You may be in a situation where your employer has proposed an agreement relating to your employment. Or, you may be unsure about the next steps to take if you feel a prior agreement has been broken. Find out more about settlement agreements and how we might be able to help below.
What is a settlement agreement?
Settlement agreements are legally binding contracts, which an employee and employer agree to as a way to create a clean break in the employment relationship. Payments are usually made under the settlement agreement to settle any disputes between the employer and employee and to bring the employment relationship to an end.
Settlement agreements are usually proposed by the employer as a way to prevent further or future legal action being taken by an employee. Before entering into an agreement of this kind, there are some important points to consider:
- They are voluntary
- They can be offered at any stage of an employment relationship
- They are legally binding contracts that waive an individual’s rights to make a claim covered by the agreement to an employment tribunal or court
- The agreement must be in writing
- They usually include some form of payment to the employee and may often include a reference.
It’s important to note that once a valid agreement has been signed, the employee will be unable to make an employment tribunal claim about any type of claim which is listed in the agreement. Therefore if a dispute arose in the future, and is featured on the settlement agreement, the employee would not be able to take legal action.
Can you negotiate settlement agreements?
Many times employees are agreeable to the offer within their settlement agreement and decide to take it without reservation. However, this is not always the case.
It is important to consider your employer’s offer carefully. In doing this, you should give some thought to the following points:
- How strong is your case?
- What is the likelihood you would win your case if you took it to court?
- What is the difference between their offer and what you could get?
- What are your other options if you decide not to take the offer?
- Would you be willing to go to an employment tribunal over this?
Whilst taking a claim to an employment tribunal is an option, and may be a good strategy for getting more money out of the settlement discussions, it is important to keep in mind that the process for employment tribunals can be lengthy.
This means that you will have to wait longer until you recover any money owed to you. Also, the process can be stress-inducing and emotionally draining, as well as the prospect for success not being guaranteed. Because of this, you may be more inclined to accept a settlement package rather than pursue a tribunal claim against your employer.
Reaching an agreement
If you reach an agreement with your employer, it is important that the agreement is clear and sets out everything you agreed upon. You do not want to have any gaps in what you can and cannot do going forward, because this could mean nasty surprises later on.
Does a settlement agreement need to be witnessed?
You do not need an external witness to sign your settlement agreement, but you do need to obtain legal advice on the terms of the settlement agreement. Your legal advisor will also need to sign the advisor’s certificate included in the settlement agreement. Once you’ve reached an agreement with your employer, it should be written down, reviewed by your solicitors before you sign and you should have received advice from your solicitor on its terms.
The agreement should be:
- In writing
- Specific, and should cover all parts of the dispute
- Exactly the terms you and your employer agreed to
- In line with the regulations surrounding settlement agreements
You should seek advice from a “relevant independent advisor” on the terms of the settlement agreement and its effects on you. This independent advisor would need to complete and sign the Advisor’s Certificate inserted into the settlement agreement.
What happens if the agreement is broken?
Breaking a settlement agreement is by definition a breach of contract. If your employer breaks the agreement, you can go to country court to bring a claim for this breach.
Can a settlement agreement be rescinded?
A settlement agreement can only be rescinded or withdrawn if neither party has signed it. Without both signatures, the agreement cannot be classed as a binding contract, and can be discarded without prejudice. If you require further advice and guidance regarding agreements, or your employer has proposed an agreement that you’re unhappy with, get in touch with us today. We may be able to help with getting a settlement agreement at work, or supporting you with the employment tribunal.