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Settlement Agreements

They are usually used to terminate an employee’s employment, and if negotiated properly, are a very useful tool for employees and employers as they enable the employer to ensure that no future claims will be made by an employee, whilst allowing an employee to receive a financial payment (very often tax free) as compensation for giving up such rights. They save the need for employment tribunal proceedings which can be expensive and time-consuming, and may attract potentially damaging publicity.

In order to be binding, there are several requirements that must be fulfilled, however, the most important is that the employee must take independent legal advice on the contents and the effect of the agreement before agreeing to enter in to it.

Talk to our team today on:
0330 017 6309

Katie  Ash
Katie Ash
Head of Employment Law
Sara Ellison
Sara Ellison
Sara Patel
Sara Patel

We Can Advise On

The Employment Law solicitors at Banner Jones are specialists in advising on, and preparing, settlement agreements. We can help advise on:

  • The tax implications of the compensation to be paid
  • The inclusion of an indemnity for any tax
  • The provision and content of a reference
  • Restrictive covenants (whether existing or new) and confidentiality, as well as restricting comments after termination
  • The types of claims that shouldn’t be included in a settlement agreement

We understand that once a decision has been made to enter in to a settlement agreement, time is of the essence and we are able to work within very short deadlines without any compromise to our quality of service.    Settlement Agreements are usually paid for by your employer and you are free to choose which solicitor you use to get the legal advice required.

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Frequently Asked Questions

If we agree on a settlement outside of court is there any way in which we can prevent the employee from coming back to make another claim?

Yes if you reach a settlement through ACAS you are able to go for a legally binding agreement which states that neither side are able to come back later for a second bite of the cherry.

The other option is for you to get a settlement agreement under which the employee waives his or hers statutory rights in return for an agreed settlement which they have received independent legal advice. If an employee was to accept such a settlement it would make it impossible for them to return for another go.

Settlement agreements have to be drafted carefully as various legal decisions on the effectiveness or scope of a particular settlement agreement have in the past gone against employees based on the precise wording in the agreement. 

Is it best to settle a claim outside of court or is it worth fighting in court?

It makes more sense to settle a claim outside of the courts, in reasonable terms. You should consider fighting for a case if:

  • The party is plainly in the wrong but can’t be brought to see it
  • There are mitigating circumstances which are more than likely to have a big effect on any award you may have to pay
  • You believe a settlement would send the wrong message to other employees and possibly give rise to more trouble in the future

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Watch Our Video

Katie Ash - Understanding Settlement Agreements

Play video Katie Ash - Understanding Settlement Agreements

Employment expert Katie Ash discusses exactly what a Settlement Agreement is.

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Talk to our friendly team today on: 0330 017 6309

Katie  Ash
Katie Ash
Head of Employment Law
Sara Ellison
Sara Ellison
Sara Patel
Sara Patel
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