What Is A Settlement Agreement Leeds?

If your employer has suggested that you enter into a Settlement Agreement to finalise your employment termination, you will need to understand how it works, what it includes and how to reach the fairest resolution and to achieve your highest compensation payment.

A Settlement Agreement was more commonly known as a Compromise Agreement until 2013 and is a legal contract between an employee and their employer where agreements are made voluntarily within the best interests of both parties. The primary case for a Settlement Agreement is when a contract of employment is to be terminated but can also manage disciplinary action and performance disputes.

Many terminations are unavoidable;if a dispute has led to the breakdown of an employment relationship—this can make working together in the future impossible.

Another reason for a termination settlement can include redundancy; either through insufficient work or the position is no longer practical or required. A Settlement Agreement can manage many other causes of employment separation and is a practical and legal method for arriving at a mutually beneficial resolution.

A Settlement Agreement is legally binding and designed to protect both parties from breaking the clauses defined within the agreement.

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The Main Benefits Of A Settlement Agreement For An Employee

The employee’s main area of concern at termination is generally the lump sum payout offered as compensation; this is often greater than the statutory minimum payout in the same situation.

It will also govern the supply of fair references by the employer.The agreement also removes any risk of losing the case through action that might have alternatively been brought against the employee in an employment tribunal or by court action.

The Main Benefits Of A Settlement Agreement For An Employer

The employer can save time and money by dealing with employment terminations or disputes privately, avoiding court costs, drawn-out proceedings and the disruption of the day-to-day business operation. It will prevent the escalation of further disputes and protect the continual operation of the business.

Settlement Agreements are often requested in cases of:

  • Redundancy
  • Poor performance allegations
  • Allegations of misconduct or gross misconduct
  • Disputes over pay, holiday pay and entitlement
  • Disputes over working expenses
  • Working conditions
  • Health and safety issues
  • Any other situation that causes the breakdown of the working relationship

Understanding ‘Without Prejudice & Subject To Contract’

The Settlement Agreement is considered a ‘protected conversation’. The term ‘without prejudice’ is used as a precursor during all negotiations, so that the information covered within the documentation cannot be used in later proceedings held by a tribunal or in court.

A ‘protected conversation’ is considered a true and constructive attempt to provide an amicable resolution for both parties.The employee cannot be pressurised into a decision they don’t agree with.The protected status will be retracted if the employer acts out of context, and can be held against them if an unfair dismissal claim is raised.

The ‘protected conversation’ governs guidelines protecting the employee from improper criticism. An employer can reference any inappropriate behaviour to air grievances in further proceedings and can use it to retract the protected status. Protected conversations aren’t applicable in automatic unfair dismissal cases that include discrimination or breach of contract.

Legal Requirements Of A Settlement Agreement

A Settlement Agreement must be presented in the form of a physical written document in order to be legally binding, stating all the disputes and issues under management that require consideration.

The agreement must state the details of the solicitor or independent legal advisor who manages the settlement on behalf of the employee. It is mandatory that the employee must receive legal advice and a full explanation of all particulars from their advisor, and that the advisor holds the correct insurance and personal indemnity to cover any costs or losses to the employee brought against them.

The agreement must also meet the statutory conditions regulating settlement agreements and contain a statement declaring all areas have been satisfied.

Do You Need Guidance On A Settlement Agreement Or Assistance Reaching Your Best Possible Outcome?

Our team of specialist employment solicitors are available to offer independent expert advice in any employment law situation. We specialise in the careful handling of Settlement Agreement cases with a high level of professional sensitivity. Dispute with an employer can be incredibly difficult,so will always aim to provide a respectful, considerate and positive outcome in all of the cases we undertake.