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Read more articles in: Amanda Hyam, Blog, Employment Law
If you are facing a workplace dispute or your employment is coming to an agreed end, you may be faced with a settlement agreement.
This is a legally binding contract between an employer and an employee and is often used in return for financial payment.
It can be difficult to know when to take a settlement agreement and it is important to understand what you are signing and how it will affect your future career.
A settlement agreement often requires an employee to waive their rights to bring future claims against the employer, such as unfair dismissal and discrimination claims.
Employees must seek legal advice before an agreement is signed, as without this, the agreement is not legally binding.
Settlement agreements are used in a range of situations, including:
A settlement agreement is not always planned and can arise suddenly.
For example, if you are called into a meeting and told your role is no longer required or during an ongoing dispute where tribunal proceedings are being considered.
You should know that you do not need to have started an Employment Tribunal claim for a settlement agreement to be offered.
Most settlement agreements contain:
Depending on the seniority of your role or the circumstances, there may be additional clauses covering intellectual property or post-termination obligations.
Settlement agreements are voluntary and you do not have to accept the first offer made.
You must carefully consider your personal circumstances, the terms being offered and any alternate options available to you.
A settlement agreement may be the right option if the compensation reflects the value and length of your role.
It is also beneficial if you value certainty and a clean break rather than an Employment Tribunal proceeding, which can be time-consuming and stressful.
However, a settlement agreement may not be the right choice if the financial offer is significantly lower than what you might recover through a legal claim.
If the agreement contains overly restrictive clauses that could limit your future employment prospects, you may look to decline or renegotiate terms.
You should never feel pressured to sign a settlement agreement and you should receive enough time to assess the terms and if any agreed-upon references are missing or unclear.
Overcomplicated wording can catch you out and we can help you fully understand the agreement so you can make an informed decision in your best interests.
A settlement agreement is not right for everyone and understanding what legal rights you are giving up is crucial.
We can help assess whether the compensation is fair and if a legal claim is better suited to your circumstances.
We can negotiate improved terms on your behalf, such as a higher settlement figure and the removal of unreasonable restrictions.
Settlement agreements can feel intimidating, but our team can help you make a decision that is not based on pressure and help you get what you deserve.
To learn more about your rights in a settlement agreement, speak to our team today.
Head of Dispute Resolution and Employment
I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.
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