Settlement agreements

When you are offered a settlement agreement you will need to take advice from an independent employment lawyer. Our employment lawyers will ensure you are properly advised about compensation for any claims you may have.

What is an employment settlement agreement?

A settlement agreement is a document that records the terms on which an employer and employee have agreed to terminate the employee’s employment or settle a dispute. It will need to deal with all aspects of your employment.

It is a legal requirement that employees obtain independent legal advice before entering into a settlement agreement. Otherwise, it is not legally binding.

Do I have to accept an employee settlement agreement?

Employees do not have to agree to a settlement agreement from employers. They do have the right to negotiate the terms of any agreement. Once you sign a settlement agreement, it is legally binding, and you cannot pursue any claims through the courts or an Employment Tribunal. We can advise you on your settlement agreement and negotiate more favourable terms for you, if you have not been properly compensated.

As well as advising you on the fairness of the financial terms offered to you, we can advise you on:

• Your prospective claims against your employer and the value of those claims
• Whether signing the agreement is in your interests and the best course of action for you
• The consequences of your signing the agreement or not signing it
• Your entitlement to salary and benefits (for example, pension, company car or private medical insurance), under your contract of employment, which a settlement agreement should cover
• What an “ex-gratia” or “termination” payment is and what it is aimed at compensating you for
• How it impacts on any share based incentive arrangements
• Negotiating a quick resolution
• Facilitating an amicable exit.

Fees and employer contribution

A settlement agreement will usually include a contribution from your employer towards the costs of getting advice on the document. Employers typically offer between £350 and £500 plus VAT at 20%. They are not obliged to cover all your costs, only the costs of advising on the terms of the agreement.

Sometimes, if the agreement is straight forward and there are no issues with it or the settlement package, then our lawyers can advise you on its contents and sign the adviser’s certificate to make it valid. Our fees for this start from £800 plus VAT at 20%.

Sometimes, when there are negotiations on the terms of the agreement, such as the financial package, our fees will be higher and we can provide you with a tailored quote before starting work. Employers are often amenable to being persuaded by you or us to increasing the contribution. If the costs of instructing us are covered by your employer in full – we will raise an invoice to you but (payable by your employer). This invoice will be sent to your employer to pay direct to us. However, if you do not accept the package and settlement agreement or your employer will not pay all of your legal costs; then we will invoice you for our costs agreed with you and you will be liable to pay us.

Facing a difficult situation regarding your employment such as redundancy or unfair treatment can be frightening and stressful. It can feel as if all the cards are stacked in favour of your employer. It’s important to understand that employment legislation exists to protect employees and getting advice on your rights can give you an entirely different picture. Getting advice from our Kent based employment lawyers can help you achieve a quick resolution, maximum compensation and an amicable exit.

Our team of specialist employment lawyers in Kent have the necessary expertise to handle a full range of employment law issues.

We have a proven track record of winning employment tribunal claims and regularly achieve great success in negotiating severance packages and assisting in the facilitation of exit strategies.