Employee Settlement Agreements
My employer has offered me a Settlement Agreement or had a Protected Conversation with me, do I need to see a solicitor?
Yes, by law, in order for the settlement agreement to become legally binding, you need to take independent legal advice on it from a solicitor or other certified trade union/legal advisor.
What is a settlement agreement?
It’s a legally binding agreement between you and your employer to bring your employment to an end. It usually provides for the payment of severance pay by the employer. In return you agree not to pursue any employment claims in the Employment Tribunal or courts. Often the employer will also offer an agreed factual reference as part of the settlement agreement.
The settlement agreement sets out the terms under which you will leave your employment and any payments that will be made to you as well as how to return company property including laptops, phones, confidential information and documents and company cars.
When do employers use settlement agreements?
Employers will use settlement agreements when they wish to bring the contract of employment to an end early. This is so that they can achieve a clean break quickly which is normally beneficial to both sides. This is usually when the employer doesn’t want to follow a long, drawn-out process. This could be where there is a dispute, or it doesn’t want to deal with a performance review process or a full redundancy process before terminating the contract. Until it is signed the settlement agreement is “off the record” meaning that it can’t be referred to before an Employment Tribunal or court.
What can a solicitor do for me?
A solicitor will review the settlement agreement and advise you upon the terms offered to you and make sure that they are fair and reasonable. If it is considered that the severance pay is insufficient or the terms offered are not reasonable considering your circumstances, your solicitor can seek to negotiate better terms on your behalf.
Do I pay tax on my settlement?
If you are receiving money for notice pay this element will be taxable at the usual rate. Otherwise, the first £30,000 of the severance pay can normally be paid tax free. We can advise you about this once we have reviewed the agreement and taken your instructions.
How much will a Settlement Agreement cost?
Your employer will normally pay your fees for taking advice upon the settlement agreement.
This is normally a contribution between £250 – £5,750 plus VAT depending on the complexity of the issues. We do have a minimum limit of £500 plus vat for any settlement agreement advice given so where your employer has not offered this level, we will request they increase their costs. We will discuss costs with you before we commenced any work.
The fees offered by your employer will normally cover the fees and if there is an insufficient amount offered by your employer, we will normally ask them to cover any additional cost. If your employer won’t meet the additional cost or you choose not to sign the settlement agreement you would need to meet our costs, we will always advise you of any costs that could be or are payable by you in advance.
We can deal with your Settlement Agreement quickly
We can generally make appointments within 24 hours and sooner in some cases. Where the amount offered is satisfactory, the settlement agreement can be signed by you, us and returned to your employer (often the same or next working day – initially by email) to ensure speedy payment of the settlement monies.
Where the terms are not agreed we will negotiate with your employer within in any time frames or deadlines they have given to help ensure the matter is resolved as quickly as possible for you.
