Settlement Agreements can be an effective way to deal with termination of an employment relationship. If handled correctly, these agreements can be used to resolve disputes, offer a clean break to both employer and employee and draw a line under the employment relationship. This can then allow both parties to move on, assured of confidentiality and freedom from the expense and distraction of litigation.
How Settlement Agreements work
Settlement Agreements involve an employee “settling” their statutory and contractual employment rights, so that proceedings already started are settled and discontinued - or the employee agreeing not to bring any Tribunal claim they may have in relation to breaches of employment rights or termination of employment.
Employees will be paid a sum by way of compensation (which may in some circumstances be paid tax free). The Employer has the benefit of making such commercial settlement in full and final settlement of any claim, without admission of liability and on a confidential basis.
How FDR Law can help
Solicitors or qualified advisors must be involved in providing a certificate confirming that the employee has been advised as to the content and effect of entering the agreement. This certification renders the agreement binding, and protects both parties. As a result of requiring certification by an advisor, there is usually a contribution to costs by Employers of between £250 and £500 plus VAT.
FDR Law’s experts can assist you with drafting a binding agreement to ensure that the employer is protected from claims. We can assist employees presented with settlement agreements by advising the effect of entering the agreement and making sure that the compensation to be received is fair in the circumstances.
We can also deal swiftly with these instructions, often completing the transaction within a matter of a few working days, utilising our experience in negotiation and our expertise in commercial, contractual and employment law.
If you are an Employer, for your instruction we will initially need details of:
- Employment history – disputes, grievances, capability issues, and incidents of personal injury at work or stress related absences, and reasons for proposed termination;
- Copies of contractual documentation, such as the employment contract or offer letters;
- Details as to salary, benefits, pension provision, length of service and the amount of compensation to be offered – we can of course assist you in assessing the latter.
If you are an Employee, we will initially need details of:
- Length of service, salary and benefits
- Contractual documentation if any has been issued
- The reason for the agreement and any relevant history to assess whether there is a justifiable claim and that the compensation offered is fair.