We have recently been instructed by a number of new clients in relation to Settlement Agreements and it is worthwhile re-visiting exactly what these agreements are and how they can benefit an employee looking to leave their job.
Leaving a job can often be stressful in itself and can lead to a number of questions such as:
1. Do I need to work my notice period?
2. When will I get paid?
3. Can I receive a tax-free payment from my employer?
If the employee finds the whole process stressful employers can also be worried that an employee is thinking about bringing a claim against them, for example, for failing to follow a redundancy procedure or for not taking an employee’s grievance seriously.
Often when the parties are in agreement that the employment should come to an end a negotiation will take place and the employee will be offered what is known as a Settlement Agreement (formerly known as a Compromise Agreement). These agreements will usually cover off things like:
1. The termination date of a contract of employment;
2. Provide certainty for an employee as to when they will be paid;
3. Provide for a tax-free lump sum payment in exchange for promises that the employee will not seek to bring a claim in an employment tribunal;
4. Confidentiality – that the employee will keep the terms of the Agreement (especially any pay-out being made) confidential; and
5. That the employee has received independent legal advice as to the terms of the agreement and has been advised on how signing the Settlement Agreement means that they cannot bring a claim against their employer.
We advise clients both face-to-face and over the telephone on the terms of a settlement agreement. The legal advice is usually paid for by your employer. The telephone advice typically takes between 45 minutes and an hour and we can arrange these appointments quickly and at the convenience of the client.
