A settlement agreement is a legally binding contract between an employer and an employee. This type of agreement normally results in a waiver by an employee of his or her rights to make any claims covered by the agreement to an employment tribunal or civil court.
Settlement agreements can be proposed by either an employer or an employee and can be offered at any stage of an employment relationship
They are most commonly used to end employment on agreed terms or to resolve an ongoing dispute, for example, a dispute over holiday pay.
In order for a settlement agreement to be legally binding, certain conditions must be met. The main ones are:
- It must be in writing.
- The agreement must relate to a particular complaint or proceedings.
- The agreement must be signed by the employee.
- The employee must have received independent legal advice on the terms from a lawyer or a certified and authorised member of a trade union.
- The adviser must be identified in the agreement and the adviser must be insured.
- The agreement must state that the statutory conditions regulating settlement agreements have been met.
Usually there is a process of negotiation during which both sides state their proposals or counter proposals until an agreement is reached or until it is clear that no agreement can be reached. Settlement agreements are voluntary on both sides and neither party has to agree to it or enter into discussions about them. Conversations about settlement agreements are normally conducted on a without prejudice basis. They are also sometimes mentioned as part of a protected conversation
Where the parties are unable to reach an agreement, the settlement discussion cannot usually be referred to as evidence in an employment tribunal or in other court proceedings.
We are able to provide assistance with drafting binding settlement agreements on behalf of employers and do so normally on a fixed fee basis.
Our team are highly experienced in this area and if you require any help of assistance please contact us directly on 01133229222
To find out more about settlement agreements please see our specialist site here: