Sometimes businesses encounter a difficult employee or situation or just need to bring a matter to a swift and safe conclusion. If this resonates with you, have you considered using a settlement agreement to solve your business’s employee problem?
They can be a beneficial commercial option for businesses in a variety of situations and an effective way of ending an employment relationship on agreed terms. Imagine starting the new year with ‘a clean slate’ – a resolution to the employee issue that has been dragging on or weighing you down or would otherwise be complex or time-consuming to deal with.
We have a cost-effective Settlement Agreement Service specifically tailored to meet the needs of employers and we have helped many businesses. Some of the more common situations employers have turned to our settlement agreement service for have included:
- Exiting employee(s) where there is a personality clash
- Dealing with a high profile / high value redundancy situation
- Exiting senior employees
- Disciplinary cases where the business is unlikely to be able to secure a safe dismissal
- Performance management or ill health cases where the employer 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 employer such as where discrimination or harassment have occurred
If your business hasn’t used a settlement agreement before, you are likely to have some questions. We answer some of the key ones below.
Settlement Agreements: Q & A
- What is a settlement agreement? In brief, a settlement agreement is a legally binding contract 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. Settlement agreements are most frequently used to end the employment relationship on agreed terms, although they can be used to resolve an individual matter without terminating the employment.
- Are there any requirements that must be met for a settlement agreement to be legally binding? Yes. As you would expect from a legal document there are a number of requirements that must be adhered to, one of which is that the employee must receive independent legal advice. As an employer, it is therefore vital you have an expert on your side.
- Can an employee be required to agree to a settlement agreement if we wish to offer one? No. Settlement agreements are voluntary. If you are considering offering a settlement agreement to an employee, it’s important that you discuss your situation with an employment law expert before taking any action, including 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 a must. In our experience, where a settlement agreement is on offer, usually agreement is reached between the parties – although this isn’t always without some negotiation with the employee’s legal representative as to the terms of the agreement first.
Our Specialist Settlement Agreement Service for Employers
As part of our specialist settlement agreement service 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.