Are You A Wirral Employee That Needs Advice on Your Settlement Agreement
Issues within employment are not uncommon. They can arise either because an employer is unhappy with the actions or performance of an employee or due to an employee being disconcerted by the treatment that they have received from their employer.
Often these problems can be resolved through the use of performance management, disciplinary procedure, grievance procedures or even via ACAS. In many situations, the employee will remain within their employment as matters will have improved.
If an issue cannot be resolved or both the employer and the employee cannot reach a position which makes it plausible for the relationship to remain intact, then Compromise Agreements can be an excellent tool in assisting the parties to conclude their contractual relationship in a mutually acceptable way.
What is a Settlement Agreement?
Settlement Agreements, which were formerly known as ‘Compromise Agreements’ are formal agreements between an employer and employee which set out the terms upon which the employee will leave the employment of the employer. They also remove the employees right to take action against the employer at the Employment Tribunal.
There isn’t always a breakdown in the relationship
Settlement Agreements are often used in situations when the parties’ wish to end their contractual relationship for reasons other than a breakdown in their relationship. It may be that the Employer needs to reduce their workforce however there isn’t a redundancy situation. As such they can use Settlement Agreements as a mechanism to allow employees to voluntarily leave hence allowing them to reduce their workforce.
Alternatively, there may well be a redundancy situation and prior to that process taking Settlement Agreements may be available. Employees may wish to take advantage of these as the terms may be of greater benefit that what may be provided for within a redundancy situation.
Who can enter into a Settlement Agreement?
The majority of Settlement Agreements will be between an employer and employee (or previous employee). They could be between an employer and other parties such as an unsuccessful job applicant who feels that they had been discriminated against at an interview.
The Agreement must be between two parties and cannot involve groups of individuals.
Key Features of Settlement Agreements
• They are Legally binding;
• They provide a ‘clean break’ between the parties
• The Employee is giving up their right to pursue what may be a successful claim within the Employment Tribunal
• The Employee has a right to receive independent legal advice from a solicitor
• The Employer will pay the costs for the employee to receive the independent legal advice
• There is usually some sort of financial settlement figure included
• There should be provision for the employer to provide a reference
• They are entirely voluntary
• They are reached through a process of discussion and negotiation
• Negotiations as confidential and should not be admissible if the matter does not resolve but instead proceeds to the Employment Tribunal.
• They can provide a quick resolution
• They prevent the parties from having to go through what can be a long Employment Tribunal process
• They can reduce the amount of stress involved
• They provide a mechanism for the employee to receive some financial benefit when exiting
• They allow for a ‘clean break’ between the parties
• They are cost effective as the legal fees involved are minimal
• The potential risk to the employer of causing problems within the wider work force if used inappropriately
• The costs involved for the employer in paying for the legal advice and providing settlement sums to the employee
How are settlement negotiations started?
The employer will often be the party who will commence negotiations by making an offer to the employee either in writing or verbally. The preferred method would be for the employee to be spoken to first and then the content of the discussions followed up in writing to avoid the possibility for there being any misunderstanding between the parties.
Any offer for a Settlement Agreement should set out the proposed outline provisions and should include details of the financial settlement being offered to the employee.
It would also assist the process if the employee was provided with some detailed reasoning as to why the offer is being made as this may assist the employee in making a decision as to what they wish to do and whether or not to accept the offer.
What should be considered in relation to the financial settlement offered?
When considering the financial settlement offer the parties should consider the following points:
• The length of service that the employee has with the employer;
• The seriousness of the potential claim that the employer wishes to avoid;
• The length of time that Employment Tribunal proceedings may take;
• The likely award if the matter proceeded to an employment tribunal;
• The costs involved in proceeding to an Employment Tribunal;
• How difficult is may be to find alternative employment and how long this would take;
• How difficult it may be for the employer to fill the post;
• The level of earnings of the employee;
• The current benefit package that they receive and whether this would be available elsewhere;
When considering an offer to accept a Settlement Agreement
Accepting a Settlement Agreement is a big step as the employee will be giving up all of their rights to pursue the employer further thought the Employment Tribunal.
The employee should be given a minimum of 10 Calendar days to consider the offer and seek independent legal advice. This period can be extended by agreement between the parties.
Independent legal advice
Every employee should who is considering accepting a Settlement Agreement should seek independent legal advice from a suitable solicitor who is experienced in providing advice in relation to Settlement Agreements. If the Settlement Agreement is to become final, then it must be signed by an independent solicitor who confirms that the employee has received advice as to the terms being agreed.
At Johnson and Boon solicitors, we are a Wirral based firm of solicitors who can provide Settlement Agreement advice. We can assist all employees who are going through this process. We will consider the Settlement Agreement in detail and ensure that the employee has a full and complete understanding of the terms which have been proposed by their employer. We will also highlight any issues within the Settlement Agreement that should be given consideration and we will suggest any additional clauses that should be added to protect the employee from future problems. A common example of this would be if there was no provision for the employer to provide a reference.
If you are an employee currently going through this process and you require some assistance and advice, then please telephone our office to speak to a member of the team on 0151 637 2034.
Alternatively, you can email your details together with a copy of any Settlement Agreement that has been given to you for consideration to firstname.lastname@example.org. A member of our team will then consider the information provided and contact you to discuss further and arrange an appointment at our office.