The benefits of settlement agreements

If you are considering making redundancies or wish to reach an amicable termination of an employee’s employment, you may want to consider a settlement agreement.

Settlement Agreements are legally binding, often achieving closure very quickly and amicably for both parties but more importantly, they provide the employer with the comfort that the employee is unable to pursue any employment claim such as unfair dismissal.

By entering into a settlement agreement in a redundancy situation, the employer need not manage a thorough redundancy consultation process to a conclusion. However, it is important that any discussions with the employee on a proposed settlement must be carried out on a ‘without prejudice’ basis.

Once presented with a settlement agreement, employees are required to seek independent legal advice before signing the agreement. ACAS guidance suggests a period of around 10 days for an employee to seek advice and consider the terms of the agreement although in practice it often occurs much quicker. It’s worth noting that a contribution to the employee’s legal fees is usually made by the employer although this is usually in the region of £250 plus VAT.  Once an agreement is signed by the parties, the employee waives their right to make any claims against the company, such as for unfair dismissal or any claim that they have suffered unlawful discrimination.

For assistance with redundancies, settlement agreements or any other employment query, please contact Sarah Collier, Head of Employment on 01204 527777  Further information : Settlement Agreements