Settlement Agreements bring an end to the employer and employee relationship. They are legally binding contracts that need to be carefully considered and negotiated by employers and employees. They are not legally binding unless the employee has had independent legal advice on the terms before signing and the relevant legal adviser has completed an accompanying certificate showing that they have given independent advice to the employee.
Our Employment Solicitors and Barristers can help with the preparation and negotiation of Settlement Agreements and provide independent legal advice for employees asked to sign a Settlement Agreement. We can advise you and complete your agreement either in a face-to-face meeting or if you prefer by using our subscription to Teams and AdobePro which enable you to be advised and complete your agreement on your phone, tablet or laptop.
Initial Telephone Consultation or Meeting
Our highly experienced Solicitors and Barristers are here to take the worry off your hands. Please call us on 01256 460830 or email [email protected] and one of the team will get back to you as soon as possible.
A Settlement Agreement is drawn up by an employer to set out the terms and conditions offered to an employee to terminate the employment relationship on terms which they seek to agree with the employee. In return for terms offered by the employer, the employee will be settling any claims they may have against the employer and usually any of their directors, employees and group companies, in relation to the employee’s employment and the manner of its termination. The employee is required to take independent legal advice and once the terms are agreed by the employer and employee and the independent adviser completed their certificate or letter, the employment relationship will end on the agreed terms. Once the Settlement Agreement is signed by the employee, employer and Legal Adviser, it becomes legally binding and is enforceable in the Court and Employment Tribunal.
Settlement Agreements can be used to terminate employment or on the withdrawal of Employment Tribunal proceedings. We also assist with the drafting of COT3 agreements.
A Settlement Agreement should be negotiated by employer and employee so that its terms protect both parties interests. As the employee must take independent legal advice on the proposed Settlement Agreement terms, employers generally pay a fee or legal costs contribution to the employee’s legal adviser to facilitate this.
Key aspects of the Settlement Agreement include:
- Details of the employer and employee
- The termination date
- The consideration for the termination of employment, the amount, the taxable status and the timescale for payments
- All contractual payments due, for example, arrears of salary, bonus/commission, notice pay and holiday pay
- Any expenses due
- Details of the employment claim the employee will be settling or compromising the right to pursue once the Settlement Agreement is signed and in force
- Usually withdrawal of any appeals, grievances and data subject to access requests
- Return of company property
- Confidentiality provisions
- Tax status and tax indemnities
- Warranties and Indemnities given by the employee and employer
- Consequences of non-observance of the terms of the agreement
- Terms of a reference and announcement (if applicable)
- The employer’s fee contribution for seeking independent advice
Benefits of a Settlement Agreement
If both parties agree on the terms of the settlement, the Settlement Agreement achieves finality and an end to the threat of Employment Tribunal proceedings or the withdrawal of a claim. It allows employee and employer to part on amicable terms.
The Settlement Agreement significantly reduces the claims the employee can make against the employer and therefore reduces the risk of the costs involved in Tribunal proceedings.
A key benefit of a settlement agreement is that usually the first £30,000 of any termination payment under a settlement agreement can be paid free of PAYE tax to the employee.
Employment Solicitors and Barristers can give robust and honest advice on the benefits of a Settlement Agreement for an employer or employee so you can make an informed decision on whether the Settlement Agreement benefits you.
Our Fees
In most cases we are able to cover the costs of our advice for settlement agreements with the legal costs contribution. Once we have seen the settlement agreement we will confirm this with you and if for any reason we are recommending that you incur legal costs in excess of the costs contribution we will explain why prior to incurring them. This enables you to make a decision as to whether you want to simply proceed without incurring any legal costs or not.
Our expert team are waiting for your call, where we will discuss your matter and specific requirements and advise on the best way forward.
How to get in contact
Our Employment Solicitors and Barristers are on hand to help you and can assist wherever you are based. Please call us for a no-obligation, initial discussion on 01256 460830 or email [email protected] and we will arrange for one of the team to call or email you back.
Based in Basingstoke, we are instructed by clients across the country and abroad and will be delighted to help. We can undertake this work by using Teams, Zoom or by face to face meetings and by using AdobePro which enables clients to sign using their mobile phone, laptop or tablet.
Please call us or email and we’ll get back to you as soon as possible.
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