Settlement Agreement Solicitors

What is a settlement agreement?

Employment settlement agreements are legally binding contracts between employers and employees (or, in rare cases, perspective employees). These are often used in the event of employer and employee wanting to agree an amicable end to the employment relationship, or, less commonly, to resolve an ongoing disagreement/dispute between parties without bringing an end to employment.

Settlement agreement process

Settlement agreements can help ensure a clean break at the end of the employment relationship for both parties, with the employee waiving their right to bring claims against their employer in the future in the Employment Tribunal. From the employee’s perspective, they can often forgo a lengthy formal process and/or receive an enhanced exit package to what they would legally be entitled to if their employment ended in absence of the settlement agreement.

Prior to parties signing a settlement agreement, there will usually be discussions between the employer and employee as to the agreement’s terms, referred to as either a ‘protected conversation’ or a ‘without prejudice discussion'. This provided protection to the discussions, which are classed as then being 'off the record', so that pre-termination negotiations will not generally be admissible in any future Employment Tribunal proceedings in the event that parties cannot reach an amicable arrangement under a settlement agreement.

When entering into a settlement agreement, the legal principles and practical implications can be complex. At the very least, the employment settlement agreement should conform and comply with all formalities set out in legislation to make sure it’s legally binding. The agreement should be in writing and state that the requirements relating to the settlement agreement have been agreed, the employee must receive legal advice by a qualified advisor on the terms and effecting of signing the agreement, and the agreement should subsequently be signed by both the employee and their qualified advisor.

The terms of the settlement agreement will likely cover, inter alia:

• Arrangements on termination, such as any payments in respect of notice and holiday
• The agreed date of termination of the employment relationship
• Any additional ex-gratia payments and the date of which the payment is to be made
• The overall tax implications of the agreement based on the payments being made
• Any contribution form the employer in respect of the employee’s legal costs
• Arrangements in respect of company property
• If the employee will be provided with a reference 
• If the employee is subject to any post termination restrictions 
• Any confidentiality obligations that parties are subject to
• Any warranties that either party is agreeing to.

Navigating a settlement agreement with Wright Hassall

At Wright Hassall we pride ourselves on providing our clients with the support with their current situation as well as cost effective guidance, tailored to their specific needs. 

Our employment lawyers work with employers and employees across England and Wales to help resolve any employment law issues. We work with clients in a range of industries, giving us the knowledge and skills needed to assist and advice on a wide variety of matters arising across multiple sectors. 

Get in touch with us today to see how we can help!

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