Advising on Settlement Agreements
For our Harrogate Employment Lawyers, the drafting of and advising on Settlement Agreements is one of the most common documents that we come across.
Powell Eddison, Harrogate, HR Solicitors can draft and review Settlement Agreements and to ensure that employees and employers are clear in any proposed agreement.
What Is An Employment Settlement Agreement?
Settlement Agreements are legally binding contracts that are signed by employees and employers. The purpose of this document is to settle any claims which an employee may have arising from their workplaces - such as payment, discrimination or dismissal claims.
Usually, but not always, Settlement Agreements involve a payment by the employer in exchange for the employee agreeing not to proceed with any legal claims they may have against them.
When Can Settlement Agreements Be Used?
An employer can offer a Settlement Agreement in a variety of situations, but they are most commonly used for in one of 3 situations:
Redundancies - If an employer wants to offer an enhanced redundancy sum and avoid the process of selection.
Disciplinaries - If an employer decides a disciplinary process is too long and that it is more cost-efficient to offer the employee a settlement to leave the business without the need for the procedure to be followed.
Grievances - Employers may want to avoid the implications of a grievance process by offering a Settlement Agreement and a quieter exit for the employee from the business.
How Long Do Settlement Agreements Take?
Legally there is no set time limit, but employees must be given ‘reasonable time’ to consider the Settlement Agreement before making a decision. Acas recommends a minimum of 10 days for this decision-making process.
In general, our Harrogate Settlement Agreement solicitors would advise that using a Settlement Agreement would be much faster than allowing any matter to go to an employment tribunal. When an employee’s claim is entered with an employment tribunal, it normally takes around 6 months for a hearing to take place. If your business is seeking a swift resolution, a Settlement Agreement is therefore normally the best option. Our Harrogate employment solicitors team can help you with any questions or proceed with drawing up a Settlement Agreement.
Are Settlement Agreements Binding?
In order to be a legally binding document, the employee must have taken independent legal advice from a qualified lawyer. In most Settlement Agreements, they must also have a certificate that must be signed by the solicitor used that has given the advice as proof that it has been taken.
Due to it being a legal requirement for employees to take the advice, many employers make a contribution towards the employee’s legal costs in taking the advice, to ensure that the settlement can proceed.
What Goes In A Settlement Agreement?
Termination Details - The agreement usually confirms a leaving date and reason.
Settlement Figure - The agreement is a contract in which the employee agrees not to pursue their potential legal claims arising from their employment. In order to be binding, and indeed of any benefit to the employee, there is normally an agreed payment to them.
The ‘Specified Claims’ - Confirmation of the specific complaints which an employee has against a business.
The Tax Indemnity - Parties in the agreement confirm that they understand the first £30,000 of a compensatory sum can usually be paid without tax deduction (although HMRC will confirm this).
Employee Obligations - The things that the employer wants from the employee to ensure a smooth exit - such as the return of company property or a period of garden leave.
Legal Advice - The employee will usually be asked to confirm that they have taken independent legal advice on the terms and effects of the agreement.
Confidentiality - Settlement Agreements are confidential and both parties will agree not to discuss its contents or the circumstances leading to it.
Completing A Settlement Agreement
The agreement is designed to settle all and any claims an employee has against the employer. A document will be signed by both the employer and employee once the individual is happy with the amount offered and understands not to pursue any additional claims against the business in future.
Next Steps And How Powell Eddison HR Employment Lawyers Can Help
The best time to ensure you are legally compliant is before any issues arise for your business. Failure to comply with the legal requirements of Settlement Agreements can lead to employment tribunal applications and other potential legal proceedings.
With this in mind, our Harrogate based specialist Settlement Agreement lawyers can advise on the full spectrum of contract generation and review matters, and have significant experience in handling all types of contractual issues.
For specialist Settlement Agreement advice contact our Harrogate employment solicitors today for a specialist, no-obligation FREE phone consultation.
Contact our Harrogate HR employment lawyers today on 01423 564551 or fill the below form in.