What Is A Settlement Agreement?

Not all periods of employment end in the happiest of circumstances. In the event that you are leaving your post due to an issue in the workplace, you may be offered a settlement agreement.

A settlement agreement may be appropriate when an employer and their employee mutually decide to end the working relationship and is usually accompanied by the employer paying the employee an agreed cash amount. This will invariably come with certain conditions. For example, by entering into such an agreement, you will not be able to pursue further claims for unfair or wrongful dismissal, existing personal injury or discrimination.

The Purpose Of A Settlement Agreement

A settlement agreement is intended to give both employer and employee a “clean break”, with the advantage for the employer being that there will be no further action taken against them. Some exclusions will apply, such as issues relating to accrued pension funds or latent personal injury. The employee may be happy to receive the financial incentive and move on, too.

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There are numerous reasons as to why an employer may offer a settlement agreement with a member of staff. These can range from the prospect of redundancies, or may be related to the employee more specifically. For example, an employer may seek a settlement agreement if they are not satisfied with an employee’s performance, or if the employee is currently facing or due to face disciplinary procedures. There may also be an offer of a settlement agreement made if the employee has raised grievances while in their post.

Citizens Advice offers practical advice on how to make a settlement agreement with your employer, although it always makes sense to talk to a specialist such as https://www.employmentlawfriend.co.uk/news/grievance/settlement-agreement-solicitors. Settlement agreement solicitors will be able to guide you through the process, giving you the support needed to achieve the right outcome.

Factors To Consider

If you decide to go ahead with a settlement agreement, then there are certain factors to consider. You will need to establish when the termination date (Effective Date of Termination, or EDT) will be, and whether you will be required to serve out a notice period or be paid in your absence for this period. It’s also important to determine how any outstanding holiday time will be factored into the agreement. If you have been placed on “Gardening Leave”, this could also have an impact on your settlement agreement.

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It’s important to remember that you don’t have to accept the agreement as it is offered to you. Indeed, working with settlement agreement solicitors is the best way to get the right terms through negotiation. You should be given a minimum of ten days to consider the initial terms of the agreement.

Can The Employee Request A Settlement Agreement?

It is certainly possible for an employee to suggest that a settlement agreement be made. To do so, the first step is to hold a “protected conversation” with your employer in order to explain your feelings on the matter.

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