A settlement agreement is a document that may be offered to you by your employer either to propose the termination of your employment or after your employment has ended.
The most common reason for a settlement agreement is where an employee is being offered an enhanced redundancy payment, a payment that is above their statutory redundancy entitlement.
Other reasons include where there are performance issues and the settlement agreement is offered as an alternative to a performance improvement plan or where the parties mutually agree to bring the employment relationship to an end, due to a disagreement or some other reason.
Why do employers offer Settlement Agreements to their employees?
The agreement usually offers you compensation or an “ex-gratia” payment over and above the payments or benefits you are entitled to as part of your contract of employment or your statutory entitlements.
In consideration of these payments, the employee will be waiving their right to bring various claims against their employer.
Why do I have to take advice in respect of a Settlement Agreement?
As you are being asked to waive your right to bring various claims against your employer, you are required to obtain independent legal advice on the terms and effect of the agreement and its effect on your ability to bring a claim against your employer.
The legal adviser must sign an Adviser’s Certificate to confirm that advice has been given.
Who will pay the legal fees for the advice?
Employers normally contribute towards the legal costs of obtaining advice in relation to the settlement agreement. The employer’s contribution should be confirmed in the settlement agreement. If you are unsure if your employer is contributing towards your legal fees, you can clarify this or your legal adviser can do so on your behalf.
What advice will I receive in relation to the Settlement Agreement?
We will advise you in respect of all terms of the agreement including:
- The amount of the compensation / ex-gratia payments including when the payments will be made;
- Salary and benefits including payments in respect of notice and accrued but untaken holiday
- Advice in relation to other benefits such as shares, car allowance, stock options and private healthcare;
- Restrictions including post-termination restrictions in your contract of employment;
- Confidentiality requirements including in relation to the settlement agreement;
- An agreed reference; and
- Employer legal fee contribution.
Our advice will also cover the potential claims you may have against your employer and we can negotiate the best compensation package in the circumstances. We will ensure that your interests are protected.
How can I arrange a meeting?
If you require advice in relation to a settlement agreement you have received from your employer or you think you may receive a settlement agreement from your employer, please contact our employment law solicitors for an initial discussion and to arrange a meeting.
Your employer may have given you a deadline for the return of the signed agreement and therefore we appreciate that you may want to obtain advice and bring matters to a conclusion as quickly as possible. We can offer a meeting at short notice and will contact your employer promptly following the meeting to raise any drafting amendments or issues in respect of the terms of the agreement.
Once terms have been agreed, we will arrange for you to sign the agreement and then return the agreement to your employer, together with the signed Adviser’s Certificate.
If you are an employer and are considering offering a settlement agreement to an employee, please contact our employment law solicitors who can provide you with advice regarding the procedure and the terms of the settlement agreement.
