Our employment law team includes settlement agreement lawyers in London and Essex. We can provide same-day virtual appointments where needed.
We charge a fixed fee for drafting a settlement agreement. Any additional time required negotiating the agreement with the employee’s solicitor, if needed, can also be done on a fixed fee.
What is a Settlement Agreement?
Formerly called a compromise agreement, a settlement agreement is a contract entered into between a business and a departing employee or ex-employee. It sets out the terms for ending the employee’s employment. Usually some compensation is payable to the employee or ex-employee. Sometimes you include a form for a reference.
The Employment Tribunal recognises a settlement agreement as being legally binding. It prevents the employee bringing any subsequent employment claim against the employer.
However, for the the agreement to be legally binding, the employee must take independent legal advice on the effect of signing the agreement. The solicitor advising the employee will sign a certificate confirming that he or she has given the necessary advice.
The settlement agreement should be comprehensive and, for example, ideally cover any bonus the employee might have been due or deal with any share options the employee had.
If there is a pending Employment Tribunal claim, then the negotiations about a possible settlement agreement are confidential. So, if you do not reach a settlement, the employee cannot use the negotiations against you in evidence in the Tribunal (and vice versa).
Advantages of a Settlement Agreement
For the employer, a settlement agreement provides certainty and peace of mind that the employee will not bring any claim at a later date. This has several advantages for the employer:
- certainty on the outcome of a dispute (even the strongest case has its risks in the Tribunal),
- avoiding wasting management time on disputes, and
- limiting legal fees.
Agreeing terms for the settlement of a dispute can bring a swift resolution to the issue.
You can also use settlement agreements to bypass long-winded employment procedures or uncertain outcomes. For example, managing an employee whose performance is not acceptable may take several months and quite a lot of management time. A settlement agreement, with some compensation to the employee, may be the more cost-effective solution. Similarly, they can be of assistance if you have an employee who is long-term sick and incapable of doing their job. A settlement agreement, with the offer of compensation, can sometimes avoid the need for medical reports and lengthy discussions.
Covering London and Essex
We are based from an office in London at Liverpool Street and Colchester in Essex. Our team provides most of our services remotely using video-conferencing. We can do face-to-face meetings when needed.
Managing an employment dispute can be stressful and many of our client’s appreciate in-person meetings at the start of the process. A settlement agreement is a common conclusion to an employment dispute.
Contact our expert team right away to speak to one of our settlement agreement lawyers. We can draft settlement agreements. We can also advise on an agreement that has already been drafted. Whilst most of our clients are employers, we also advise senior employees and company directors. All initial discussions are without charge.
ACAS have issued a statutory code detailing when settlement agreements should be used.
