Residential & Commercial Property Lawyer KensingtonWhat is a Settlement Agreement?

This is a document that for many years used to be referred to as a Compromise Agreement.  Under the current legislation it is now referred to as a Settlement Agreement and is a legally binding Contract between an employer and an employee whereby the employee agrees to leave the Firm/Organisation normally in return for a largely tax free compensation sum.  These sums as long as they are £30,000.00 or less fall within a Government endorsed scheme whereby employees do not pay tax on sums paid under such an arrangement and the document itself may include any number of other matters inclusive of quite often a non-compete Clause, a Reference attached to the Agreement itself, provisions in relation to commission, bonuses and Share Options and there may be Clauses within the Settlement Agreement that deals with Company property such as a Company Car, computer or mobile phone.

Why should you take advice about a Settlement Agreement?

It may be the case that simply signing a Settlement Agreement may not be the best option open to you.   It may be that the sum being offered to you is too low and in fact were you to bring proceedings in the Employment Tribunal you may get substantially more.   Having that in mind if you instruct a Firm of Solicitors to assist you with the Settlement Agreement negotiations can take place between those Solicitors and your employer perhaps with a view to increasing the amount offered in the Settlement Agreement itself.  Alternatively a Solicitor may be able to improve on the terms generally for example retaining a Company Car or improving on the terms of a reference.

Employers are increasingly having to enter into Settlement Agreements as these are often confidential, prevent the need for very significant sums of money being spent on Solicitors defending Employment Tribunal claims and have the advantages of achieving certainty quickly and without having to wait six months to a year for the result of a Tribunal Application.

Does a Settlement Agreement have to be verified by a  Solicitor?

The Settlement Agreement itself has to be verified by an independent Solicitor.   If not it will not be valid.  That Independent Solicitor must have a current Contract of Insurance or Professional Indemnity Insurance covering the risk of a claim against them by the employee for inaccurate advice or perhaps negligent advice.

Can a Settlement Agreement deal with your particular problem?

Settlement Agreements can be used in most employment cases.   For example, discrimination cases, victimization or bullying, harassment, pregnancy and maternity, unfair dismissal and a wide range of other employment matters.   Nevertheless, there are some matters which cannot be settled such as future personal injury claims, failure to consult in connection with collective redundancy and TUPE claims.

If you are being offered a Settlement Agreement you will find that the employer generally offers to pay your Solicitors costs.   Those costs can be anywhere between £100.00 and £1,000.00 depending on how many of the terms of the Agreement are agreed or how many remain to be agreed.

Russell Conway at Oliver Fisher has been dealing with Compromise and Settlement Agreements for over twenty-five years.   He would be delighted to discuss the matter with you on the telephone.   Please call him on 0203 219 0145 or email at russell@oliverfisher.co.uk.

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