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Settlement Agreements

What is a Settlement Agreement?

A settlement agreement is a formal legal agreement between an Employee and Employer, usually to bring the working relationship to an end voluntarily.


It sets out all of the terms and conditions under which the employment relationship will terminate.  This includes setting out all the payments due and owing to the Employee as a result of the termination.  Sometimes this can include ex gratia or compensatory payments depending on the circumstances that have led to the Settlement Agreement.

Importantly, the Settlement Agreement also restricts the Employee's rights to bring any future claims (either in the Employment Tribunal or the Civil Courts) against the Employer arising out of their employment.  This is why it is so important for Employees to avail themselves of independent legal advice before signing off their legal rights - whatever the figure presented by the Employer.

Employees are also often asked to agree to various other conditions including not making any derogatory comments about the company and maintaining confidentiality etc

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Why do you need a Lawyer?

Simply put the Settlement Agreement would be invalid without you taking independent legal advice on the terms and conditions.  It is your Employer's responsibility to ensure that you have received this advice before signing off on the agreement.

But in fact it is more important than that - Micaila will ensure that she knows everything about why your Settlement Agreement has been drawn up and make sure that you are not settling for terms and conditions (including a financial sum) that is less than what any potential claims may be worth.

It is only when Micaila is sure that the terms are in your best interests that she would advise you to sign.

Who pays for the Independent Legal Advice?

As part of the terms and conditions of the Settlement Agreement, your Employers are obliged to pay reasonable legal fees in connection with the advice given and the eventual signing of the Settlement Agreement.  

Usually, the fee specified by your Employers is sufficient and you will not have to pay towards this service.

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What if I don't agree to the terms?

If either you, or Micaila, think that the terms are not in your best interests and do not adequately compensate you for any potential or actual claims you may have then Micaila will enter into negotiations on your behalf with your Employer to bring the matter to a swift but amicable resolution.

This can require a degree of tact and skill given that the Employer can choose to withdraw the Settlement Agreement and continue to employ you whilst at the same time commencing other appropriate action such as Disciplinary or Capability Processes, which you may wish to avoid.


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