Employee Settlement Agreement – What you need to know.

If you are an employee looking for independent legal advice regarding a Settlement Agreement, Tollers are here for you. We are experienced in drafting and negotiating settlement arrangements and will help you to make an informed decision based on what is best for you. Get in touch with our employment law solicitors, for expert advice you can count on.

• Have you been presented with a ‘settlement agreement’, formally known as a ‘compromise agreement’ that you need to take advice on?
• Are you yet to be presented with an employee settlement agreement and want some help negotiating a settlement agreement with your employer?
• Do you want to take some advice as to whether the sum offered to you is a fair settlement?

What is a settlement agreement?

They are usually entered into between an employee (or former employee) and their employer.

Once signed by all parties, it is a legally binding agreement and similar to that of a non-disclosure agreement (‘NDA’). Given that they are likely to contain confidentiality clauses to prevent any disclosure of the contents of the agreement.

The agreements act to waive an individual’s rights to bring a claim against the employer usually in return for a sum of money or any other agreed benefits.

Settlement agreements can be used to end an employment relationship on agreed terms or to resolve an ongoing work dispute.

What is a protected conversation?

When an employer seeks to negotiate a settlement agreement with you they may invite you to have a protected conversation. A protected conversation under s.111A of the Employment Rights Act allows employers to enter into off-the-record conversations with an employee and they are not supposed to be admissible in an employment tribunal hearing. They can be used where there are performance allegations made against the employee.

A protected conversation doesn’t apply to dismissals that are automatically unfair, those involving health and safety matters, whistleblowing, breach of contract claims or discrimination claims or if there has been inappropriate conduct.

What does without prejudice and subject to contract mean?

The phrase ‘without prejudice’ is a similar concept to a ‘protected conversation’ but is wider in scope. The common law principle of ‘without prejudice’ prevents statements whether orally or in writing being placed before an employment tribunal or any other court as evidence in legal proceedings. It therefore enables parties to speak freely to negotiate a settlement.

This principle can apply to any type of claim but there must be an existing dispute between the parties and there must be a genuine attempt to settle that dispute. There also cannot be any unambiguous impropriety by either party during the settlement discussions or else this principle won’t apply and the conversations will become admissible in an Employment Tribunal or court proceeding. Examples of unambiguous impropriety can include blackmail, fraud, physical violence or unlawful discrimination.

If you decide not to enter into the settlement agreement then you should not be treated unfavourably and it should be as if the conversation never happened.

Legal requirements involved in drawing up a settlement agreement

In order for a settlement agreement to be binding where it waives an individual’s right to bring a complaint before the employment tribunal all of the following conditions must be met:

• It must be in writing;
• Must relate to a particular complaint or proceeding;
• The employee must receive advice from a relevant independent adviser on the terms and effect of the proposed agreement and the agreements effect on your ability to pursue a claim or complaint before the tribunal or other court;
• The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim but the employee in respect of any loss arising from that advice;
• The agreement must identify the adviser; and
• The agreement must set out the statutory provisions that govern the conditions regarding the validity of a settlement agreement stating that they have been satisfied.

Legal Fees 

Most employers will agree to contribute towards your legal fees, so you to receive appropriate independent advice regarding the settlement agreement.

Who can be an independent adviser?

An independent adviser can be:

• a qualified lawyer
• a certified and authorised officer, official, employee or member of an independent trade union; or
• a certified and authorised advice centre worker.

The adviser must not be employed by, acting for, or connected with the employer

The advisers at Tollers Solicitors meet those requirements.

For more information regarding an Employee Settlement Agreement and how we can help…Talk to Tollers on 01604 258558, our Employment Team is here to help and guide you through the process.

More information regarding Settlement Agreements can be found here.