next step would be to instruct a lawyer from our employment law team to bring an employment tribunal claim against your employer. We can also assist you in going through ACAS and their early conciliation service to achieve a cost-effective settlement if at all possible.
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