If you find yourself dealing with a tricky situation or employee or you are frustrated that it’s taking longer than you would like to deal with an HR issue, such as poor performance, you may be wondering if there is an alternative commercial route that could benefit your business. If this sounds familiar, a settlement agreement may be the solution you are looking for.
Not heard of settlement agreements before, or would like a quick reminder?
- Settlement agreements – in bitesize
- When are settlement agreements commonly used?
- How Kingfisher can help
Settlement Agreements
In outline, a settlement agreement is a legally binding contract voluntarily entered into by an employer and an employee in which it is agreed that, in exchange for a sum of money, the employee won’t bring claims covered by the agreement against the employer. Usually, the parties also agree that the settlement agreement will end the employment relationship, enabling a clean break.
As you would expect, some legal requirements need to be met for the agreement to be legally binding (including the employee receiving independent legal advice), and it must be carefully and appropriately drafted to meet the needs of your business.
When are settlement agreements commonly used?
A settlement agreement can be an attractive option for businesses in a variety of situations; we frequently assist employers with settlement agreements when they find themselves facing:
- Disciplinary cases where the business is unlikely to be able to secure a safe dismissal
- Performance management or ill health cases, where the business does not wish to undertake what could be a lengthy process
- Situations where there is a risk of a successful claim being brought against the business, such as where discrimination or harassment has occurred
- A redundancy situation where there is an enhanced payment available to encourage employees to take voluntary redundancy
- A need to exit a senior employee or a wish to do so in an amicable way
If you think a settlement agreement may be the way forward for a situation in your business, as a first step, you should get in touch with us for specific advice, not least because it’s important to ensure you have the information you need before broaching the matter with the employee. There are rules around this, so being aware of these, how they operate, and any implications for your situation is vital.
How Kingfisher can help
We have a specialist settlement agreement service available just for employers. 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 your Employment Law Specialist, who will be happy to help.