Coronavirus Guidance for Employers - Click Here

Could a Settlement Agreement Help Your Organisation?

Many employers will find themselves dealing with difficult situations in the coming months. If your organisation is one of these it may be worth considering whether the use of a settlement agreement could help. Settlement agreements can be a useful commercial tool for employers, often where they wish to exit an employee from their organisation.

In brief, a settlement agreement is a legally binding contract, voluntarily entered into by the parties, that prevents an employee from making a claim that is covered by the agreement to an employment tribunal or court. The employee usually enters into the agreement in exchange for a payment from the employer.

Common scenarios where an employer may want to think about whether a settlement agreement could be a good option for them include where:

  • They are finding a formal process such as a redundancy procedure or performance management process too slow or burdensome
  • They are offering an enhanced redundancy payment for voluntary redundancy
  • They wish to end an employment relationship but it’s unlikely a fair dismissal could be achieved or they are dealing with a difficult employee or issue and there is a risk of a claim

It’s important to bear in mind that for a settlement agreement to be legally binding there are certain requirements that need to be met, one of which is that the employee needs to receive independent legal advice on the terms and effect of the agreement.

If you think you may wish to use a settlement agreement in your organisation you should contact Kingfisher Professional Services Ltd for further information and advice on your situation before taking any action, including broaching the matter with the employee.

Specialist Settlement Agreement Service for Employers

Kingfisher Professional Services Ltd offer a cost effective settlement agreement service. As part of this we can advise you on the facts of your case, including settlement agreement discussions and the rules around these, draft a bespoke settlement agreement to meet your needs and negotiate with the employee’s representative on your behalf in accordance with your instructions.

If you would like further information regarding settlement agreements, including the fixed fee in place for our settlement agreement service, please contact us as we will be happy to help.