Settlement Agreement Solicitors in Inverness

Going your separate ways

If you have received an employment settlement agreement please contact Employment Law Inverness immediately for expert legal advice before comencing settlement agreement negotiations. A settlement Agreement (formally known as a compromise agreement) is a legally binding contract between the employer and employee agreeing that the employees' employment is terminated in return for financial compensation and often a reference.

Settlement Agreements are frequently initiated by an employer but an employee can equally request one. The financial compensation provided by the employer is normally more than would be available if the employee was being made redundant – it is an enhanced payment and advice should be obtained as to whether the offer is an appropriate one in all the circumstances.

Employers usually enter into such agreements to protect themselves against the employee making a claim to the Employment Tribunal Service. The agreements can be offered to employees for a number of reasons such as general business needs or difficulties in the employment law relationship.

Employment Law Inverness regularly advise employees on the terms of such settlement agreements and can assist in negotiating the drafting of such a document.

I have received a Settlement Agreement, what should I now do?

We offer legal advice to employees. You should contact us immediately upon receiving a settlement agreement from your employer. We will give you clear advice on the offer given to you and whether it is fair and in your interests to accept.

In order that an employee can accept the terms of a valid Settlement Agreement, they must have obtained independent legal advice about the terms of the contract and the legal implications in signing same. The legal advisor must have professional indemnity insurance. It is for the employer to meet the legal costs of provision of this advice so you will not incur legal fees.

Even though the legal costs are being met by the employer the advice that is provided to you is in no way affected – you become our client and we act to protect and promote your interests at all times.

As an Employee do I need to accept the Settlement Agreement offer?

You are perfectly entitled to refuse to sign a Settlement Agreement if one has been offered to you. As the name suggests, agreement requires to be reached between the employer and employee and of this does not happen the employment law relationship would simply continue. Each offer often has different circumstances surrounding it being made and we can discuss with you any possible repercussions that may flow from refusing to accept the offer.

What is a notice period?

A notice period signifies the time between an employer's notification of employment termination and its actual implementation. This period is subject to negotiation during settlement discussions, allowing adjustments to be made based on contract terms, service duration, and termination reasons. While serving the notice period, employees are entitled to standard salary and benefits. Within settlement agreements, options such as immediate termination, garden leave, or payment in lieu of notice (PILON) can be negotiated. Each approach has tax implications, underscoring the need for professional advice. It's crucial to outline notice period terms clearly in the agreement to prevent misunderstandings. Legal counsel's guidance is instrumental in ensuring compliance, fairness, and mutually beneficial outcomes in settlement negotiations.

Can I ask my employer for a settlement agreement?

Yes, you can initiate the process of obtaining a settlement agreement in the UK by approaching your employer and expressing your interest in reaching a mutual agreement to end your employment.

If we reach agreement, what does that mean?

The Settlement Agreement will list conditions prohibiting the seeking of a claim through an Employment Tribunal. The effect of signing and accepting the agreement including its conditions is that the employment relationship will come to an end. The employee will receive the agreed lump sum at a specified date and the employer will be secure in the knowledge that no claim will be forthcoming through the Employment Tribunal System. The agreement will also contain the termination date and usually an agreement to provide a basic reference.

Why Are Settlement Agreements Beneficial?

Settlement Agreements are commonly associated with job loss, however they can be used to solve numerous issues such as resolving a conflict or preventing a harassment case going to court. Despite this many associate a settlement agreement with redundancy and see their offer in a negative light. However, settlement agreements can be beneficial to employees as well as employers.

Due to the nature of a settlement agreement and the circumstances that they are offered in, the vast majority tend to be a reasonable amount of money, often around three months salary.

A percentage of the fee offered as part of a settlement agreement is also given tax-free. They also allow employees to avoid going through the unnecessary stress of taking their case to an employment tribunal. Settlement agreements allow workers or those leaving the company to part amicably without a public or personal court battle. Furthermore conditions such as "a good reference" or other employment conditions can be included.

Beneficial to Employers

Settlement agreements can also be beneficial to employers, with many saving costs of legal fees and ensuring that they are protected legally from an employment tribunal claim. Under an air tight settlement agreement, the employee waives the right to bring their claim before an employment tribunal giving peace of mind to the employer. Companies with a number of skilled workers often use settlement agreements because certain conditions can be put in the agreement. Under a condition, workers may not be able to work for a competitor or in a certain area of employment for a time period. Naturally this comes with a larger payoff, but it protects the company from giving competitors knowledge or skilled workers.

What are the legal requirements of a settlement agreement?

In the UK, a settlement agreement (formerly known as a compromise agreement) is a legally binding contract between an employer and an employee that typically outlines the terms under which the employment relationship will end. Settlement agreements are often used to resolve disputes or potential claims that the employee might have against the employer. There are several legal requirements that must be met for a settlement agreement to be valid:

1. Must Be In Writing: The settlement agreement must be in writing and must specify the particular claims or potential claims that it covers. This is to ensure clarity and prevent misunderstandings.

2. Independent Legal Advice: The employee must receive independent legal advice before signing the settlement agreement. This advice can be provided by a qualified lawyer or an authorised trade union representative. The employer typically covers the cost of this advice.

3. Legal Advisor's Signature: The settlement agreement must include a statement from the legal advisor confirming that they have provided advice to the employee. This is to demonstrate that the employee has understood the implications of the agreement.

4. Voluntary Agreement: The employee must enter into the settlement agreement voluntarily and without any undue pressure or influence from the employer. If there is evidence of coercion or duress, the agreement might be invalidated.

5. Consideration: There must be some form of consideration provided to the employee in exchange for agreeing to the terms of the settlement. Typically, this is a financial payment, but it could also include other benefits such as a reference or outplacement support.

6. Covers Specific Claims: The settlement agreement should specify the claims or potential claims that it covers. It's important to make sure that the agreement is comprehensive and covers all relevant issues.

7. Clear Language: The terms of the settlement agreement should be clear and easy to understand. The use of complex legal language should be avoided to ensure that the employee fully understands what they are agreeing to.

8. Time to Consider: The employee must be given a reasonable amount of time to consider the terms of the settlement agreement. This is usually at least 10 calendar days, although this can vary.

9. Revocation Period: Once the settlement agreement is signed, the employee has a "cooling-off" period of 7 days during which they can change their mind and revoke the agreement.

10. Confidentiality: Settlement agreements often include a confidentiality clause that prevents the employee from discussing the terms of the agreement with others, except for their immediate family, legal advisor, or a regulatory body.

It's important for both employers and employees to ensure that the settlement agreement meets these legal requirements to ensure its validity. If you're dealing with a settlement agreement, it's recommended to seek legal advice to ensure that your rights and interests are protected. Keep in mind that legal requirements and regulations can change over time, so it's a good idea to consult with a legal professional who is up-to-date with the latest information.

Get Expert Advice on Settlement Agreements Today

Contact our Specialist Employment Solicitors at Employment Law Inverness. If you have received a Settlement Agreement then please contact Employment Law Inverness immediately for settlement agreement advice. We have significant experience in such matters.

Call us on 01463 215 569 or complete our online enquiry form.