Settlement Agreement.

In employment law, a settlement agreement is a legally binding agreement between an employee and an employer.

Most commonly, a settlement agreement is used for redundancy. However, an employer can also use a settlement agreement to resolve an employment issue and prevent an employee from taking a claim to the employment tribunal. 

A settlement agreement is valid if it meets all the following criteria:

• The agreement must be in writing.
• An employee must receive independent legal advice from a relevant independent adviser. The adviser must clearly outline the terms and conditions of the agreement and the effects of agreeing to the agreement.
• An agreement must relate to a “particular proceeding” or “particular complaint”
• The adviser providing the independent legal advice must have professional indemnity insurance or a current contract of insurance. This insurance covers the risk of a claim made against them by the employee.
• The agreement must identify the adviser who’s providing the independent legal advice.
• Finally, the agreement must state that all the conditions regulating settlement agreements are met.

The employer will usually cover the cost for the employee to get independent legal advice on a settlement agreement.

If an employee is unhappy with a settlement agreement, they don’t have to sign it, and other options are available.

Negotiation

In an instance where an employee feels the terms and conditions of the settlement agreement are unfair, they can enter into negotiation with the employer. It’s beneficial to have the support of a solicitor during the negotiations as they can help to achieve a fair agreement.

Claim to the employment tribunal

On the other hand, if the employee doesn’t wish to settle a dispute through a settlement agreement, they can ignore the agreement and claim through the employment tribunal. However, they must make the claim within three months minus one day since the first act(s) in question.

Whether you’re an employer or employee, it’s advisable to seek legal advice early on in an employment claim.

A settlement agreement is legally binding. Therefore, if one party breaks the terms and conditions of the agreement, the other party is entitled to take legal action.

When it comes to a breach of a settlement agreement the best course of action depends on the type and severity of the breach. Therefore, it’s best to discuss your case with a settlement agreement solicitor. To contact one of our solicitors please call us on 0203 007 5500.

In most cases, the employer will pay for the employee to get independent legal advice on their settlement agreement. In this case, there won’t be any cost for the employee to obtain independent legal advice on the agreement.

However, if the employer hasn’t offered to cover the cost of independent legal advice, Britton and Time will charge £450 plus VAT. For this price, our solicitors will:

• Read through the settlement agreement
• Clearly explain all the terms and conditions of the agreement
• Highlight any potential future consequences of signing.

In an instance where either party is unhappy with the terms and conditions of the settlement agreement and wants to negotiate the terms, this is a separate service with separate costs.

A settlement agreement cost for the employee is dependent on the legal work needed on the case, the level of advice given, and the monetary value of the settlement itself.

Signing a settlement agreement without fully understanding the terms and conditions comes with an array of avoidable but costly risks. Therefore, it’s always worth sitting down with a settlement agreement solicitor to understand precisely what is being agreed.

Even in a circumstance where you’re happy with all the terms and conditions, you’ll gain peace of mind that you’re not going to face any unwanted surprises in the future.

To contact one of our settlement agreement solicitors, please call us on 0203 007 5500.