FAQs: Responding to a Settlement Agreement

Year Published: 2020

If you are an employee, Salaried Partner or Director and have been offered a settlement agreement but you are unsure what to do next, here are some FAQs to consider:

1. What is a Settlement Agreement?

A settlement agreement is a legally binding document that, in most circumstances, will set out the terms on which your employment will come to an end.

2. Why have I been told to see a Solicitor?

For a settlement agreement to be legally binding, you must first obtain independent legal advice on its contents. Your Solicitor will then complete a certificate to confirm that you have been advised on the terms and effects of signing the agreement – without this, the agreement would not be valid.

3. What are my options?

Depending on the circumstances, you can either agree to enter into the agreement, proceed with any internal process your employer may be undertaking such as a disciplinary or grievance, or you may even have the option to instead make a claim in the Employment Tribunal. You can never be forced to sign a settlement agreement if you do not wish to do so.

4. How much will a settlement agreement cost for an employee?

In most circumstances, your employer will contribute towards your legal fees for getting advice on the agreement and this contribution is usually enough to cover all legal fees. Therefore, there is usually no cost to an employee in getting advice in relation to a settlement agreement.

5. How will this impact my future job prospects?

The agreement may contain clauses relating to post-employment restrictions – therefore it is important to know how these may affect you and what you can disclose to a future employer. Most employers also offer “agreed references” as part of a settlement agreement – this means that when you apply for another job, you can be confident as to exactly what reference will be given.

6. How will a Solicitor help?

A Solicitor will be able to clearly explain all of the legal jargon and help you to understand the nature and consequences of signing the agreement.

They will be able to review the details in your contract of employment, find out your entitlements to things such as notice, redundancy, commission, bonuses or holidays and make sure that you are getting a fair deal in the circumstances.

They can help with negotiating amendments to the terms of the agreement if you feel that the current terms do not accurately reflect the circumstances. Finally, they will ensure that you only sign the agreement when you feel completely comfortable to do so.

7. How long will the process take?

Employees should be given no less than 10 days to consider a settlement offer. Once an employee has been advised by a solicitor, subject to any lengthy negotiations, the process can usually be completed within a couple of weeks. If no amendments are required then matters can sometimes be concluded on the same day the employee receives their advice.

8. What if I don’t want to accept the terms?

As settlement agreements are commonly offered as an alternative to another process, such as disciplinary or redundancy, if you choose not to sign then your employer should carry on with that process in the normal way. Your employer should also explain that choosing not to sign the agreement will have no impact on any other process.

For more advice on settlement agreements or any other Employment Law or HR matter, contact Charlie Wood on 0161 475 7673 or email [email protected].

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