Settlement Agreements

If your employer has offered you a settlement agreement, you’ll need independent legal advice before you respond. You can rely on us to act in your interests.

What is the purpose of a Settlement Agreement?

A Settlement Agreement (also known as a Severance Package) is a legally binding contract which is made between an employee and an employer where generally, in return for giving up employment rights, an employee will be entitled to receive a lump sum settlement figure. A Settlement Agreement can be offered at any time during an employment relationship,

Why does an employee need to see a Solicitor about a Settlement Agreement?

The law requires an employee to take independent legal advice before signing the Settlement Agreement to ensure that they are obtaining the best deal for them, and to ensure that they do not sign away their employment rights without obtaining the necessary independent legal advice from a solicitor.

A solicitor is able to advise an employee not only about the terms of the Settlement Agreement but also advise about any potential claims they may have, tax implications and how to negotiate the best deal.

How much will it cost an employee to see a Solicitor about a Settlement Agreement?

Usually an employer will pay for an employee to receive independent legal advice and in most situations that means the employee will not be required to pay any costs.  In some circumstances it will be necessary for the solicitor to carry out further work on behalf of an employee if certain terms need renegotiating to obtain the best deal and the employee may have to contribute to legal costs.

We can explore various avenues for funding these negotiations, including the employee paying on a private basis, renegotiating with the employer for an increase in the contribution to legal fees, legal expenses insurance and in some situations on a No Win No Fee Agreement.

Where can I get more information about Settlement Agreements?

ACAS Statutory Code of Guidance on Settlement Agreements provides further information on Settlement Agreements and plays an important role at an Employment Tribunal as consideration will be given by a Tribunal as to whether or not an employer has followed the ACAS Code. If an employer has failed to follow the ACAS Code, in certain circumstances an Employment Tribunal can increase an employee’s compensation by up to 25%.

We can help you with settlement agreements arising from:

  • unfair dismissal
  • redundancy
  • discrimination
  • a clash of personalities
  • other employment issues

For more information, or to discuss your case, please contact our employment law specialists Maureen Cawthorn or James Hodgson on 01422 339600.


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