What is a settlement agreement?

Settlement agreements (previously known as compromise agreements) contain the terms for settling an employment dispute between an employee and employer.

Sometimes settlement agreements are used where the employment relationship is to continue but more often than not, settlement agreements are used where employment has terminated or is about to be terminated.

What is the difference between a COT3 agreement and a settlement agreement?

Unlike COT3 agreements, settlement agreements do not require Acas’ involvement but the employee does need to receive independent legal advice on the terms and effect of the settlement agreement.

Why am I being asked to sign two agreements?

If there is a gap of more than several weeks between the employee signing the settlement agreement and their employment terminating, employees may be asked to enter into a re-affirmation agreement. This is to confirm that no claims have arisen in the period between signing the initial settlement agreement and re-affirmation agreement.

How long do I have to consider the settlement agreement?

Acas guidance recommends that employers give employees 10 calendar days in which to consider a settlement agreement and take advice on the same. Kate is often approached by employees who require same-day appointments which Kate can support.

Why do I need a solicitor?

It is a condition of the settlement agreement that an employee has received independent legal advice on the terms and effect of the settlement agreement. Without such advice, the agreement is invalid.

How much will it cost?

If you are happy with the settlement package which has been offered to you, Kate can often keep within the legal fee contribution offered by your employer. If you require support in negotiating terms of the agreement, the settlement sum or advice on potential claims, Kate can give you a fee estimate for such advice.
Should my agreement include a reference?

There is no legal obligation to include a reference as part of your settlement agreement but employers commonly do. The reference is usually attached to the settlement agreement and will often be a factual reference providing minimal information such as dates of employment and job title, although this is not always the case.

Should I mention that I have been offered a settlement agreement with anyone else?

Most settlement agreements have a confidentially clause which restricts who you can discuss your settlement agreement with inside your organisation. There are usually exceptions within a settlement agreement so that you can discuss the fact that you have been offered a settlement agreement with immediate family and professional advisers.

Do I need to attend an in-person meeting?

Kate can advise you on the settlement agreement over the phone, via video call or in person. Clients have often remarked how seamless and fuss-free the entire process is from client set up through to signing and returning the settlement agreement to your employer.

Can I sign the settlement agreement electronically?

Most employers are happy for the settlement agreement to be signed electronically. Once you are happy to sign the agreement, Kate can send you a secure link for signing the agreement electronically.

Are offers to settle disclosable in tribunal proceedings?

Settlement agreements are often labelled “without prejudice” which means that neither party can refer to settlement discussions in any subsequent or existing legal proceedings if the without prejudice rule applies (see below).

“Without prejudice and subject to contract” means that until a binding agreement is in place (i.e. the employee has received independent legal advice and both parties are willing to enter into the agreement on the terms contained therein) either party may withdraw from settlement discussions.

For the without prejudice rule to apply, the communications must reflect a genuine attempt to resolve an existing dispute between the parties. Employers who therefore use surprise meetings to try and pressure employees into accepting a settlement package could fall foul of this rule. Any communications which the employer inadvertently treated as “without prejudice” basis may be disclosable in subsequent legal proceedings.

It is also possible for employers to use “protected conversations” with a view to offering the employee a settlement package and leaving employment.
If there are allegations of discrimination or improper behaviour against the employer, communications made during the protected conversation may be disclosable in existing or subsequent tribunal proceedings.

Do you advise on multiple settlement agreements?

In large-scale restructures or redundancies there may be circumstances where a number of employees leave employment. In this situation, settlement agreements are often used if the employer is offering an enhanced redundancy payment or an ex-gratia payment as an incentive for the staff to waive their legal rights.

Kate has experience of advising on bulk settlement agreements, whether online or at the employer’s premises. Kate can streamline the process so that settlement agreements can be completed in a short space of time, advising on up to 10 agreements per day. Kate’s systems are set-up to accommodate the need for a quick turnaround while ensuring that the redundant employee is properly advised.

Support needed?

If you’re looking for settlement agreement advice, get in touch today. Kate frequently advises employees on settlement agreements and at short notice. Contact her by email (kate.walsh@carbonlawpartners.com) or by phone 029 2278 4435.