A Settlement Agreement is a document that broadly speaking allows an employer and an employee to resolve a dispute or issue that has arisen between them, which will often simultaneously record the terms for ending the employer/employee relationship.
From an employer’s perspective, the main benefit of entering into a Settlement Agreement is that it affords a level of protection that typically involves the employee waiving their rights (other than in certain excluded circumstances) to take legal action against the employer.
From an employee’s perspective, entering into a Settlement Agreement should only be considered where they are receiving some reciprocal benefit, usually one that is financial in nature.
It is important to stress that no employee can be compelled to enter into a Settlement Agreement. For the most part, the proposal that the parties enter into a Settlement Agreement represents an offer of terms on which to end the employee’s employment. As with any offer, it is open to the employee to accept, reject, or alternatively seek to negotiate its terms.
It remains a legal requirement that any employee considering entering into a Settlement Agreement must seek and obtain independent legal advice upon the terms and effect of the Agreement, and in particular upon the fact that by entering into the Agreement they are waiving certain legal rights that may otherwise be available to them.
The parties to a Settlement Agreement can often be creative as to its content, allowing the freedom to formulate a resolution to a dispute that is suited to both parties. This can include making specific provisions regarding ongoing duties of confidentiality and non-disclosure, agreeing the wording of a reference that the employer will give for the benefit of the employee when seeking future employment, dictating the return or destruction of any property or information in the hands of one party that belongs to the other, and of course recording any terms of financial settlement such as any contractual or non-contractual payments that the parties have agreed upon or that have been proposed.
The vast majority of employers will agree to pay or at the very least contribute towards the employee’s legal costs incurred in seeking independent advice upon the terms of the Agreement. At Hewitts, we have a team of qualified Solicitors capable of drafting, amending and/or advising upon Settlement Agreements, usually on terms that ensure legal costs are limited to the amount the employer is willing to contribute, meaning there is often nothing for the employee personally to pay.
If you require any advice or assistance regarding such an Agreement or any employment dispute, please feel free to contact a member of our team – https://hewitts.co.uk/our-team/
