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Settlement Agreements

Settlement agreements can be used in two situations: to end a contract of employment cleanly and protect the employer from future claims, or to settle an existing dispute between employer and employee. If you are looking to propose, or have been proposed with an employment settlement agreement, our employment law solicitors in Brighton and Hove can advise.

What Is A Settlement Agreement?

A settlement agreement is a legally binding agreement between an employee and an employer. When a settlement agreement is offered, it normally involves a severance payment in return for an agreement from the employee that they will not pursue any claims in a court of law or an employment tribunal. If a claim is ongoing, it will normally state that the employee will withdraw their claim.

There are likely to be specified terms that have to remain confidential, including the circumstances surrounding the contract’s termination and the amount of the severance payment.

Why Use A Solicitor For Your Settlement Agreement

Signing a settlement agreement comes with risks if you don’t know exactly what you’re signing, and you can’t come back at a later date and appeal the agreement claiming you didn’t understand it.

Most employers will advise that you take independent legal advice when signing a settlement agreement if you don’t already have an employment law solicitor acting for you. It’s also useful to have a solicitor review the agreement to see if there are any unfair terms, and to propose suitable amendments.

If you don’t take legal advice, your agreement could be challenged in future. This is particularly risky for employers if an employee fails to seek legal advice, which is why often employers will offer to pay this cost on behalf of the employee.

Furthermore, as an employee, you could have a strong case where it isn’t in your best interests to settle early or receive a settlement that simply undervalues your claim. Our employment law solicitors will help you understand what’s fair and the consequences of the different options on the table.

The implications of signing a employment settlement agreement must be fully understood by all parties. An employment solicitor can make sure your severance payment is a sum that represents the strength of your potential claims and make sure you leave with a full reference.

You should never feel pressured into accepting a settlement agreement without first taking legal advice.

Can My Employer Dismiss Me If I Don’t Accept The Settlement Agreement?

If you reject an employer’s proposed settlement agreement, your employer must continue to treat you normally. If they fail to do so, they could open themselves up to a claim of discrimination.

If this happens, it’s best to raise a grievance, which, if not upheld, could result in the employee’s resignation and a claim against your employer for constructive dismissal. 

What About Confidentiality?

Confidentiality clauses are an extremely important part of settlement agreements for employers. While employers will want these clauses to be as stringent as possible, often they can be relaxed to allow you as the employee to speak to those closest to you, or to be able to tell future employers about the circumstances of your departure from the company.

There may also be clauses preventing employees from making derogatory comments about the employer. It is worth noting that these can be changed to mutual clauses, which stop the employer from denigrating you, as well as vice versa.

If you need a settlement agreement reviewed by one of our employment law solicitors, then contact us or call us on 01273 726951.

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