Specialist Settlement Agreement Solicitors In Berkshire
At Rowberrys, we are experienced settlement agreement solicitors who can work with employers or employees to ensure that any termination of employment is undertaken to the mutual benefit of both parties.
Our Employment Team has expertise in all legal matters in the
workplace – representing both businesses and individuals in solving disputes.
We will work closely with you to understand your requirements and we will
endeavour to explain all aspects of the legal process clearly, with our advice
specifically tailored to suit your situation.
Talk to the Rowberrys team today for expert advice and support with your
settlement agreement.
What is a Settlement Agreement?
A Settlement Agreement’ (previously known as a compromise agreement) is recognised as a legally binding contract made between an employer and employee.
It sets out the terms of departure between the parties and once signed, prohibits the employee from bringing a legal action against the employer in respect of the employee’s employment and/or its termination. This is usually in exchange for a termination payment, and other benefits which are also set out in the agreement.
A Settlement Agreement may be offered in many situations, usually when the employment relationship is coming to an end, to resolve the following (among other matters):
- Redundancy;
- Performance management at work;
- Long-term sickness;
- Clash of personalities;
- Transfer of a business;
- As a means of settling a grievance.
What are the benefits of entering into a settlement agreement?
The main benefit of entering into a settlement agreement is to provide certainty between the parties, and a clean amicable break between an employee and their employer. An employee will have the security of a termination agreement setting out what financial settlement he or she is receiving together with other benefits such as a job reference. The employer, in turn, has the guarantee that it will not have to deal with a future claim by that employee.
Making use of a settlement contract can often help employers to avoid undertaking formal disciplinary or redundancy procedures. This helps to save time, cost and removes the risk of unfair dismissal and other employment claims. While the employer will usually offer to draft a settlement agreement, employees can use their independent settlement agreement lawyers to negotiate terms to improve what’s on offer, including the compensation payment.
Why must an employee meet a lawyer?
An employee is under no obligation to accept a Settlement Agreement and should and can only do so once independent legal advice has been obtained. The agreement cannot be binding unless you have received such advice and a lawyer has provided the appropriate certificate.
What terms does a
settlement agreement normally contain and why?
In return for the employee’s agreement to waive potential claims, the employer will generally agree to pay the employee:
a. Payments up to the Termination Date – this is usually salary and accrued but unused holiday entitlement.
b. Notice – the agreement will set out what notice the employee is entitled to, including whether you have to work that notice or not. Very often, you will be paid in lieu of notice (otherwise known as “PILON‘). Typically, a PILON payment will reflect your full notice in one lump sum (or the balance of any notice due), and also means that your termination date will be much sooner that it would have been had you worked your full notice. PILON payments will always be subject to tax and NIC. You may also be put on “garden leave”, which means that you are not required to come in to work during your notice period.
c. Compensation - the first £30,000 of any compensation over and above your contractual entitlements (such as notice) is usually payable tax free. This sum can usually be paid free of deductions for tax or national insurance contributions. Depending on the circumstances surrounding the proposed termination of employment, it is often possible to negotiate the compensation figure upwards, and this is something we will be able to discuss with you. This is the incentive for you giving up any rights beyond outstanding salary and notice – for example for unfair dismissal or unlawful discrimination. Obviously, it is important to weigh up the value of the compensation payment offered in the agreement against the value of any claims you are waiving the right to pursue.
We will discuss this with you.
What are the Costs for a settlement agreement?
Most employers will agree to pay a contribution for you to receive legal advice in relation to a review of your Settlement Agreement. This will usually around £500 plus VAT. It is important to bear in mind that a contribution towards legal fees is not an entitlement or right under statute, however it is almost universally offered by employers.
Total legal costs will depend on whether the employee decides to pursue negotiation of the sum on offer or amendment of the wording of the settlement agreement. In our meeting we will give you our recommendations as far as that is concerned.
Contact Our Specialist Employment Solicitors For More Information
To learn more about how our settlement agreement lawyers can help with your particular situation – whether you’re an employer seeking to draw up a contract or an employee in need of independent advice – please do not hesitate to get in touch with us today.
