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If you’re in the Northampton area and have been offered a settlement agreement, we can provide expert specialist advice and help. A fast sign off service might be best, if you’re happy with the deal, with solicitor costs limited to the level your employer has agreed to pay.
Once signed, a settlement agreement is legally binding. That’s why it’s crucial to have specialist advice from a settlement agreement solicitor in the UK.
A settlement agreement is a formal agreement between an employer and an employee. The documents used to be called compromise agreements, and they’re covered in the Employment Rights Act 1996. Once the agreement is signed:
For the settlement agreement to be legally binding it has to comply in certain ways, for example, it must be in writing, and the employee must have received legal advice from a solicitor. That’s crucial because you need to know if the deal is fair and be certain that you don’t want to bring a claim against your employer.
We that losing your job or having a dispute at work can feel overwhelming and stressful. However, we have long term experience of helping people reach the best outcomes possible with their settlement agreements. Getting the right advice means we can ensure you are getting the best deal (and negotiate on your behalf if you’re not) and allow you to sign your settlement agreement and move on.
IMPORTANT: The contents of this page are general guidance only and should not therefore be regarded as constituting legal or other advice or recommendations. You are free to instruct any solicitor you wish.
Richard is a specialist employment solicitor, who advises clients in the Wolverhampton area. IMPORTANT: The contents of this page are for general guidance only and should not therefore be regarded as constituting legal or other advice or recommendations. You are free to instruct any solicitor you wish.
IMPORTANT: The contents of this page are general guidance only and should not therefore be regarded as constituting legal or other advice or recommendations. You are free to instruct any solicitor you wish.
Q: “I want to offer a member of our marketing team a settlement agreement to leave but make sure he doesn’t take any of our customers. I’ve looked at his employment contract and there aren’t any restrictions preventing him from competing after his employment ends. I’ve also read the ACAS template settlement agreement but there doesn’t seem to be anything in there either that I can use to stop him competing. The employee has a three month notice entitlement in his contract. Any advice?”
Charles Millett, partner at law firm Morecrofts LLP answers…
It is perfectly acceptable to include in a settlement agreement terms that go beyond what is stated in the Acas template agreement. Post-termination restrictions and clauses dealing with garden leave during the notice period are examples of this.
However, there are a number of important points that employers need to consider and it is highly recommended that they obtain professional advice in drawing up the agreement.
Although post-termination restrictions can be enforceable, they must go no further than is absolutely necessary to protect the employer’s legitimate business interests. It is here where it becomes particularly crucial to have very tight wording in the clauses. Often if an employee is seeking to challenge the enforceability of a post-termination restriction, even after they have agreed to it, they will look to argue that the restriction goes beyond what is reasonably necessary.
The employer also needs to consider whether it is necessary to offer the employee a further financial incentive under the settlement agreement in return for the employee agreeing to the post-termination restrictions. A payment to an employee in return for the employee agreeing to post-termination restrictions will almost certainly be taxable, as it falls outside the statutory exemption that applies to termination payments. Advisors of employers and employees need to consider this when they are giving advice. There is always the danger that HMRC might seek to argue that part of the tax free severance payment actually relates to this kind of taxable payment unless an amount is allocated to the taxable element in the agreement.
Of course, including post-termination restrictions is one thing, enforcing them is another. It is invariably a costly exercise for all parties. The important point from the employer’s perspective is that restrictions are included that are capable of being enforced, as this should act as a strong deterrent to the employee.
Answer given on 2 October 2013 by Charles Millett, partner at Morecrofts LLP.
IMPORTANT: The contents of this page are for guidance only and do not constitute legal advice. You should consult a solicitor without delay if you require legal advice on a particular employment matter.
Do I have to pay a fee to bring a claim against my employer?
Rebecca Lake, Partner at Davenport Lyons solicitors answers:
This is a matter that is currently subject to Government consultation with, as yet, no implementation date announced. However, consultation closes on 16 May 2013 and we expect that perhaps by the summer the Government will announce the introduction of fees in the Employment Tribunal. This will mean that for all claims lodged after the implementation date Claimants will have to pay a fee both to issue their claim, and also to proceed to a hearing. The consultation proposes two levels of fees, 1 and 2. Level 1 fees are £160 to issue and £230 for a hearing. Level 2 fees are £250 to issue and £950 for a hearing. An unfair dismissal case would fall into Level 2.
Unlike the usual position on costs in the Tribunal (where each side must bear their own, win or lose, except in exceptional circumstances), the consultation proposes that these new fees may be recovered from the unsuccessful party.
There will also be the possibility of the Tribunal waiving or reducing the fee if the Claimant is able to satisfy a test based on disposable capital and income, most likely to be similar to the type of tests usually adopted for means tested benefits.
This answer was given on 1 May 2013. See updated answer via Ask an Expert Main Page.
James Sommerville at Thomas Horton LLP solicitors answers…
It’s important to remember that if your employer puts forward a settlement agreement, also known as a compromise agreement, it does not have to be accepted by you. There are options available to you and it is best to seek legal advice from a qualified person, such as an employment solicitor, before responding to your employer. Get the solicitor to explain the legal jargon and make sure what is being offered is understood so you can make an informed decision and one that is best for you.
In the case of a settlement agreement, your employer will usually pay a contribution to your legal costs, in some instances this will cover your costs. A settlement agreement is a complex and lengthy document and you need to ensure that you know your rights and that you are being properly looked after. If you think the offer is too low, a solicitor can help you to negotiate the financial settlement with your employer. Your decision will be based on balancing the claims you may have against your employer against the compensation being offered, as well as taking into account the risks of taking your employer to an Employment Tribunal.
If the settlement agreement is accepted, there are advantages to the employee, including knowing what you will be paid (usually fairly quickly after signing the agreement). In addition, a settlement agreement can also deal with references, letting you know what your employer will say about you to future employers. But it is important to remember that in order for a settlement agreement to be legal and valid, it must be in writing and a solicitor must be able to confirm that the statutory requirements have been followed and complied with.
If an agreement can’t be reached, then your solicitor can help you to prepare for an Employment Tribunal and will explain the process and the risks involved. These risks include:
Your claim may be unsuccessful
You may not recover legal costs even if you win
You are labelled as a ‘difficult’ employee because you have taken your former employers to the Employment Tribunal.
This will be more so if you work in a niche sector.
If the correct advice is taken, a stressful situation can actually be a fairly smooth one and there is often a positive outcome for employees in terms of financial settlement and future career prospects.
IMPORTANT: The contents of this page are for guidance only and do not constitute legal advice. You should consult a solicitor without delay if you require legal advice on a particular employment matter.
Employment solicitor Richard assists clients in the Leamington Spa region.A practising senior employment law solicitor, specialising in advising employees at all levels, Richard provides practical, strategic employment law advice. He can help you to achieve successful outcomes, whether that’s a quick simple sign-off, where the deal is reasonable and you’re happy to sign, or negotiating better financial terms or changes to the settlement agreement wording.
He also advises on all aspects of employment law, such as claims in the employment tribunal involving unfair dismissal, discrimination at work, restrictive covenants, breach of contract, sexual harassment and maternity and pregnancy discrimination.
IMPORTANT: The contents of this page are general guidance only and should not therefore be regarded as constituting legal or other advice or recommendations. You are free to instruct any solicitor you wish.
Any guidance, commentary or tips contained on this website is provided for information purposes only and is not intended to be (nor is it) legal advice nor should it be relied upon as legal advice or construed as creating a lawyer-client relationship. You are recommended to seek legal advice from a solicitor on your own particular situation without delay.
© Marchmouse. All of the solicitors listed on this site are qualified solicitors that work for a law firm authorised and regulated by the Solicitors Regulation Authority. All legal services for individuals in relation to settlement agreements are provided by qualified solicitors and members of the Employment Lawyers Association. Settlementagreement.co.uk is operated by Marchmouse Media Limited which is not a firm of solicitors. Use of this website is subject to our policies and terms of use.
