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Negotiating the best exit terms

Have you been offered a settlement agreement or considering proposing a settlement agreement to your employer?

A settlement agreement (formerly known as a compromise agreement) is a written agreement, regulated by statute, between an employee and their current or former employer. By entering into a settlement agreement an employee waives their rights to bring certain claims against their employer in return for a sum of money.

Settlement agreements can be used in a variety of situations. These include as an alternative to disciplinary or capability proceedings, voluntary redundancy, changes to terms and conditions or when there is a breakdown in the employment relationship. They usually provide for the mutually agreed termination of the employee’s employment but this is not a requirement.

Why advice from a settlement agreement solicitor is mandatory

You will need independent legal advice from a solicitor or a barrister about the terms and effect of the document. This is because it cannot be legally binding without this advice.

Employment claims can be extremely valuable and therefore it is essential that you receive advise about the value of any claims you may have before you give up your right to pursue them.

Our employment lawyers will provide you with all the expert legal advice you need within a 24 hour turnaround. If you want a no-obligation, confidential conversation with someone in our team then;

Arrange a call back convenient for you

One of our employment solicitors will call you as soon as possible. We understand this is a stressful time and will ensure that your situation is assessed as quickly as possible so that you can be advised of your options going forward.

The cost of advice and how this can be funded

Advice regarding a straightforward settlement agreement (which does not require any amendments) usually costs £350 plus VAT. Employers usually make a contribution towards the employee’s legal fees which covers all costs. However, if the contribution is not sufficient, our solicitors can often negotiate an increase in the fee contribution to ensure that all of your costs are covered by the employer.

Why choose us as your solicitor?

  • Top ranking employment lawyers across the country. Ranked in the Legal 500 and Chambers directories and based across the country in Bristol, Birmingham, Cardiff, Manchester, Southampton, Taunton and London.
  • A highly experienced team. We regularly advise individuals on settlement agreements, are experienced in handling complex cases and have a track record of negotiating the best deals for their clients.
  • Assistance in all aspects and stages of your settlement agreements. This includes requests for being offered a settlement agreement, negotiating the terms of the agreement and, finally, advising on the terms and effect of the final document.
  • Specialists in what we do. As you will be waiving your rights to pursue a number of employment claims by entering into a settlement agreement, it is important that you seek legal advice from a specialist employment solicitor.

Frequently asked questions

Can I negotiate the terms of my settlement agreement?

Yes, provided both parties (employer and employee) agree to any proposed changes. An employee can seek to negotiate an increase in the amount they are being paid (perhaps because they believe they would be giving up a valuable employment claim) or the terms of the settlement agreement (perhaps to include a reference or internal announcement).

Can I disclose my settlement agreement to my next employer?

Settlement agreements usually include a confidentiality clause which means neither party disclose the fact or content of the agreement to anyone else. The exceptions to this normally include the HMRC, if it is required to by law and the employee’s immediate family. However, the parties can agree to include recruitment agents and future employers in this exception so that they too can be told.

What are the benefits of a settlement agreement?

A settlement agreement provides a clean break for both the employer and employee and compensation for the employee without the risk and cost of litigation. It may avoid the need for an employer to take an employee through a formal procedure which can be time consuming and stressful for both parties and may result in a dismissal. It can also provide a quick and dignified conclusion to an employment relationship which may have irretrievably broken down.

What does “without prejudice” mean?

The label “without prejudice” can be used to enable parties to have a full and frank discussion about settling an existing dispute without fear of what is said later being used in a court or tribunal if the settlement discussions break down.

If there is no dispute, an employer may start a (“protected”) conversation about offering a settlement agreement under section 111A Employment Rights Act 1996. This may prevent the conversation or correspondence later being used as evidence in an unfair dismissal claim.

This protection may be lost if an employer acts inappropriately.

What’s an “agreed reference”?

The parties agree on the wording for any subsequent reference in advance and as part of the terms of the settlement agreement. This often appears in a schedule to the settlement agreement and is usually factual – e.g. name, role and dates of employment.

If you need a solicitor to advise on your settlement agreement, you arrange a visit with one of the specialists near to you. Find your nearest specialist via Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton. Alternatively, contact us now by calling us at 0800 915 9354 or select a specialist below.

Speak with an employment expert

Marc Long

Head of Employment and HR Team/COFA

Southampton and London
Marc Long is the Head of Clarke Willmott’s Employment and HR team specialising in TUPE and outsourcing.
View profile for Marc Long >

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