Deal or no deal

They may look fairly straightforward on the surface, but settlement agreements can often be complex for both employer and employee.
Whether you are an employer preparing a settlement agreement to give to an employee who is leaving, or you are an employee who has been given a settlement agreement by your employer, it is important that you get advice from a specialist employment solicitor.
E. Rex Makin & Co are experts in negotiating and advising on Settlement Agreements ranging from relatively routine to high-value and complex deals.

1. What is a settlement agreement?

A settlement agreement (formerly known as a compromise agreement) is a legally binding agreement between an employer and an employee under which the employee agrees to settle their potential employment claims.

2. The seven key legal requirements for a binding settlement agreement.

  • The agreement must be in writing.
  • The agreement must relate to a particular complaint or particular proceedings.
  • The employee must have received legal advice from a relevant independent advisor.
  • The terms and effect of the proposed agreement and, its effect on their ability to pursue any rights before an employment tribunal.
  • The independent adviser must have a current contract of insurance (or professional indemnity insurance) covering the risk of a claim against them by the employee for the advice.
  • The employee’s adviser must be identified.
  • The agreement must state that the conditions regulating settlement agreements have been met.

3. What might be included within the settlement agreement?

Aside from the legal requirements the contents of a settlement agreement are largely at the discretion of the business and the employee involved. As well as a financial settlement it may include such things as:

  • A confidentiality clause
  • An agreed reference
  • An agreement not to make derogatory statements
  • Contribution to legal fees.
  • Waiver of claims by the employee, including warranty that the claims listed are the only claims which the employee has against the employer.
  • Re-assertion or modification of existing restrictive covenants.
  • Return of the employer’s property.
  • Indemnity from employee in relation to tax and national insurance contributions.

If you are offered a compromise agreement, you should get expert legal advice on the agreement as soon as possible. Anne Tyson our specialist Settlement Agreement Solicitor can advise you on any claims you may have, and can negotiate the best compensation package whilst ensuring that the agreement is adequately drafted to provide you with the protection you require.

Contact Anne on 0151 709 4491or email: employment@erexmakin.co.uk.