Once a settlement agreement is signed, it becomes a legally binding contract, which absolves the employee of their rights to any employment claims they may have against their employer in exchange for a sum of money or other agreed benefits. Settlement agreements can be used to end an employment relationship on agreed terms or to resolve an ongoing workplace dispute.
Settlement agreements are voluntary and parties do not have to agree to them or enter into discussions about them. There is usually an initial process of negotiations during which both parties make proposals and counter proposals until an agreement is reached or both parties decide no agreement can be reached. If an agreement cannot be reached, the parties cannot use the discussions surrounding the proposed settlement agreement as evidence in any type of claim, as long as there has been no “improper conduct. Improper conduct may include: not giving an employee reasonable time to consider the agreement and therefore putting unreasonable pressure on them; or behavior that could make the dismissal look like much more of a foregone conclusion, such as cutting off email access or indicating that dismissal will be an outcome if the agreement is not accepted.
Employees will need to take independent legal advice before they enter into the agreement. The Acas Code of Practice on settlement agreements specifies that an employee should be allowed a minimum of 10 calendar days to receive legal advice on the effect of the settlement agreement, unless the parties agree otherwise.
Settlement agreements can be complex and should be drafted properly to provide sufficient clarity and protection for both parties. As employment law specialists, Tollers solicitors can help and advise both employers and employees on settlement agreements.
In any negotiations, it is helpful to bear in mind the alternative to reaching an agreement and how attractive that alternative looks both to the employer and the employee. It is important to be aware of the different options available, as it would enable parties to weigh up whether to offer or accept a settlement package or whether a different course of action is better for their future.
Talk to Tollers
Whether you are an employer looking for advice or help in drafting a settlement agreement, or an employee looking for independent legal advice, Tollers are here for you. We are experienced in drafting and negotiating settlement arrangements and will help you to make an informed decision based on what is best for you.