Employment Settlement Agreements

Settlement agreements are typically an agreement where you as the employee are paid a sum of money in exchange for signing away claims against your employer. Such agreements are voluntary, can be offered at any time during the employment relationship or afterwards and the process of entering into settlement discussions can be instigated by you as an employee.

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Understanding settlement agreements

If presented with a settlement agreement, it is important for you to have a clear and thorough understanding of what you are agreeing to and also the effect which entering into the agreement will have on your employment rights.

Settlement agreements can deal with a wide range of issues; they don’t need to be restricted to waiving the statutory employment related claims (for example unfair dismissal, discrimination, and holiday pay) in exchange for money. Settlement agreements also commonly include provisions regarding entitlement to shares, company property, references and benefits.

How much you receive as part of a settlement agreement can depend on a number of factors including:

  • Whether you have a valid claim
  • The reason for your employment relationship changing or coming to an end
  • Whether you are alleged to have committed an act of misconduct
  • How averse to risk your employer is
  • What your own circumstances are and what’s happened during your employment
  • What your contract says
  • Each party’s approach to negotiation

The decision to enter into a settlement agreement is a matter for each party. Your solicitor’s role in the process will be to provide advice on the purpose and effect of the agreement, what options each party has available, and discussion of a tactical strategy to improve the terms of the offer if that is what you want.

How we can help you

We can advise and support clients entering into settlement agreements in a way that makes the process as easy as possible for you and seeks to find the right solution for both parties. Employment Tribunal proceedings can be lengthy, costly and the outcome is ultimately outwith each party’s control. A settlement agreement may offer a more straightforward, cost-effective and speedy solution.

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