What is a settlement agreement?
A settlement agreement is written agreement between an employer and employee under which the parties agree to end their relationship amicably on agreed terms. The agreement may provide for:
- A defined payment for, for instance, enhanced redundancy
- Agreed notice pay, or an agreed payment for defined possible theoretical claims, although this will be inevitably without any admission of liability.
- An agreed reference to enable you to gain employment for the future
- A confidentiality clause restricting what either party can say about the termination
- A ‘restrictive covenant’ which may restrict what you can do in terms of competing with the business later after you have left employment.
We help employee-clients throughout the country and particularly throughout Greater London. We specialise in assisting senior executives and the City and the financial sector.
We always try to renegotiate and improve upon any offer put forward to our employee-clients. Unlike many lawyers, we never simply sign-off the agreement as it stands, unless those are your specific instructions. We will go through the agreement paragraph-by-paragraph in a professional manner, to ensure that you are content with the implications of the agreement and any obligations on you under it.
What will it cost me?
Usually absolutely nothing. Commonly, the employer will pay for the legal costs of us advising you in relation to the settlement agreement, even though we are acting entirely in your interests.
This is because it is necessary for an employee to be advised by a properly qualified independent lawyer for the agreement to be enforceable. We will normally send our invoice directly to the employer.
Why should I have a formal settlement agreement if ending my employment?
If ending your employment, any agreement is not binding unless certain formalities have been complied with. You must have received advice from an independent qualified advisor acting on your behalf, such as a solicitor, who must have professional indemnity insurance covering him or her against the risk of not advising you properly. The advisor must be named in the written agreement and he/she must certify that the statutory conditions have been fulfilled.
I am an employer and I want to dismiss an employee. Do I need a settlement agreement drafted?
It may well be a good idea, depending on the circumstances. We can certainly draft a settlement agreement for you which meets your needs. We can take your detailed instructions on the background and advise on what clauses to include within the agreement. Of course, your employee will need to take independent advice from another lawyer before the settlement can be regarded as binding.