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If you need an Employment Solicitor in Northampton to advise on the terms of a Settlement Agreement we can provide the expert legal advice you’re looking for. A Settlement Agreement (formerly known as a Compromise Agreement) is a legally binding agreement between an employer and employee, so you need expert legal advice.
Settlement Agreements were formerly known as Compromise Agreements, and many people still refer to them as such. They replaced Compromise Agreements in 2013 and are in broad terms similar.
Settlement Agreements were designed to encourage both parties (employers and employee) to be proactive and balanced when negotiating a settlement before employment is terminated. The benefit is that this approach should save everyone time, money, uncertainty and hopefully result in a more amicable outcome.
At Wilson Browne Solicitors our expert employment solicitors regularly advise individuals on the terms of their settlement agreements, ensuring that the it is binding and that they get the best possible deal. We try to make the process as easy as possible and can provide advice over the telephone or at one of our offices in Northampton, Kettering, Corby, Higham Ferrers, Wellingborough and Leicester.
Settlement Agreements are voluntary – you cannot be forced or coerced into signing one: if you feel this is the case, you should call us as soon as possible.
Here are 12 things that you should know if contemplating a Settlement Agreement.
1: What is a Settlement Agreement?
A settlement Agreement is a legally binding agreement between an employer and an employee where you (the employee) agree to settle your potential claim and in return, the employer will generally agree to pay financial compensation.
Settlement Agreements are typically associated with the ending of someone’s employment and are issued either shortly before or after the employment has ended (but they can also be used when employment is going to continue).
To be binding, the employee must get independent legal advice before signing.
2: When is a Settlement Agreement appropriate?
You can make a claim against the business/your employer under both the contract of employment (e.g. a wages claim) and under statute (e.g. discrimination or unfair dismissal claims).
Typically claims can arise in the following broad circumstances: on recruitment; during employment; or when their employment is terminated. Accordingly, settlement agreements can be used at any point during the employment (or potential employment) relationship.
We understand that when a settlement agreement has been offered, the relationship between the employer and employee has often broken down or become strained. If that is the case, we can help by liaising directly with your employer on your behalf, minimising the contact you need to have with them. When needed, we can also conduct negotiations on your behalf to help achieve the best possible settlement for you.
Are settlement agreements liable for tax?
Up to £30,000, they are normally exempt from income tax and National Insurance.
It needs to be emphasised that is dependent on the situation, so it is important to get proper legal advice.
3: Who pays for the Settlement Agreement?
Although not legally required, it is normal for the employer to contribute money, which is typically enough to cover the cost of a typical Settlement Agreement.
4: Expert Settlement Agreement solicitors, at a fixed fee.
As one of the leading Settlement Agreement solicitors in Northamptonshire, you’re in safe hands. We know how distressing it is when things don’t work out and we’ll make the whole process as pain-free as possible – normally at a fixed fee.
5: How much will it cost?
The last thing you need is a big leagl bill! We aim to work within the fee contribution sum, which your employer usually offers to pay if you sign the agreement. In those cases when this is not possible, we will identify this early in the process, so you can make decisions which are right for you and without a hefty price tag.
6: What are the legal requirements for a Settlement Agreement?
For a Settlement Agreement to be legally binding, conditions must be met, which include:
- The Settlement Agreement must be in writing;
- It must relate to a particular complaint or particular proceedings;
- The employee must have received legal advice from a relevant independent adviser (for example, a qualified lawyer or union official) on:
- the terms and effect of the proposed agreement; and
- its effect on their ability to pursue any rights before an employment tribunal
- The independent adviser must have a current contract of insurance (or professional indemnity insurance) covering the risk of a claim against them by the employee for the advice;
- The employee’s adviser must be identified in the Agreement;
- The agreement must state that the conditions regulating settlement agreements have been satisfied;
- An employee should be given reasonable time to consider the agreement before they sign (the Acas Code of Practice recommends a minimum of 10 days)
7: Possible content of a Settlement Agreement.
The contents of a Settlement Agreement are mainly at the discretion of the business and subject to negotiation with the employee involved. Examples of common clauses include:
- Compensation for loss of employment.
- Contribution to the employee’s legal fees.
- A waiver of claims by the employee, including a warranty that the claims listed are the only claims which the employee has against the business.
- Re-assertion or modification of existing restrictive covenants or inclusion of new restrictive covenants.
- Re-assertion or modification of existing confidential information obligations or inclusion of new confidential information obligations.
- An Indemnity from an employee concerning tax and national insurance contributions.
- Sometimes the Settlement Agreement will include other things such as an agreed reference.
8: Are there any types of claim which cannot be settled by a Settlement Agreement?
Some statutory claims cannot be settled by entering into a Settlement Agreement, such as some types of Personal injury claims; Pension claims; and claims following the transfer of a business.
9: The benefits in signing a Settlement Agreement, via Wilson Browne Solicitors
- A breakdown in the relationship with your employer can be stressful – we can help you make a clean break
- We can conduct negotiations on your behalf as you may find it stressful having to talk to your employer
- We will ensure that that you are made a fair offer and if not, we can help negotiate (where possible) a higher sum
- Sometimes the most sensible option is for people to part company – a Settlement Agreement is a pragmatic way of doing this mainly where enhanced settlement payments are discussed
- A Settlement Agreement allows you to avoid often painful formal procedures. E.g. disciplinary, capability, or even redundancy.
- Finally, it can save the time, expense, hassle, stress and uncertainty of issuing Employment Tribunal proceedings
10: Are there risks in signing a Settlement Agreement?
The only real risk is that you use a solicitor or legal adviser who doesn’t make you fully aware of what you may be “signing away” in return for entering into the agreement. Part of our role is to ensure you are fully aware of what you will be getting, and what you may be giving-up.
You may notice that the Settlement Agreement says “Without Prejudice and Subject to Contract”: what does that mean?
… it means that the Settlement Agreement cannot be used as evidence in Court or in Employment Tribunal proceedings, and until it is signed by the employee and the employer, it is not legally binding.
11: What we do and why it is crucial.
- Identify your objectives;
- Discuss your entitlements;
- Explain what signing means for you;
- Advise if it’s the best deal for you in the given circumstances; and
- Minimise the stress in, what can be, a difficult situation.
By signing the agreement, you are giving up rights to bring claims in respect of your employment or its termination so it is crucial that we help you to identify if the deal is right.
12: Why use us?
1. We give transparent and jargon-free advice;
2. We have a practical, friendly and down to earth approach and always put your needs at the forefront;
3. Specialist employment law solicitors will handle the matter from start to finish.
Don’t just take our word for it…
Your service was excellent and I would highly recommend you to friends and family. Many thanks for your patience.
Mrs G, Coventry
I would like to take this opportunity to thank you and your team for all the help and guidance during this difficult process which lasted 4 weeks and took 6 proposals to finalise. Your professionalism, skill and speed made it a pleasure for me to deal with Wilson Browne and I would certainly not hesitate to recommend your firm in future.
If I need a solicitor in the future Aimee Johns / Wilson Browne will be my first port of call , thank you for your time and attention in this settlement.
Please view our guide on settlement agreements for further information.