Settlement Agreement Solicitors

Settlement Agreements, previously called Compromise Agreements, may be proposed during redundancy cases. You can discuss and adjust the terms of your settlement agreement or even decline it if it’s deemed more beneficial to you.

A Settlement Agreement is a contract between an employer and an employee in which the employee waives their right to bring legal action. In return, the employer offers some kind of incentive, such as a severance package and/or a reference.

Why am I being offered a Settlement Agreement during redundancy?

Settlement Agreements (compromise agreements) can be used in lots of different situations. One of the most common is when your employment is terminated because of redundancy.

Employers must follow strict protocols during the redundancy process. Amongst other things, your employer must consult you on their decision to make you redundant, try to find another position for you in the same company, and give you the chance to appeal.

If your employer fails to meet the requirements, your redundancy could be considered unfair. This would give you the option of pursuing an unfair dismissal claim at an Employment Tribunal.

Therefore, you are being offered a Settlement Agreement firstly because it avoids the need for the redundancy process – which can be long-winded and difficult for your employer. Secondly, it protects your employer from the threat of legal action.

Request for a Legal Consultation

Garner & Hancock realise that the prospect of pursuing a legal matter can be challenging, so we offer an initial phone consultation to discuss your options, and to give you information that will help you make the right choices affecting your case.

Should I sign it?

However, a Settlement Agreement may also be beneficial for you. The terms of a Settlement Agreement will vary from case to case. But usually, you will be given a sum of money (known as severance) and a reference.

The compensation on offer may be greater than your statutory redundancy pay. On the other hand, your employer may be suggesting a poor deal. If you waive your right to bring legal action, this could put you in a difficult position.

Thankfully, you must seek legal advice before signing a Settlement Agreement. Otherwise, it isn’t valid. This ensures you will not sign anything that goes against your best interests. Typically, your employer will cover your legal fees, so you do not have to worry about the cost.

Expert legal advice

At Garner & Hancock Solicitors, we can review the terms of the proposed Settlement Agreement and advise you on the implications. We may raise concerns regarding things such as:

  • The amount of severance being offered
  • The wording of your reference
  • The tax implications (you have to pay tax on payment in lieu of notice, holiday pay, bonuses, and your severance package if it is more than £30,000
  • The reasons for your redundancy – it may be that you have grounds for an unfair dismissal claim

If necessary, we can help you negotiate the terms of your Settlement Agreement. We can also explain any unforeseen consequences of signing the contract, such as tax liabilities or ‘non-compete’ clauses, which prevent you from working for your employer’s competitors.

We have your best interests at heart and can ensure that you are getting the most out of your redundancy. We know this is a stressful time, but we are here to offer expert legal advice.

Contact us now

Have you been offered a Settlement Agreement? Let our solicitors review it first.

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