Settlement Agreements
Settlement Agreements: Protecting your interests and your future
Has your employer offered you a Settlement Agreement?
Are you happy with their offer?
Would you like a quick and thorough conclusion to the process?
Helping you through the turmoil of a Settlement Agreement
If you’ve been offered a settlement agreement, it’s quite normal to feel a mix of emotions: upset, confusion, and often a little bit of relief.
Whether you’re facing redundancy, a potential dismissal, or other employment concerns, a Settlement Agreement can offer you a clear path forward.
The agreement can provide a way to resolve issues efficiently and amicably, allowing you to receive a lump sum termination payment while avoiding the stress, cost and uncertainties of a tribunal process.
Lauren and the Employment Law team at Tierneys can guide you through every step of the process.
They’ll help you to understand the terms and the consequences of the agreement and ensure your rights are understood. With their support, you can move forward with confidence, knowing that your interests are in safe hands.
Meet Lauren, our
Partner responsible for Settlement Agreements
Lauren Lancaster
Partner and Head of Litigation and Property Services
What is a settlement agreement?
A settlement agreement is a legally binding contract between an employer and an employee, where the employee waives their right to make employment-related claims against the employer, usually in return for a termination payment and other benefits.
The agreement is often used to:
● Resolve disputes.
● End the employment relationship.
● Avoid legal proceedings.
The Settlement Agreement Process
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01 Mar, 2023
Initial Offer
Your employer presents you with a settlement agreement.
You may choose to carry out some preliminary negotiations with your employer.
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01 Mar, 2023
Review and Get Advice
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01 Mar, 2023
Negotiate
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01 Mar, 2023
Revise or confirm the agreement
Make sure you fully understand it first!
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01 Mar, 2023
Receive Compensation
Why is your employer offering you a Settlement Agreement?
Employers usually offer Settlement Agreements when a position is being made redundant, or they believe the employment relationship is no longer working for them.
To help you negotiate the best possible terms, it’s worth taking your time to understand how Settlement Agreements can benefit employers.
Save Time and Resources:
Employers may decide their interests are best served by agreeing to part company with an employee.
To avoid the need to defend their decision in court, they can offer a settlement agreement that involves you agreeing not to make any claim against the employer in relation to their employment or the termination of their employment.
In exchange, they pay you a termination payment as specified in the terms of the settlement agreement.
Protection of Company Interests:
Confidentiality clauses in settlement agreements help safeguard the organisation’s commercial interests and reputation.
They typically require you to agree not to discuss or disclose the details of your departure or the specific terms of the settlement.
Provide Clarity:
Settlement agreements provide clear terms regarding final payments, notice periods, and post-employment obligations.
Help bring about a Smooth Transition:
Settlement agreements can help ensure a smooth transition for the employee and an orderly departure for the employer.
Clean Break:
Settlement agreements provide a clear and final end to the employment relationship, ensuring there are no lingering disputes.
It gives you peace of mind that there are no legal surprises down the line and certainty as to any financial amount you will receive from your employer.
— FAQs: Frequently Asked Questions
The most common questions we’re asked about Settlement Agreements
Is the termination payment offered taxed?
So, the payment is tax-free if it’s offered as compensation, rather than a contractual obligation e.g. payment in lieu of notice.
Payments over £30,000 are subject to income tax and national insurance contributions, for the amount over £30,000.
How long does it take to finalise a Settlement Agreement?
Typically, it may take a few days to a few weeks, depending on how quickly you and your employer can agree terms.
What kind of compensation can I expect in a Settlement Agreement?
It may include a one-time payment, unpaid wages, holiday pay, or severance pay, but the amount depends on factors like your length of service and the specifics of your situation.
Will signing a Settlement Agreement affect my ability to find new employment?
However, you should be aware of clauses regarding confidentiality or non-compete terms that may limit your future job opportunities.
What happens if I don’t agree with the terms of the Settlement Agreement?
If the agreement is not accepted, your employer may proceed with their original intentions, such as redundancy process, disciplinary actions or terminations.
This can result in your receiving less than if you accept a settlement agreement.
How we can help you
Talking to a specialist Settlement Agreement Solicitor is an important step in
getting you the best payout and terms and protecting your future.
Understand the Implications
There’s a lot more at stake than financial compensation.
We will listen, understand what’s important to you and explain the agreement, the consequences of acceptance and the opportunities available.
Help you find Peace of Mind
The Settlement Agreement process can be an emotional rollercoaster.
It helps to have a specialist by your side to answer your questions and look after you.
Protect your Future
It’s easy to focus on the money and short term interests.
That’s why you need someone in your corner advising you on the bigger picture.
What should you look for in your Settlement Agreement?
Financial Support:
There is sometimes some room for you to negotiate your financial settlement.
Beyond the initial offer, you should also consider any bonus or commission payments and the continuation of benefits like pension contributions and private health insurance which you would have been entitled to had your employment not ended.
Reference:
You should consider asking for an agreed reference in writing, to be included in the Settlement Agreement, with a clause insisting your employer cannot change this reference later, without good reason.
Notice Period:
You may be able to negotiate an immediate exit from the organisation, rather than work out your notice period.
Dignified Exit:
The agreement allows for a dignified exit, which can be particularly important in sensitive situations.
Certainty and Finality:
There is a lot to be said for making a clean break and avoiding the stress and uncertainty of taking an employer to an Employment Tribunal or other forms of litigation.
Legal Advice:
Employers typically pay all of or a contribution towards the cost of independent legal advice for the employee, ensuring they understand the implications of the agreement.
Your Settlement Agreements team at Tierneys Solicitors
Lauren Lancaster
Partner / Head of Litigation & Property
Joined Tierneys in 2011
Russel Raslan
Solicitor
Joined Tierneys in 2023
Adele Dowdall
Legal Assistant
Joined Tierneys in 2006