Agreeing to a settlement agreement can sometimes prevent the lengthy and stressful formal redundancy process. Do I have to accept the settlement? No, but your employer might only make an enhanced payment on condition you sign the agreement, and you might be turning down the best offer you’ll get if you don’t accept.
Full Answer
What do you need to know about a settlement agreement?
A settlement agreement is a legally binding document between and employee and employer, which settles claims the employee may have arising from the employment or termination of employment. The employee must be advised by a qualified independent adviser, usually a solicitor, before signing the agreement.
Should I accept my employer’s settlement agreement?
If your employer offers you a settlement agreement, deciding whether you should accept it can be pretty daunting. Settlement agreements are typically given to employees when they are being made redundant.
Do you need a solicitor to sign a settlement agreement?
The employee must be advised by a qualified independent adviser, usually a solicitor, before signing the agreement. Why do employers offer settlement agreements? Usually, it’s for speed, risk-management, certainty and closure.
Can I negotiate a settlement agreement to claim more compensation?
If it’s not, there may be scope for negotiation. However, refusing a settlement agreement in order to try to claim more compensation in an employment tribunal is risky and there are a number of reasons why a settlement agreement is often (but not always) preferable to a tribunal claim.
What does it mean to accept a settlement agreement?
Accepting the settlement agreement would mean you won’t be able to claim compensation in an employment tribunal. You would need to consider whether the amount being offered by your employer is adequate. If it’s not, there may be scope for negotiation.
What is a settlement agreement?
A settlement agreement is a document by which an employee agrees to waive their rights to bring any kind of legal action against their employer . This is usually in exchange for a settlement payment.
How does a redundancy package compare to a settlement agreement?
If you refuse the settlement agreement and your employer makes you redundant, you will still receive certain minimum payments in a redundancy package . These include:
What payments can you expect if you opt for the settlement agreement instead of redundancy?
If you accept a settlement agreement instead of redundancy, you will usually be paid more money. Otherwise, what incentive is there for you to accept the settlement agreement?
Why is refusing a settlement agreement risky?
However, refusing a settlement agreement in order to try to claim more compensation in an employment tribunal is risky and there are a number of reasons why a settlement agreement is often (but not always) preferable to a tribunal claim.
Can an employer offer a settlement agreement?
Often an employer will offer staff a settlement agreement as an alternative to going through the redundancy procedure.
Is it fair to offer a settlement agreement instead of redundancy?
Is it fair to offer the settlement agreement instead of redundancy? There is nothing wrong with this in principle. One of the effects of the settlement agreement is that the employee waives any right to go through a fair redundancy procedure in exchange for an enhanced redundancy payment. It’s often a win-win.
What is settlement agreement?
Settlement agreements are typically given to employees when they are being made redundant. The documents outline the terms of the deal: usually an employee is given money in return for certain conditions, such as not bringing a claim against their employer. It’s a final sign-off before your employment is terminated.
Why do employers offer settlement agreements?
Settlement agreements are also offered to employees if an employer thinks they are performing badly in their job or are guilty of misconduct. In some cases, an employee will be aware that their boss is unhappy, while for others, being offered a settlement agreement can come as a shock.
What is pre termination negotiation?
Pre-termination negotiations – also known as a protected conversations – have come into force as a way of encouraging employers to have frank conversations with employees about terminating their contracts. Anything that’s said in this discussion is protected and cannot be used by either party against the other in an unfair dismissal claim.
What happens if you don't sign a contract?
If you don’t sign the agreement, then you preserve your full rights to make a claim against your employer.
What to do if you are facing unemployment?
If you’re facing a period of unemployment, you need to be able to meet your household living expenses until you get another job. One of the considerations you need to make is whether the money that’s being offered is enough.
What happens if you refuse to sign a settlement agreement?
If you refuse to sign, however, you may well face a disciplinary procedure or a redundancy situation. Either way, it’s often a stressful experience.
When did settlement agreements come into effect?
Settlement agreements came into force on 29 July, as part of wider government changes to employment laws. They’re legally binding agreements that set out the full terms of a settlement between an employer and an employee.
What is a confidentiality settlement agreement?
Confidentiality or gagging clauses. The payment made by the employer as part of signing the Settlement Agreement is made in return for the waiving of the employee’s rights to bring a claim under statute law, the contract of employment, or common law.
What is discrimination claim?
Claims for direct or indirect discrimination, victimisation or harassment related to race, disability, sexual orientation, religion or belief, and age.
Can you waive a settlement agreement?
Signing a Settlement Agreement Does Not Waive All of Your Statutory Rights. It is a common misconception that a Settlement Agreement can mean all of your legal rights are waived. The right to statutory maternity pay, statutory paternity pay, statutory adoption pay, or statutory shared parental pay cannot be removed by a Settlement Agreement.
Can a settlement agreement be used to settle a claim?
This is because there is an absolute restriction on the contracting out of these payments. A Settlement Agreement can, however, be used to settle statutory claims including: Claims for ‘equality of terms’ (as per sections 120 and 127 of the Equality Act 2010 and under section 2 of the Equal Pay Act 1970.
Is a settlement agreement negotiable?
Final Words on Signing A Settlement Agreement. Be under no illusion, Signing a Settlement Agreement is highly negotiable. If you are asked to sign one, don’t. Instead, take your time and seek legal advice. Retaining your rights to bring a claim may ultimately prove more beneficial to you and your future career.
Should I Sign a Settlement Agreement?
For any employee, being asked to sign a Settlement Agreement may lead to confusion, feelings of intimidation, and worry. In part, this is because while the employer will understand the precise legal terms and implications of signing the Settlement Agreement, the employee, not being familiar with such documents will be an immediate disadvantage. If you have been handed a Settlement Agreement for consideration, it is essential that any decisions from this point forward are made with a solid understanding of the document you are being asked to sign, and how it may affect your rights and your future career. Make no mistake, not all Settlement Agreements are fair and equitable; with some being overly tipped in favour of protecting the employer.
