Settlement Agreement

Sometimes you will find that your relationship with your employee is not working. You may want to terminate their employment but dont have time to follow a fair procedure or you want to avoid them bringing a claim at a later stage.  You can do this by using a settlement agreement, which is a legally binding agreement to terminate their employment. 

A settlement agreement will usually include the payment of a lump sum by way of compensation and may also include details relating to their pension, bonus, holiday and company car arrangements. It could include an agreed reference or an announcement to your staff or customers, and it occasionally has restrictive covenants to protect your business from competition after they leave. 

Our experts will gather all the information to be able to advise you as to the appropriate amount of money to offer by way of compensation, and prepare the initial draft agreement for your employee. We can also help with the negotiation of terms or wording of the agreement.

Our expert employment solicitors are here to help resolve your issue as quickly as possible. 

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Potential Benefits of a Settlement Agreement

Experienced settlement agreement Solicitors understand that settlement agreements provide benefits to the employer that cannot be obtained through redundancy or other means such as:

Preventing an Employment Tribunal Claim

When disputes arise between employers and employees the spectre of the Employment Tribunal looms large. The Tribunal process can be long and messy and do damage to the brand or the reputation of important figures in the company. There is also the possibility of the employee winning a sizable settlement. The settlement agreement can take the Employment Tribunal off the table.

Enabling a Clean Break

It is rarely in the interest of a business or institution to be dragged through a protracted high-profile dispute with an employee. The settlement agreement enables both parties in a dispute to make a clean break and put the unpleasant matter behind them in a definitive way by stipulating the employee shall bring no future claims against the employer.

Enabling the Employer to Get Out From Under a Poor Contract

Settlement agreements are not just used to resolve disputes. In some cases an employer may enter into an employment contract they later realise was poorly considered. As time goes by the contract acts as an anchor, holding the business back. A settlement agreement can enable the employer to make a split with the employee thereby freeing themselves of the unfortunate employment contract.

The Potential Downside of Settlement Agreements

Downsides include the cost of drafting the agreement and supplying advice to the employee; costs usually borne by the employer. In addition, a settlement agreement may call for a large termination payment, perhaps larger than the employer is willing to make. Also, after all the negotiation the employee may decide the agreement is not in their best interest and walk away, leaving the employer to bear all the costs generated to that point.

Settlement agreements can be an effective way to bring an unfortunate situation to a definitive conclusion. But they are not the right choice in every case. The experienced settlement agreement solicitors at Frederick Solicitors can help you decide if this is the right course for you.

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