Settlement agreements

Your employer may offer you a sum of money or other benefits in return for you signing a settlement agreement in exchange for your agreement not to raise some or any claims after the date of the settlement agreement. We understand that deciding to agree and negotiating terms can be complicated and distressing. It’s important to seek legal advice and be sure of your next steps.

At Leigh Day, we’re highly experienced in dealing with settlement agreements. We can take you through your agreement and explain what each clause means. We’ll offer our expert legal advice and alert you to any potential problems.

Where it is appropriate to do so, we can also liaise with your employer to seek amendments to the agreement and make it more beneficial for you where necessary.

If you need assistance with a settlement agreement at work, get in touch with our team of settlement agreement solicitors today.

What is a settlement agreement?

A settlement agreement is a legally binding, mutual contract that sets out terms to resolve a workplace dispute or end an employment relationship. They often involve conditions that agree to avoid an employment claim in exchange for compensation.

Settlement agreements are one of the few mechanisms by which an employee can sign away his or her employment rights. Agreements need to meet various requirements to be valid, including that:

• You must receive independent legal advice on the terms and effect of the agreement
• The agreement is in writing
• You must identify your legal advisor
• The legal advisor must have relevant liability insurance
• It is signed by you, your employer and your solicitor

This is to ensure that you understand that you will usually not be able to enforce a significant range of employment and other rights once you have entered into the agreement.

Why would a company offer a settlement agreement?

Employers will often use settlement agreements to protect themselves, using confidentiality clauses and anti-competitive conditions. It can also help employers avoid procedures such as:

• Formal disciplinary
• Redundancy
• Unfair dismissal and other employment claims.

Settlement agreements can be offered and entered into whether you’re leaving an employer or staying in employment. By using a settlement agreement, both parties are confirming that a given issue or set of issues which might be in dispute is resolved and crucially cannot be raised in a claim before the Tribunal or the courts.

It’s important to understand that a settlement agreement can be a a useful and less costly alternative to making an employment claim in the Tribunal or the courts.

When engaged in a dispute with your employer, there is of course a risk that you may not reach a mutual agreement with your employer and your rights and position in respect of whether to bring an external claim will need to be considered.

At Leigh Day, we can offer specialist legal advice on employment law claims and settlement agreements. From the start of your concerns to ensuring fair compensation terms or representation in claim, we’re here to support you.

What is usually included in a settlement agreement?

Common clauses in a settlement agreement may include:

• Compensation, including rights to bonus and share options
• The date your employment will end, if applicable
• Recognition of the parties’ understanding of the tax position and tax indemnity from the employee
• Confidentiality obligations and restrictions
• A record of claims waived or settled
• Repayment provisions to the employer if you breach the settlement agreement. These could result in payment back of more than you have received in certain circumstances
• An agreed reference.

Confidentiality clauses are often used in settlement agreements to protect the terms agreed. It’s also to prevent you from discussing your settlement with colleagues. If your claim is brought to the employment tribunal, the dispute will usually be made public.

Normally, though not always, the termination of your employment will be one of the main terms of the agreement. Any payments you receive will partly be to compensate you for this.

What’s included in your settlement agreement will depend on your circumstances.

Who can we assist with settlement agreement services?

We offer legal advice for settlement agreements within a wide range of work sectors. We have expertise supporting claimants from backgrounds such as:

• Banking and financial services
• Legal sector
• Media sector
• Retail
• Charities
• Industry and technology, including Pharma
• Healthcare
• the public sector and local government

How can our settlement agreement services be of help?

At Leigh Day, we can:

• Help you understand the choice between going ahead with legal proceedings or negotiating a settlement agreement.
• Equip you through broader advice about your position with the knowledge to negotiate with your employer directly, which may help you negotiate more favourable settlement conditions, including compensation, restrictions and anti-competitive clauses.

We understand that settlement agreements can be complex and stressful to navigate.