In most situations, the employee-employer relationship can end on mutual terms, with both parties protected by their contract.
However, in some cases, ending employment does not go as smoothly, which can have a negative impact on both parties involved.
At Warner Goodman, our settlement agreement lawyers are here to represent both employees and employers, giving valuable insight on how to pursue a favourable outcome.
A settlement agreement, formerly called a compromise agreement, is a legally binding document outlining the terms and agreements between the employer and employee when they agree to settle on court proceedings, such as an employment tribunal claim.
Settlement agreements aim to settle any areas of contention and prevent disputes or litigation from arising further down the line.
Our solicitors specialise in drafting and finalising airtight settlement agreements that protect your interests and allow both parties to move forward.
Our services for settlement agreements include:
How we can help employees with settlement agreements:
- Specialist legal advice
- Possible amends to the settlement agreement
- Further meetings and negotiation
How we can help employers with settlement agreements:
- Understanding how to talk about the settlement
- Drafting a settlement agreement
- Negotiation and mediation
Speak to our settlement agreement solicitors today
Need help from a settlement agreement solicitor? We have specialist solicitors in Southampton, Portsmouth, Fareham, Chandler’s Ford and Waterlooville.
To find out how Warner Goodman Solicitors can assist you, contact our settlement agreement solicitors on 023 8063 9311 or email enquiries@warnergoodman.co.uk.
How we can help employees with settlement agreements
Specialist legal advice
In our initial meeting, we ask that you bring a copy of the settlement agreement and your contract of employment, along with any relevant details regarding how and why you are being offered this severance document.
You will then be given professional settlement agreement legal advice tailored to your exact circumstances. We will assess whether the settlement is fair and whether you can stand to pursue a more favourable outcome. We will also ensure that you will not be under undue legal duress under the contractual stipulations.
Possible amends to the settlement agreement
Your solicitor for settlement agreements may, in their legal expertise, believe that one or more of the contractual clauses are unreasonable or that the financial sum is unacceptable.
In this event, they will suggest possible amendments and have these put to your employer for consideration.
Further meetings and negotiation
If necessary, we will arrange a secondary meeting with you to discuss the new terms and effect of the agreement. You won’t be expected to sign or pay until you are confident in the terms that you are agreeing to.
Settlement agreements are usually concluded within a reasonably short amount of time. Ideally, if the contract and sum are reasonable, we can finalise the process within a few days. Further negotiations will extend this timeline, potentially to a couple of weeks.
There is a risk that should negotiations be attempted clumsily, your employer may take offence and withdraw their offer. Due to this, we would only suggest attempting negotiations by yourself if you feel confident in your ability to achieve more in an Employment Tribunal claim. A specialist settlement agreement solicitor can save you time and financial losses and prevent litigation altogether.
If your employer expects you to accept the agreement quickly, or if you have a deadline that you would like to keep to, then let us know, and we’ll work to conclude matters as efficiently as possible.
How we can help employers with settlement agreements
Understanding how to talk about the settlement
There is a procedure to follow when approaching the topic of a settlement with your employee/former employee. Our settlement agreement solicitors can assist with conversations around a settlement agreement and protecting yourself from any potential claims.
Warner Goodman can provide guidance and the correct procedures to follow that we tailor to your specific situation so you can proceed confidently. We’ll arrange a meeting between you and your employee so that you can offer them the draft settlement and ensure that proceedings are mediated efficiently.
Drafting a settlement agreement
Following an initial discussion, a formal written agreement for the settlement will need to be drawn up.
A settlement agreement solicitor can help you do this while bearing in mind the impact that the settlement could have on your employee’s ability to seek further employment.
Negotiation and mediation
Your employee may want to negotiate the specifics of the draft settlement. In our experience, it’s always best to have a legal professional present to affirm your priorities and prevent negotiations from breaking down due to perceived offences.
In the case of settlement agreements, professional advice and mediation are crucial.
Settlement agreement FAQs
When it comes to settlement agreements, employers are required to take on legal advice for the final contract to be legally binding and effective. There is a lot to consider when putting together the contract in order to protect you and your employee.
For employers, we charge for the advice we offer, documentation preparation, and any necessary negotiation, all on an hourly rate basis. For a typical settlement agreement, we anticipate the total fees from preparation to finalisation to cost between £750 - £1000 + VAT.
For employees, we anticipate that your employer will offer you a budget to meet the legal requirements of the settlement agreement solicitor cost, typically around £500 + VAT, as suggested by the Court’s judicial guidance. This would most likely adequately cover the time it takes us to discuss your circumstances and thoroughly review the settlement agreement.
If more time is needed (we estimate that most resolutions take around one to two hours), rest assured that you will incur no additional fees without your agreement ensuring complete transparency.
Each settlement agreement will be different, depending on the nature of the work and employment dynamic. However, as a general practice, there are two main points of consideration: the responsibility of the employer towards their employee, including any potential liabilities that need to be covered, and a financial offer.
The writer of the agreement will typically outline the following details since they typically impact the value of the financial offer:
- The nature of the formerly held job
- The motivation for the settlement offer
- What the job contract said relating to employment, notice period, annual leave, etc
- The length of employment
- How difficult it would be to replace the employee/ fill the empty role
- How long the settlement agreement will take
- How long it could take the employee to find a similar, suitable job
- Potential liabilities and costs to take this matter to court in the event that a settlement is not agreed upon
From these points of consideration, the financial amount will be determined and discussed. The employee will suggest what they think is a sensible amount to account for the above items, and it is up to the employee whether or not it would be considered ‘reasonable’.
The employee must be allowed ten calendar days to consider the settlement proposal and, should they wish, seek legal advice.
Whilst we recognise why an employer may feel eager to see the process finished and get a response, these ten days are a specific requirement of the Acas Code of Practice on Settlement Agreements. If you do not allow for these full days, then that will likely be used as evidence of your unreason in Court.
Details of the payment arrangement and timeframe should also be discussed openly through proactive interaction. Often, several elements within the final sum affect the income tax and National Insurance (NI) tax, such as compensation and payment for outstanding holidays, so they should be discussed clearly.
Once both parties have signed the contract, it becomes legally binding. However, if one of the parties believes that the agreements were not entered into voluntarily or that either party breached the terms, then it becomes invalid and can be challenged in court.
Yes, a compromise agreement is just an old term given to a document with the same purpose – to settle and prevent potential claims or disputes, which our compromise agreement solicitors can help you with.
Speak to our settlement agreement lawyers today
Need help from a settlement agreement solicitor? We have specialist solicitors in Southampton, Portsmouth, Fareham, Chandler’s Ford and Waterlooville.
To find out how Warner Goodman Solicitors can assist you, contact our settlement agreement solicitors on 023 8063 9311 or email enquiries@warnergoodman.co.uk.
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