Should you be in a position where you want to make a complaint or grievance against your employer, which could result in an employment tribunal claim being issued, you or your employer may wish to try and settle the dispute by other means, such as with a settlement agreement where an exit package can be mutually agreed between both the employee and the employer.
If you’re offered this option under a protected conversation rather than going through the formal procedures (such as a grievance, disciplinary or capability procedure) or during such procedures, it’s important that you know exactly what is involved in the process and how to get the best offer you can with a settlement agreement so that you can make informed decisions, negotiate and come to a conclusion that is beneficial to you.
You should also know your rights regarding whether you can ask your employer for a settlement agreement if you want to end your employment with them during a dispute, and so we’ve outlined everything you need to know below.
When do employers offer settlement agreements?
There are many reasons why an employer would offer you a settlement agreement.
For example, if you’ve raised a grievance about unfair treatment, if there is a dispute about whether your employer has unfairly disciplined you or you have been made redundant and wish to appeal the decision, then your employer may propose a settlement agreement to ensure you are not able pursue legal proceedings against them.
Employers may also offer a settlement agreement instead of going through the formal procedures such as a disciplinary, capability or redundancy processes, to save themselves management time and also to reduce any risk of claims being brought against them where the settlement is agreed.
Additionally, your employer may want to avoid the cost and time implications associated with an employment tribunal claim being brought against them, and thus offering a settlement agreement would be the best way to prevent this.
Can I ask for a settlement agreement?
As mentioned above, it is typically the employer that offers the option of a settlement agreement as opposed to an employee taking the dispute to an employment tribunal. However, you may also pose the option to your employer should you wish.
Requesting a settlement agreement may be a more mutually beneficial outcome, such as when you feel there is tension within your workplace that is unlikely to be resolved through a grievance procedure or mediation.
While you may still be eligible to claim for unfair dismissal, such as if you are being let go for prolonged periods of illness, asking for a settlement agreement may be a more lucrative decision, also allowing you to exit from the company faster and gain a resolution to the ongoing issues you are facing at work.
Regardless of whether you ask for a settlement agreement, or your employer offers you one, your employer is usually responsible for covering the costs of the legal fees associated with obtaining advice on the terms of the agreement.
Smith Partnership will be able to advise you as to whether proposing a settlement agreement to your employer is the best course of action in your situation. Advice should be sought on the circumstances of the potential claim and whether proposing a settlement agreement would be beneficial or advisable in the circumstances. We could even write to the company on your behalf to propose a settlement agreement and exit package.
What should be included in a settlement agreement?
When it comes to negotiating a settlement agreement, there are certain things you should make sure are included to ensure you’re getting the best possible deal.
It’s important to remember that unique circumstances can impact the specifics of a settlement agreement, with employers tailoring the agreement to suit particular requirements. However, a settlement agreement should still include the following as a basic start:
The settlement agreement must be in writing
It must relate to a particular complaint or proceedings, such as an unfair dismissal claim
A clause specifying the date of employee termination
A clause outlining the balance of any outstanding payments owed such as salary, bonus or commission
A clear outline of what the termination or compensation payment will be
Standard confidentiality clauses, such as protecting the reason behind employment termination being shared
A clause that entitles the employee to a form of reference
The employee must have received independent legal advice on the terms and impacts of the agreement, such as the waiver of their rights to take the claim to an employment tribunal
The settlement agreement must identify the relevant independent advisor
It must also state that the conditions relating to the settlement agreement, under relevant statutory provisions, have been satisfied
Our team of dedicated employment law and settlement agreement solicitors can negotiate and advise on any proposed terms on your behalf.
Can I refuse to sign a settlement agreement?
If, for any reason, you do not feel comfortable or satisfied with the terms and clauses set out in a settlement agreement which is proposed to you, you may refuse to sign it.
However, you should be aware that should you refuse to sign your settlement agreement, your employer may still be able to fairly terminate your employment if they follow the correct procedures.
Find out more about how to get a settlement agreement at work
Should you still have further questions surrounding how to get a settlement agreement, you can get in touch with our dedicated team of settlement agreement solicitors, who, with their years of experience, can guide you through the process with honest advice.
We offer an 8am to 8pm contact service, Monday to Friday, which many other legal practices and solicitors do not offer – we understand the importance of providing accessible points of contact, which is why we are available via phone, email, or through our contact form at your time of need and can provide advice within 24 hours and due to the remote facilities, this can be done on a national basis.