I'm being offered a settlement agreement at work and would like legal advice

Settlement agreements are legally binding documents that record an arrangement between an employer and employee. Commonly used when employment is brought to an end – perhaps through redundancy, or because of performance issues – these agreements aim to draw a line under issues.

The basic idea of a settlement agreement is that the employee agrees to relinquish their right to bring (or to continue to pursue) certain employment law claims; unfair dismissal or discrimination, for example. In return, the employer will usually offer to pay more than the employee is due on termination, and/or to provide non-monetary benefits such as an agreed reference.

If your employer has asked you to sign a settlement agreement, you should take this to a specialist employment law solicitor. The primary reason (and your employer should be aware of this) is that a settlement agreement will not be enforceable unless the employee signing it has had independent legal advice. Employers usually pay or contribute towards the cost of this.

The earlier you can see your solicitor, the better. They will help you understand exactly where you stand and what the terms and effects of the settlement agreement mean. They may even be able to help you get a better deal. Employers don’t always include in the agreement everything to which the employee is entitled; holiday pay is sometimes miscalculated, and things like contractual bonuses left out. Together, you and your solicitor will be able to identify elements that are not quite right.

In some situations, particularly where an employee has one or more potentially valuable employment law claims that the agreement seeks to settle, there can be a period of negotiation around the termination payment the employer is willing to offer. Over the years, we have managed to significantly increase employees’ settlement packages - something that means they’re genuinely compensated for what they’re giving up and set up for the next stage of their lives.  

Being presented with a settlement agreement can be unsettling. But it shouldn’t be assumed that the employer has the upper hand and that the terms they’ve put forward will need to be accepted. It’s really important to understand your own position so that you can judge how fair or otherwise the deal you are being offered is. And that is where specialist support is so important.  

For advice about a settlement agreement, or any other employment law issue, contact us on 01264 353411 or email info@bsandi.co.uk.