We have seen a recent influx of employee clients needing legal advice, assistance and support upon receipt of a settlement (compromise) agreement from their employer.
Being issued with a settlement (compromise) agreement can be a worrying and stressful time for an Employee and their family as they find themselves suddenly facing an imminent unplanned exit from employment, loss of income and fears over the ability to find alternative employment.
Settlement (compromise) agreements can arise from a number of situations including compulsory or voluntary redundancy situations; variations to contracts of employment; disputes at work; grievances and disciplinaries and sickness absences; ill-health retirements; and where an Employee faces allegations of poor performance or misconduct.
Whilst there are occasions where an employee can propose and negotiate an exit from employment by way of a settlement agreement, in reality most of the time, employees find themselves facing a request by their employer to sign a settlement agreement with a very short deadline; a potentially sub-standard package and a threat of continued formal action for example a disciplinary or dismissal.
Settlement Agreements used to be called Compromise Agreements. Once legally complete a settlement agreement is a legal contract between an Employer and an Employee enforceable by both parties. The agreement documents and agrees the termination of an Employee from employment with an Employer. Such agreements are usually confidential.
A Settlement Agreement generally includes a termination date (the date an employee departs a company), particular payments to an employee, a reference and confidentiality. An agreement requires an Employee to accept particular terms in return for waiving his or her rights to bring complaints, claims or rights of action against the Employer, its directors, officers and employees. It therefore seeks to remove the risk of potential claims and defence costs for an Employer.
For a Settlement Agreement to be valid, an Employee must take independent legal advice on the terms and effect of a Settlement Agreement and certification that this has been provided by an independent legal adviser has to form part of the agreement. For these reasons, Employers usually provide a contribution to an Employee’s legal fees.
Whilst Settlement Agreement’s may sometimes originate from a distressing and unfortunate set of circumstances, they can upon conclusion provide closure on a situation for an Employee and allow an Employee to move forward and begin a new chapter to their life.
The requirements of legal advisers are to advise an Employee on the terms and effect of a settlement agreement. However it is imperative to go much further than this.
We (Farleys Solicitors LLP) pride ourselves on “going that extra mile.”
We endeavour to understand our clients; their existing terms of employment; their objectives and what is of paramount importance to them.
To us, it is not just about ensuring all contractual entitlements are included in a settlement agreement but doing the very best for our client which includes advising you as to whether or not it’s a good deal and if not seeking to achieve an additional monetary amount to appropriately compensate an Employee. In addition to this, consideration will be given to relevant tax issues arising from payments due to an Employee.
We will also negotiate on your behalf to amend terms and agree additional elements to settlement agreements to protect you and ensure your ability to find alternative employment or pursue your career is not impeded by the settlement agreement and the Employer’s proposed terms.
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