Settlement agreements are often used upon the termination of employment. Sometimes circumstances are amicable, for example they are often used where an employer is willing to pay an enhanced redundancy package, and sometimes they are offered to an employee to draw a line under a disagreement or other contentious issue.
The purpose of a settlement agreement is to ensure that the employer will have the peace of mind of knowing that the employee waives any claims arising out of their employment or its termination. In return for the employee agreeing to this, the employer will usually offer a termination payment or enhanced redundancy payment to the employee. Agreements often contain additional terms, such as the parties agreeing to keep matters confidential and that the employer will provide an agreed reference.
In order for a settlement agreement to be legally binding they must comply with a number of requirements – including that the employee must be advised on the terms and effect of the agreement by a relevant legal adviser, which in practice is usually a solicitor. As a result of this, it is almost always a term of the agreement that employers will contribute to the legal fees that an employee incurs in obtaining legal advice.
We advise on:
- The specific terms of the agreement
- The legal rights you are forgoing by signing the agreement
- Your and your employer’s obligations under the agreement
- If you are uncertain whether to accept the terms, the alternatives available to you
If you believe the terms offered by your employer are insufficient, we can also act on your behalf to negotiate terms with your employer. This may be particularly relevant to employees whose employer has acted in manner which breaches their contract of employment or statutory employment rights, or where the employer is proposing to terminate employment in circumstances which might otherwise give rise to a claim of unfair dismissal.
All of the members of our employment team have extensive experience of advising employees with regard to settlement agreements.
For further details on settlement agreements, please see Paul McAleavey’s article.