When might a Settlement Agreement be offered?
A Settlement Agreement is most commonly offered when a term of employment is coming to an end. The employer may wish to avoid the time consuming and costly processes related to dismissal for poor performance, disciplinary matters, or redundancy by offering a Settlement Agreement voluntarily and bring the issue to a close in a timely manner.
Settlement Agreements are also used to resolve disputes between employer and employee by negotiating terms and avoiding further legal action. A Settlement Agreement might also be offered when there are large scale redundancies or dismissals taking place.If you are an employer wishing to settle a dispute or dismiss an employee, in a manner that offers protection for your business, the specialist Settlement Agreement Solicitors at
Analysis Legal will help you navigate the entire process efficiently and effectively.
Our advice is tailored to the individual circumstances, resolving the issues as smoothly as possible, while protecting your business from future disputes or litigation.
What claims will I be able to make if I sign the Agreement?
Generally, there are only three types of claims that you could make after signing a Settlement Agreement.
Firstly, you could claim a breach of contract if your employer does something contrary to the terms agreed. For example, not paying the agreed amount.
Secondly, unless excluded at the time, you are usually able to make a personal injury claim for illnesses or injuries that come to light in the future if they were caused by your working conditions (except if they relate to another claim which has been settled).
Thirdly, you should still be able to make claims in respect of accrued pension rights.
What types of claims can be settled by a Settlement Agreement?
Settlement Agreements may be used to stop a wide range of employment claims, including:
- Unfair dismissal
- Discrimination
- Equal pay
- Whistleblowing
- Statutory redundancy payment
- Bullying and harassment
- Unpaid salary/bonus
- Breach of maternity rights
Whatever the circumstances of your case are, we can advise you on the full implications and ensure you achieve the best possible settlement.
What are the benefits of a Settlement Agreement?
The main benefit of a Settlement Agreement for both parties is the avoidance of potentially long and stressful processes with uncertain outcomes. Employment Tribunals and court cases take their toll on all those involved. Employees and employers alike will have their abilities and skills scrutinised and criticised.
No matter what the outcome is, legal proceedings inevitably impact on workplace morale and productivity that can be difficult to recover from. A Settlement Agreement provides a mutually beneficial route out of the situation that has arisen. But in any well negotiated deal both sides will have to make compromises.
There are also several drawbacks for both parties, so it’s vital that you seek specialist legal advice from an experienced Settlement Agreements Solicitor.
What are the advantages of Settlement Agreements for Employees?
- The settlement payment will be made quickly.
- You avoid the stressful process of an employment tribunal.
- You gain the certainty of an agreement over the risk of your claim being dismissed at a tribunal.
- You may be able to agree a favourable future reference.
- Your settlement payment may, depending on the circumstances, be tax free up to £30,000.
What are the advantages of Settlement Agreements for Employers?
- An added degree of control over the outcome of the dispute.
- Speedy closure. An Employment Tribunal case can take around 18 months.
- Lower legal costs.
- You may be able to keep the details of the dispute or reasons you are terminating an employee’s contract confidential.
What is a good settlement offer?
From the employee’s perspective, whether the settlement offer constitutes a ‘good deal’ will depend on the precise circumstances, the individual’s feelings towards what’s happened and their prospects in the future.
Sometimes, it’s all about the money. So, a good deal is one where the maximum possible financial settlement has been negotiated. However, some employees attach greater value to things like a reference or minimising post-termination restrictions. Your minimum expectations would be your basic contractual and statutory rights, before looking at what you may be able to negotiate on top of this in exchange for accepting the wider implications of the Agreement.
It may also be that the circumstances of your case mean that you do not have a strong negotiating position, so a low offer may still be better than what you are likely to achieve in a tribunal. This is where the knowledge and skill of a good employment lawyer becomes invaluable. We’ll draw on years of experience to ensure all aspects of a settlement are considered to help you make an informed decision.
To determine whether you have a good offer on the table, you can consider the following factors:
- How long you’ve been employed for.
- Length of service is used to calculate your statutory redundancy entitlement or basic award in unfair dismissal claims.
- The notice period you are entitled to.
- Unless your employer has grounds to terminate your employment immediately, you’d normally expect to be paid for your notice period.
- Discrimination.
- If discrimination is a factor in the dispute, the value of your settlement should be higher.
- The strength of your claim.
- If an employer is confident that they could successfully defend your claim if it were to go to a tribunal, the offer is likely to be lower.
Can I negotiate a better offer for a Settlement Agreement?
Negotiating a settlement offer is certainly part of the process, but it may be a daunting prospect, and you need to have a full understanding of your position within the law to do so effectively without jeopardising the deal that’s on the table.
If you enter negotiations with an employment lawyer representing you, your employer is likely to take more notice of what you are saying, and you’ll be able to put forward a firm counter-offer that is difficult to ignore.
Ideally, employers should make the settlement offer in the context of a protected conversation or without prejudice conversation, so that discussions are held ‘off the record’. This allows you both to speak freely without worrying that your words could be used against you in the future.
If your employer doesn’t invite you to a protected conversation/without prejudice conversation, you may want to ask for one yourself. This shows that you’re taking things seriously, you have informed yourself about the process, and that you want to make sure matters are conducted correctly.
When it comes to negotiating money, understandably, employers won’t want to pay more than the law requires them to. But there may be other elements of the Agreement that could be targeted in negotiations especially where there is some goodwill following long service, or after having contributed significantly to the business for example, that might mean the employer is willing to consider improving the offer.
Our expert Settlement Agreement Solicitors will help you negotiate the terms of the settlement with tenacity and professionalism.
Can I reject the offer of a Settlement Agreement?
A Settlement Agreement is entirely voluntary, so you do not have to accept the offer if you don’t want to.
This is not a decision that should be taken lightly, as the circumstances of your case may mean that you have a lot to lose if you don’t accept the offer. Conversely, you should be careful not to accept an offer that is below what you are entitled to.
It is important to take the time to consider all the implications of your decision with the guidance of an experienced Settlement Agreement Solicitor. In some circumstances, if an employee rejects the offer, the employer may still be able to fairly terminate their employment.
