At Lawson West we are a significant team of experienced solicitors specifically trained in acting for employees who have been offered a settlement agreement to end their employment.
Our fees for providing advice and representation to you are generally covered by your employer so there is no need to worry about facing a large bill for working with us on your Settlement Agreement.
With four solicitors with 60 years combined experience in specialising on advising on settlement agreements, you have come to the right place. We act for employees from all sectors of the UK workforce including:
For employers, a Settlement Agreement is a method of settling any potential claims that an employee may have against the employer and secures a ‘clean break’ for both employer and employee providing a practical and effective solution to the ending of a contract.
The Settlement Agreement should provide a breakdown of the payments being agreed and also state whether any are to be paid to the employee free of tax.
See our article on negotiating your settlement agreement here.
Payments of up to £30,000 compensation can often be paid without tax being deducted, if the payment is being made on an “ex-gratia basis” (that is, it’s a payment you have decided to make rather than one you are legally obliged to make) or as damages to compensate for a breach of contract. However, this can be a tricky area and it’s always advisable to obtain legal advice before committing to making a tax-free payment.
There is no set scale of payments and the amount depends on the individual circumstances of each case. Possible factors to consider are:
Calculating the sum of money you are owed is highly involved and there is a lot to take into consideration. Given the vast amount of details you need to check, we have put together a step-by-step guide that covers everything you need to think about.
Click here to see settlement agreement flowchart
Often an agreed reference will become part of the Settlement Agreement. A clause in the Settlement Agreement will require the employer, when providing a reference for the employee, to not deviate from the wording of the agreed reference which has been agreed within the Settlement Agreement.
A confidentiality clause will also be included, requiring the employee to keep the terms of the agreement, the payment amount and the reasons for the Settlement Agreement confidential. There is also often a clause preventing the employee from making any derogatory comments about the employer.
The Settlement Agreement will also be clear about what is not included within the agreement, for example the employee does not give up any pension rights they have accrued and is free to pursue a personal injury claim in respect of any injury suffered during their employment, but of which they are currently unaware at the time.
At Lawson West we recommend seeking legal advice should you have a potential claim made against you – to ensure you follow the correct procedures and do not miss anything that is crucial in the process. Claims can be very costly and need to be carefully considered early on.
Our employment team is able to provide the appropriate advice and guidance in relation to Employment Tribunals. We offer no-obligation initial appointments and can meet you at any of our office locations in Market Harborough or Leicester.
If you believe you have a situation where you require free legal advice, please contact us on 0116 212 1000 or 01858 445 480. Alternatively, you can complete the free Contact Us form and we will get in touch as soon as possible.
If you want to see us face to face, we run four employment law walk-ins each week at our offices in Leicester and Market Harborough and this initial meeting with you is FREE of charge. We’ll look at your paperwork and advise on the best course of action. We can also meet with you digitally on Teams if you’re in another part of the country, in fact, we advise individuals on their employment legal needs right across the UK.
From settlement agreements, to redundancy, dismissal and disability and other types of employment dispute situation, we’re on hand to support and advise you. Please get in touch as soon as you can, as deadlines might apply.
Great client service is at the centre of our thinking, it’s embodied into how we train and develop our staff, how we help our clients and how we advise and assist people and business owners with their legal needs.
Our Core Values are Welcoming, Confident, Supportive, Knowledgeable and Dependable and we aim for clients to have a positive experience with Lawson West Solicitors.
Evidence of our great client service can be seen in the reviews and testimonials we regularly receive. We are always pleased to receive great reviews because it means our clients are happy with the service we provide, and it shows that we deliver on our core values, we don’t just talk about them. We really welcome client feedback and hope you enjoy reading some of the latest testimonials throughout this website.
A Settlement Agreement is a legally binding contract between employer and employee which usually brings the employer and employee relationship to a mutual end. A Settlement Agreement can also be used where the employment is ongoing, but both parties want to settle a disagreement that has risen.
If you have raised a grievance or are being subjected to investigatory or disciplinary procedures, an employer may want to agree to a settlement instead of them spending time carrying out the formal procedures, holding meetings, looking into the issues or carrying out lengthy redundancy procedures. Settlement Agreement is often used to save time and resources if they are agreed by mutual consent.
If a Settlement Agreement package is good enough to let you leave your employment then you will also avoid having to deal with e.g. with formal investigatory/disciplinary meetings, a performance improvement plan or even return to work meetings if you have been absent.
However you will need advice on the value of the Settlement Agreement package in comparison to what potential claims you will be giving up (and their value) by signing the agreement.
The benefit to you from a Settlement Agreement is that you have a legal document setting-out how much compensation your employer will pay you. It is quicker than pursuing a claim in an Employment Tribunal where there is always a risk you might not be successful.
The other advantage of the Settlement Agreement is that it may contain clauses regarding giving references for you on request and what the reference will say. This gives you peace of mind that any future employers will receive a reference from your current employer that will not contain anything negative.
This is entirely depends on the circumstances behind why you have been given/offered a Settlement Agreement. We can provide you with advice on what potential claims you may be able to bring, the strength of such claims, the prospects of success and the value of these claims if successful. You will then be able to make an informed decision on if you wanted to proceed with the settlement or try to negotiate for more. Please see our Settlement Agreement Flowchart for more help on how to calculate your package.
Most settlement payments under £30,000 can be made tax-free, but this will not apply to all payments. The tax treatment of payment in lieu of notice (known as PILON) and holiday pay is more complicated. You will need to discuss your particular circumstances with a solicitor for specific advice.
Employers will also require a tax “indemnity” clause as part of the Settlement Agreement. This means if HMRC decided there was any tax payable on the amounts you have received, you will be liable for the tax to be paid. These indemnity clauses often state that if HMRC claimed the tax from your employer, you would have to reimburse your employer.
Your employer will usually pay your legal costs for a Settlement Agreement, although your employer may set a limit so we will endeavour not to charge more than your employer has agreed to pay.
We also offer a free initial consultation so it will cost you nothing to find out where you stand and how we can help you with a Settlement Agreement. All discussions are in confidence and we will negotiate with your employer on your behalf.’
More employers are using Settlement Agreements (formerly Compromise Agreements) when making employees redundant. Settlement Agreements protect the employer against the employees making employment tribunal claims for unfair redundancy procedures.
However, there are advantages for employees in signing a Settlement Agreement when being made redundant:-
If you’ve been asked to sign a Settlement Agreement, please Contact Us.
Once a Settlement Agreement is signed by all parties, it is a binding agreement in full and final settlement so cannot be re-negotiated. If you are unsure about or not happy with any terms in the Settlement Agreement, you should seek legal advice.
You do not have to sign a Settlement Agreement. We will advise you whether the Settlement Agreement is fair and what you are entitled to when your employer ends your contract of employment. We can also advise if you have a claim for unfair dismissal and whether you are likely to succeed if you make an employment tribunal claim. If you do not sign the Settlement Agreement, you would maintain your right to pursue an employment tribunal claim.
Each Settlement Agreement has slightly different clauses. A typical agreement would have:
If you are unsure of or have any queries regarding terms in a Settlement Agreement, contact us to discuss the specific terms.
According to the Employment Rights (Dispute Resolution) Act 1998, advice regarding Settlement Agreements can only be given by a qualified lawyer, a qualified trade union official or a qualified advice centre worker, all of whom have to be covered by an appropriate certificate of indemnity insurance.
A solicitor will have indemnity insurance and will be able to advise you if the terms of the Settlement Agreement are right for you and whether the amount of compensation being offered is fair. Settlement Agreements can be packed with legal jargon and refer to Acts and Regulations so it is vital you understand the full implications of what you are being asked to sign.
Lawson West Solicitors has a client charter promising to communicate with you in a jargon-free way. We can advise and negotiate any terms that may be unfavourable to you.
If the agreement is validly made (see above) and executed by everyone then yes, it is then a legally binding agreement. Where either party breaches its terms, the other will have a right to sue for breach of contract.
If your employer fails to follow the terms of the Settlement Agreement then the can amount to a Breach of Contract claim.
Once a settlement agreement has been signed by both parties, it becomes a legally binding document. If either party breaches the terms, the other will be entitled to make a Breach of Contract.
Our Dispute Resolution team will then be able to advise you on how they can help you enforce your rights under the Settlement Agreement.
Still need clarity? Or want to discuss your Settlement Agreement with an experienced employment solicitor? Just complete our Contact Us enquiry form and we will get straight back in touch with you.
