Employment Settlement Agreement Solicitors
When it comes to settlement agreements, our employment lawyers are experienced in providing clear, easy to understand and practical advice.
Whether you are at senior or board-level with a complex share options package or a junior employee navigating your first redundancy, we can guide you through the settlement negotiation process and advice you on each term in the settlement agreement so that you can sign it with the confidence that you actually understand what it says.
If you are a business looking for advice on how to terminate an employee and/or offer a settlement agreement to an employee, we can have a call to discuss your legal obligations, the potential risks and how to mitigate them and commercial strategy when it comes to negotiations.
or send your enquiry to ask@dragonargent.com
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Settlement Agreement – If you are an employee
If you have been offered a severance package or have been provided a settlement agreement from your employer (whether it is following a disciplinary/grievance, dispute or redundancy process), before signing it, by law you are required to consult with an employment solicitor. We offer a complimentary 30-minute consultation, get in touch with one of our solicitors to book yours now.
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There are requirements for a settlement agreement to be legally binding, these include:
1. The agreement must be in writing;
2. The agreement must relate to a particular complaint or particular proceedings;
3. The employee must have received legal advice from an independent adviser on the terms and effect of the proposed agreement and its effect on the employee’s ability to pursue the statutory rights in question before an employment tribunal;
4. 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 in respect of the advice; and
5. The agreement must state that the conditions regulating settlement agreements have been satisfied.
Whilst it is not a statutory requirement, it is expected that the employer makes a contribution towards your legal fees, in London this is usually a minimum of £500 plus VAT.
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A settlement agreement may include a range of clauses, commonly covering:
1. The issues which led to the need for a settlement agreement.
2. Details of your employment (role, length of service etc.).
3. The agreed date of termination of employment (if your employment is terminating or has terminated).
4. The sum of compensation to be paid in exchange for entering into the settlement agreement (settlement payments are tax free up to £30,000).
5. Terms surrounding the compensation, such as payment date, satisfactory handover, return of company property etc.
6. A statement of the parties’ understanding of the tax position.
7. Confirmation that tribunal proceedings have been or will be withdraw.
8. Details of any entitlement to bonus or commission payments.
9. Details surrounding share options.
10. Confidentiality and post-termination restrictions.
11. A list of the claims being waived or settled.
12. Employee indemnities.
13. An obligation to return company property.
14. Repayment provisions if the settlement agreement is breached.
15. Agreed draft wording for an employment reference.
16. Agreed draft wording for an internal/external exit announcement.
17. The employer’s contribution towards legal costs
We know it can seem like a lot to take in and understand. We are here to help you, step by step and explain each clause to you in an easy-to-understand way! We can also guide you through any negotiation process and explain the range of possible outcomes and keep you updated on your legal rights.
To advise on the terms and effect of the settlement agreement alone, we charge a fee of £500 plus VAT. Please note, the £500 plus VAT does not include corresponding with your employer, negotiating amendments to the settlement agreement or advising you whether the settlement offer “is a good deal”. If you would like to discuss how we can assist you in more detail, please book a complimentary 30-minute call with us.
Settlement Agreement – If you are an employer
As an employer, resolving a dispute or handling the end of an employment relationship can be complex, stressful and time consuming. A well-drafted settlement agreement offers a clear, structured way to conclude a sensitive situation and it can protect both your business’ reputation and commercial interests and the employees.
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Settlement agreements can be used for a variety of reasons:
1. To end employment on agreed terms.
2. To resolve workplace disputes.
3. To prevent an employee from making a Tribunal claim.
4. To short-cut long-winded legal processes (e.g. like performance, disciplinary, long-term sickness or redundancy).
5. To offer enhanced terms (e.g. a redundancy package).
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Settlement agreements can be offered at any time during an employment relationship but are often considered as a way to avoid incurring expense, uncertainty and time associated with following formal processes or responding to Tribunal claims.
The first step for an employer is to identify when a settlement agreement is needed. This will vastly depend on the specific circumstances at hand, how long the employee has been employed, the risk appetite of the business and cashflow of the business. Get in touch with our employment solicitors who can provide guidance on the most appropriate initial steps.
We can work directly with you to provide a draft settlement agreement that will comply with the legal requirements and will be modified to fit your business and the current specific situation. The draft will incorporate the essential clauses such as termination details (if termination is the case), compensation, waiver of claims, protection of confidentiality and intellectual property, non-disparagement, post-termination restrictions etc. After the initial draft is prepared, the consultation phase with the employee and their legal adviser will commence until a mutual agreement on all terms is met.
Meet the Employment & Immigration Team
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Cacy Symonds
Head of Employment & Immigration
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Sara Maghouz
Employment & Immigration Solicitor
Why choose Dragon Argent?
Experience: we have extensive experience in acting on behalf of an employee and on behalf of an employer, meaning we are well versed in negotiation tactics played by both parties. We give direct and practical advice, and we are skilled in de-escalating disputes to avoid litigation where possible.
Tailored Advice: We can balance legal risk with your business needs taking in to account time, cost, reputation, workplace culture, future plans of the business etc. Our advice is specifically tailored to meet the distinct requirements of your business.
Precision and Fairness: we provide our advice in plain language, and our draft agreements have been prepared from years of experience in reviewing and negotiating various templates. We also operate a clear fee structure with no hidden costs, and we provide regular updates.
Book a complimentary 30-minute consultation with our employment solicitors.
Frequently Asked Settlement Questions
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Settlement agreements can be used to settle disputes arising from the end an employment relationship; settle disputes whilst still employed or to settle claims already issued at the Employment Tribunal. An employee waives their rights to bring claims against the employer in return for a compensatory payment.
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Yes, we are regulated by the Solicitors Regulation Authority and must adhere to their professional conduct standards at all times. We are regularly audited and always work in our clients best interests.
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No, a solicitor is not required during the negotiation process but getting egal advice can often assist in reaching a conclusion quicker, as you will receive professional advice on your position and whether your position is reasonable or unrealistic. For the settlement agreement to be legally binding, an employee must get independent legal advice before signing. The solicitor providing this advice must hold professional indemnity insurance and be named in the settlement agreement for it to be valid.
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In exchange for waiving their rights, employees are often paid a compensatory payment. The amount that is paid will depend on various factors such as the dispute / breach at hand, the length of the employee’s service, the salary/position of the employee, the job market, terms in the contract etc. You should seek legal advice to understand what a ‘reasonable’ settlement payment would look like for your situation.
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Settlement payments are tax-free up to £30,000. Please be aware, any contractual payments, such as notice pay, holiday pay, bonus or commission payments are subject to standard tax and National Insurance contributions.
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Whilst not legally required, it is common that employers will offer to make a contribution to the employee’s legal fees. In London, this is usually a minimum of £500 plus VAT and can be increased depending on the complexity of the situation, the length of negotiation and the number of amendments required to the settlement agreement. The employee is responsible for any shortfall between the agreed contribution and the actual fee.
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Yes, a confidentiality and/or non-disclosure clause can be included within a settlement agreement. The purpose of this clause is usually to prevent the employee from disclosing the terms of the agreement or any sensitive information about the company. However, it is important to ensure that such clauses are drafted in a way that are legally enforceable and fair to both parties.
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No. There is no legal requirement for an employer to provide a reference for an employee (whether good or bad) to future employers. The wording of an agreed reference can be negotiated and put in the settlement agreement, requiring both parties to no deviate from this wording.
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Yes, settlement agreements can be used to resolve workplace disputes whilst keeping the employee employed. If the business’ intention is to terminate an employee and wishes to offer a settlement agreement as part of an on-going process, a protected conversation or a without prejudice discussion should be used – this can be quite complex and therefore we suggest you get legal advice to ensure you are doing this correctly.
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Without a settlement agreement, an employee, if eligible, can make a claim at the employment Tribunal against its employer (even if they ‘promised not to’). Making a claim at the employment Tribunal is free to do for an employee. Proceeding with or defending an employment claim at the tribunal can be time-consuming, stressful and costly. A well-drafted settlement agreement offers a clear, structured way to conclude a sensitive situation and it protects both the business’ reputation and commercial interests and the employees.
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For a settlement agreement to be legally binding, the employee must receive independent legal advice from a qualified solicitor. This solicitor must have professional indemnity insurance and must be named in the agreement. Additionally, the employee must confirm they understand the terms and implications of the agreement, and it must be signed by both parties.
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A settlement agreement can be breached by either the employee or the employer. If a breach occurs, you should first raise this with the other party to give them the opportunity to rectify the breach but if this does not resolve the issue, you should seek legal advice on pursuing the matter of breach of contract at court.
Examples of breaches include:
The employee making a claim at the employment tribunal that was waived under the settlement agreement.
The employer failing or refusing to pay the agreed payments in the settlement agreement.
Either party breaching any clause outlined in the agreement.
If you’d like assistance with your settlement agreement, we offer a complimentary 30-minute consultation. Get in touch to speak with one of our expert solicitors.