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.
If you’re in the Edinburgh area and have been offered a settlement agreement, we can provide expert specialist advice and help. We offer a fast sign off service (if you’re happy with the deal) or we can negotiate your behalf to improve it. Costs are paid by your employer.
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.
This guide covers the new ‘Confidential Pre-termination Negotiations as well as the general confidentiality (gagging) and bad mouthing clauses often found in a settlement agreement
The aim is to encourage employers and employees to have frank conversations about the employment coming to an end without these being relied on in a Tribunal. For example, the employee will not be able to argue, in a tribunal, that the employer decided to dismiss the employee 6 months earlier because this possibility was raised during a pre-termination negotiation.
The ‘without prejudice’ rule, which prevents settlement discussions being relied on in the Tribunal, has the same effect but only applies where there is an existing dispute.
This only applies to unfair dismissal claims, not discrimination, whistleblowing or other automatically unfair dismissal claims.
The provisions do not apply where there is improper behaviour by either party and the tribunal decides that the negotiations can be relied on in the Tribunal.
29 July 2013
It covers any offer made or discussions held, before the termination of the employment, with a view to it being terminated on terms agreed between the employer and employee.
A settlement agreement is the new name for a compromise agreement. It is a legally binding agreement between employer and employee, which settles all employment disputes on agreed terms. Commonly, the employer will pay the employee a sum of money to leave his or her job and not bring any legal claim against the employer.
Either the employer or employee but it will usually be the employer.
The ACAS Code says that the parties must be given a reasonable period of time – at least 10 days – to consider an offer of a settlement agreement and get independent legal advice.
Where the employer or employee behaves improperly the other party may be able to rely on the discussion if a claim is made. Examples of improper behaviour given in the ACAS code are :
All forms of harassment that include intimidation through the use of offensive words or aggressive behaviour;
Physical assault and other criminal or wrongful behaviour;
Victimisation of people because they have complained of a breach of a statutory right;
Discrimination because of age, sex, race, disability, sexual orientation, religion or belief, transgender, pregnancy and maternity and marriage or civil partnership;
Putting undue pressure on a party; this includes
Where a tribunal finds there has been improper behaviour, any proposal of a settlement agreement or discussions relating to it will only be confidential if and in so far as the tribunal considers it just.
There is bound to be uncertainty about what is ‘improper’ behaviour. An employee may say that the employer behaved aggressively, for example by threatening dismissal and no compensation if the settlement agreement is not accepted. It is for the tribunal to decide whether the behaviour is improper and whether it is just and fair to allow it as evidence before the tribunal.
Improper behaviour has no effect on the validity of a settlement agreement.
If the agreement is rejected and there has been no improper behaviour, the parties may go through a formal disciplinary and grievance procedure, ignoring the confidential discussions.
As the ACAS Code says, it is important that employers follow a fair process because if the employee is subsequently dismissed, failure to do so could be grounds for an unfair dismissal claim.
For example
In August , an employer tells an employee that she is likely to be made redundant in October and asks if she wants to leave early with compensation. She does not accept the offer and the employer goes through the redundancy procedure. The employee wants to argue that the employer had made up its mind to make her redundant back in August so the redundancy process was really a sham. However, this conversation is ‘protected’ so she cannot rely on the discussions in June to argue that the redundancy was unfair.
Almost all agreements include confidentiality and bad mouthing clauses. The confidentiality clause should only relate to the terms of the agreement and surrounding circumstances leading up to the agreement. However, it is important that you can tell a future employer why you left the job so this should be agreed and included in the agreement. Commonly, the reason is redundancy or that the employee has decided to move on.
You agree and undertake, and the employer agrees to use its reasonable endeavours to procure, that none of its officers or employees shall:
(a) make or publish any statement to a third party concerning this Agreement, the dispute settled by it or the circumstances surrounding the termination of your employment; or
(b) make or publish any derogatory or disparaging statement, or do anything in relation to the other, and in your case in relation to your employer or its officers or employees, which is intended to or which might be expected to damage or lower their respective reputations;
provided that the parties will not be prevented from making a disclosure for the purposes of seeking legal advice in relation to this Agreement and in your case to your spouse, or partner, or civil partner, provided such person agrees to maintain confidentiality, or for the purposes of seeking alternative employment.
Note: the bad mouthing clause should only apply to the future. Some agreements include a warranty (promise) that the employee has never (in the past) made derogatory comments about the employer. As most employees make rude comments about their employer at some stage, it should be avoided, if possible.
You should check your contract to ensure you understand any continuing obligations. Some employees have a restrictive covenant preventing him/her from working in a similar job or dealing with the same clients for a period of time, commonly between 6 and 12 months. If the restriction will prevent you getting another job, you should ask for the restriction to be waived or the period reduced.
Any claim to the tribunal must be lodged within 3 months of the end of the employment or act of discrimination, or within 6 months in equal pay claims. It can be extended in certain circumstances but it is not worth taking the risk unless you are already out of time.
Fees will be payable on any claim lodged on or after 29 July 2013. There is power to waive the fee for those on a low income, but you have to make a remission application, giving details of your and your partner’s income.
Written by Camilla Palmer of Leigh Day on 24 July 2013
IMPORTANT: The contents of this page are general guidance only and shoul regarded as consting legal or other ad
We don’t have a specialist employment solicitor listed here but one of our panel employment solicitors can help.
Why use our Panel of Employment Solicitors?
Davies, Blunden & Evans – 43-45 Victoria Road, Farnborough, GU14 7PD
KSN Solicitors – York House, 37 Heatherdale Road, Camberley, GU15 2LT
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.
Cripps, Harries, Hall – Wallside House, 12 Mount Ephraim Road, TN1 1EG
Thomson Snell & Passmore – 3 Lonsdale Gardens, Tunbridge Wells, TN1 1NX
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.
Paul Samuel , partner at Ashby Cohen Solicitors Limited answers:
The first thing which you should appreciate is that if you have been approached about a settlement agreement, it is likely that, one way or another, you will be parting company from your employer. This will be either as a result of signing the agreement or via a resignation / dismissal, followed by an employment tribunal claim. You should not underestimate the stress and delay involved in going to a tribunal, let alone the risk of losing before the tribunal. The objective should be to maximise your compensation under the settlement agreement. This will depend on the reason your boss is picking on you.
The first thing would be to look at your employment contract and what notice period you are entitled to receive, remembering that if you have worked for more than two years then you are entitled to one week’s notice for each complete year you have worked up to a maximum of 12 weeks, regardless of what your employment contract says about your period of notice (unless it provides for more).
If you can show that you are being picked on because of your age, disability, gender reassignment, being married or in a civil partnership, race, religion and belief, sex or sexual orientation, you could raise the possibility of a discrimination claim. A discrimination claim can be brought regardless of how short a period you have worked for your employer.
Also, a discrimination claim would allow you to claim for the upset which your boss has caused you (“injury to feelings”) and there is no cap on the amount of compensation which a tribunal can award you. You might also be able to bring a claim against your manager personally as well as your employer.
If you have complained about a health and safety matter or complained that your employer has breached some legal obligation and that this is the reason why your boss is picking on you, you might be able to bring a claim as a whistleblower where again there is no cap on the compensation. If none of these features are present, and you have been picked on simply because the boss has taken against you, you might have a claim for ordinary unfair dismissal (assuming that you have worked for long enough so as to be eligible to bring an unfair dismissal claim).
Under Government proposals there will shortly be a cap on your compensation award for unfair dismissal of one year’s salary (or if your salary is above £ 74,200 per year the cap is £ 74,200). Whatever the basis of your claim, you would be able to claim a basic award which is equivalent to your statutory redundancy entitlement (capped at £450 for each full year you worked) and your compensatory award would depend on how soon you are likely to get another job at the same or a similar salary and benefits.
It is obviously sensible for you to contact a specialist employment law solicitor to advise on the details of your situation.
Answer dated 26 April 2013.
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.
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.
