A settlement agreement is a legally binding contract between an employer and employee which parties enter to resolve a (potential) dispute. Usually, settlement agreements are used when an employee and employer want to come to an amicable solution to end the relationship where the employer does not want to conduct a long capability/disciplinary procedure or to avoid tribunal proceedings where the employee may have a claim. However, they may also be used where both parties want to continue the employment relationship, but a disagreement has occurred they would like to settle. The terms of the agreement can be negotiated between the parties.
By proposing a Settlement Agreement, you can be certain that your departing employee will be prevented from bringing a claim at the Employment Tribunal against your business. Furthermore, it will help you avoid a public Employment Tribunal claim and will ensure that your interest and reputation are protected.
There are benefits for both the employer and employee to enter into a settlement agreement, including:
1. It can be legally binding if the statutory requirements are met. To be legal binding the agreement must state the specific complaints the parties are settling, and the employee must have received legal advice from an independent solicitor, who has insurance in place, on the terms of the agreement.
2. The agreement can contain confidentiality and disparagement clauses prevent the parties from talking about the agreement and making derogatory comments about the other party to the agreement. This can help the employer avoid bad publicity that may affect their future business and assist the employee who may be looking for a new job and need a reference.
3. Saving costs in the long run. If a settlement agreement is not entered into, a potential dispute may result in an Employment Tribunal claim which incur high legal costs, usually considerably more than a settlement agreement. Further, in a settlement agreement employers have some control over the amount of the ex-gratia payment which they would not have if Employment Tribunal made an award for compensation.
Davenport Solicitors has considerable experience in bringing employment law matters to a close in an amicable manner while protecting the rights of employers involved in the process.
Employers need to be cautious when presenting a settlement sum to an employee, to ensure that they do not expose themselves to any potential claims. Whist we would not advise employers to accept a poor or unfitting agreement to avoid a tribunal process, we believe that the parties will ultimately show a willingness to reach a suitable agreement without resorting to Tribunal, as it is usually in the interest of both parties to do so.
Our experience and success in this area means that we are a natural fit for your needs. However, we believe that every business is unique, therefore every Settlement Agreement is likely to be different. You can be rest assured that we will provide you with a bespoke service at all times, ensuring that your business is protected.
How we can help you?
Get in touch with our experienced Settlement Agreement Solicitors today! Call us on 020 7903 6888 or request a call back at a time convenient for you. You can also drop us an e-mail at email@example.com. We aim to reply within 24 hours.
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