Settlement Agreement

Disputes do arise. When they do it is important for employers to ensure that they act as they should and equally that employees do not make unjustified threats. With recent changes in legislation aimed at reducing the number of claims being heard by Employment Tribunals, there is a greater emphasis placed on the parties to try to reach a compromise and settle their differences before taking formal legal action.

During any discussions or correspondence, which clearly relate to reaching a settlement, then we recommend that this is done on a “without prejudice” basis. This should prevent the contents from being disclosed to a Court or the Employment Tribunal. Whilst this may not always be possible, as sometimes the communications are not protected, the most important aspect is that you do not want to make an apparent admission of liability whilst trying to reach a settlement!

It is always best to try to resolve any disputes amicably. And this is what we always try to do.

One particular point to bear in mind is that it is only solicitors who enjoy what is called legal professional privilege, which seeks to protect communications passing between solicitors and clients. Such privilege does not apply to accountants, tax advisers or other consultants or advisers.

It is always best to try to resolve any disputes amicably. And this is what we always try to do. However, due to legislation, the only way to ensure that a dispute is fully and finally settled is to enter into a formal compromise or settlement agreement, the terms of which comply with the Employment Rights Act 1996. One of the key provisions is that employees receive independent legal advice from a suitably qualified person, such as a solicitor, and that person must provide a written certificate of confirmation.

For employers, we draft compliant settlement agreements to ensure that all potential claims are fully and finally settled, protecting the employer from any further exposure.

For employees, we review and advise on settlement agreements to ensure that the terms are not only understood, but that they are accurate and compliant. We provide independent legal advice.

As part of our balanced approach to employment disputes, we strive to maintain a balanced and practical perspective to ensure that the terms of settlement agreements meet the required business or commercial objectives of our client, whether employer or employee, whilst of course ensuring that any potential claim is finally settled.We have recently provided advice to a significant number of employees in the banking sector when their employment comes to an end. In addition to the usual requirements, our advice has covered, in particular, equity compensation schemes and guaranteed bonus schemes which are operated by banks.