A settlement agreement can provide a fast, cost-effective option for resolving existing employment disputes or avoiding potential future disputes. They are commonly used during redundancy proceedings and other kinds of terminations, but can be highly effective for a wide range of employment disputes, as long as both parties involved have the right legal advice and support.
Franklins’ expert employment law solicitors, based in Northampton, are highly experienced in representing both employers and employees in settlement negotiations, creating and reviewing settlement agreements to ensure both parties’ interests are protected. With our expertise and skilled advocacy, we can help find a solution that works for everyone under even the most difficult circumstances.
A key benefit of a settlement agreement is that it allows both parties to avoid the need for an Employment Tribunal, meaning the matter is kept private and any uncertainty over the outcome is side-stepped. Voluntarily agreeing a settlement is also usually faster, cheaper and less stressful for everyone involved.
Our settlement agreement solicitors in Northampton have particular expertise in non-confrontational dispute resolution, including mediation and negotiation. This allows us to defuse any potential conflict and encourage both sides to see the benefits of a negotiated settlement. That way you can move on quickly while preserving a positive relationship where this is considered advantageous.
Whether you are currently involved in an employment dispute, or are concerned about avoiding a possible future dispute, our employment dispute resolution solicitors in Northampton can give you the expert advice and guidance you need to achieve a positive outcome.
If you need a settlement agreement solicitor in Northampton to resolve an employment dispute, we can help. Please get in touch by calling 01604 828282 or using our contact form for a prompt response.
How settlement agreement can be used to resolve employment disputes
A settlement agreement is a written agreement between an employer and employee (or former employee) in which the employee agrees they will not refer a specific matter or matters to an Employment Tribunal, normally in exchange for a one-off cash payment and/or other concessions from the employer.
Acting as a replacement for the formerly used ‘compromise agreements’, settlement agreements are a popular way to deal with both ongoing employment disputes and potential future employment disputes surrounding employee terminations. However, they are also used for various other types of employment issues, including those related to discrimination and workplace harassment.
What should a settlement agreement contain?
The specific contents of a settlement agreement will depend on the situation and the requirements of both the employer and the employee. Typically a settlement agreement will include details such as:
- Compensation for termination of employment
- The employee’s agreement not to refer specific issues to an employment tribunal (i.e. a ‘waiver of claims’)
- The employee’s warranty that they have no other potential claims against the employer than those listed in the agreement
- A contribution towards the employee’s legal costs
- Reiteration of, or amendments to, any pre-existing restrictive covenants the employee entered into with the employer during their employment
- An agreement by the employee to return any property in their possession belonging to the employer
- Indemnity from employee tax and National Insurance contributions in relation to the agreed financial settlement
- The employee agreeing not to use or share any confidential information relating to the employer or to offer any public criticism of the employer
How to ensure a settlement agreement is legally binding
For a settlement agreement to be considered legally binding it must:
- Be in writing
- Relate to a specific complaint or complaints
- Only be signed by the employee once they have had access to independent advice from a lawyer or certified, authorised trade union (this adviser must have appropriate insurance or professional indemnity cover)
- Name the employee’s adviser
- Allow the employee reasonable time to consider the agreement before they sign (the Acas Code of Practice recommends a minimum of 10 days)
- State the relevant statutory conditions regulating the agreement
Settlement agreements FAQs
Is a settlement agreement the same as a compromise agreement?
Settlement agreements replaced compromise agreements in July 2013 and provide similar advantages. The main difference is that settlement agreements are designed to encourage employers and employees to negotiate a settlement before an employee’s employment is terminated, saving both parties time, money and uncertainty.
Are settlement agreements liable for tax?
Settlement agreements of up to £30,000 are normally exempt from income tax and National Insurance. However, this is dependent on the situation, so it is important to discuss this with your legal adviser before signing the agreement.
Is a settlement agreement needed when making someone redundant?
While a settlement agreement is not strictly required during redundancy proceedings, they are increasingly commonly used as they can protect the employer from any potential future dispute over how the redundancy process was carried out.
When can a settlement agreement be used to resolve an employment dispute?
Settlement agreement can be used for most kinds of employment disputes, such as those related to:
- Unfair dismissal
- Equal pay
However, certain types of statutory claims cannot be resolved with a settlement agreement, including:
- Potential personal injury claims
- Failure to properly inform and consult employees in relation to collective redundancies and TUPE regulations
Can my employer insist that I sign a settlement agreement?
Settlement agreements must be entered into voluntarily by the employee only after taking independent legal advice and having been given reasonable time to consider the agreement. If your employer tries to pressure you into signing an agreement without either of these provisions, they will be acting unlawfully.
That said, as long as the appropriate measures are in place, signing a settlement agreement will often be in your best interest as it can save you time, money and stress, as well as giving you immediate certainty over the outcome, as opposed to going to an Employment Tribunal where there are no guarantees that you will achieve a favourable result.
Why choose Franklins Solicitors for your employment dispute?
Franklins Solicitors has a strong track record of helping employers and employees to resolve employment disputes, with an exceptional reputation established over more than 35 years. As a result of our extensive experience, our employment lawyers in Northampton can provide a tried and tested approach to help resolve your employment dispute faster and at lower cost to both parties.
Where a settlement agreement cannot be reached or is not appropriate, we also have the experience to ensure you have the best possible representation at an Employment Tribunal.
We have over 100 staff split between our Northampton and central Milton Keynes offices, giving us a wide range of talent and expertise to call on, no matter what issues you are facing. By combining the latest technology with the highest levels of legal expertise, we offer an accessible, convenient modern legal service to match your needs, allowing us to provide excellence as standard, not as an exception.
We are Lexcel accredited by the Law Society in recognition of the strength of our practice management and client care. We are regulated by the Solicitors Regulation Authority (SRA), providing assurance that we continually meet the highest legal and professional standards at all times.
Get in touch with our settlement agreement solicitors in Northampton
For pragmatic, commercially-focused advice and representation to resolve your employment disputes, please get in touch with us today.