Why do you need a Settlement Agreement?

You or your employer may wish to end the employment relationship for various reasons such as redundancy, performance issues, stress, poor health or, in some cases, because the contract of employment has been breached.

A settlement agreement is a document which allows you and your employer to end the employment in a mutually acceptable way by setting out the terms and conditions between the parties and without the need for an employment tribunal claim.

You are required to obtain independent legal advice before signing a settlement agreement to ensure that you are advised on your legal rights and your interests are protected. Moss Solicitors are regularly instructed to advise employees on these agreements.

If one party breaches the settlement agreement the other party may have the right to enforce the terms of the agreement through legal action.

Key features of Settlement agreements

• They set out a terminate date when the employment will come to an end.
• They are legally binding.
• They address and resolve specific disputes or claims between the parties and waive the employee’s right to bring a claim covered by the settlement agreement to the employment tribunal or court.
• There will usually be a payment of compensation to the employee after the employment ends and a reference that can be annexed to the settlement agreement.
• They will include a confidentiality clause to keep any discussions concerning the termination of employment as well as the negotiations and terms of settlement confidential.
• Settlement agreements are usually entered without either side admitting liability.

Settlement agreement procedure

Step one – Send the Documents

If you have been offered a settlement agreement you will need to send the document to Moss Solicitors. We may also need to see your contract of employment and any other relevant documents.

Step two – Arrange the Meeting

We will review the documents and invite you to meet with us at our office on Woodgate in Loughborough. The meeting will typically take between 45 minutes to an hour depending on the complexity of the settlement agreement. We will go through the terms of the agreement with you and advise you on your legal rights. If you have not been offered a fair settlement we may enter into negotiations with the employer regarding the terms offered.

Step three – Finalise and Sign

Once the terms of the settlement agreement have been finalised you will be required to sign the document and we will also sign the certificate as your legal adviser. The signed document will then be sent to your employer for execution. Usually, the employer will agree to pay for your legal costs in seeking legal advice. Once the document is signed by the employer (the final party to sign) the document will be legally binding on all.