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FAQs for Employees who have been offered Settlement Agreement.

1.) What is a settlement agreement?

A settlement agreement is a legal contract between you and your employer which brings about a resolution to a legal case. If there is a dispute between you and your employer, there would either be a payment agreement, or an agreement that promises to stop unfair treatments signed and agreed by your employer. Settlement agreements are usually signed mostly after an employee’s termination at a particular organization and they are usually aimed at ensuring that an employee doesn’t pursue claims against their employer.

2.) How long do I have to decide whether I want to accept the settlement agreement?

There are actually no laws stating a fixed time period should be given by your employer(s) as to whether to decide on accepting a settlement agreement or not. However, ACAS guidance deems 10 days reasonable. The ACAS guidance says that an employer should give the employee a minimum of 10 days to decide whether to accept a settlement agreement or not. During this time it is advisable to seek legal advice from an employment solicitor to ensure the terms of the agreement are favorable.

3.) Do I need to have a solicitor?

Yes, you do. According to the law, a settlement agreement is only valid if you sign it following legal advice from a qualified lawyer who has indemnity insurance and is an expert in settlement agreement. You need to ensure that you have a solicitor who will help you understand how to proceed with regards to signing the agrement.

4.) What is the function of my solicitor?

Apart from offering you legal advice, your solicitor is to ensure that they look into the reason behind the settlement agreement and advise you on whether you are receiving suitable compensation or not. The solicitor should look into your background and history with your employer to make sure that you receive adequate entitlement. They can scrutinise your employment contract to make sure there is no breach on your employer’s part and if there are any outstanding bonuses due for payment.

5.) Will I pay to seek legal advice?

Normally, your employer has a duty to contribute a percentage of the fees to be paid to a solicitor. Sometimes, the agreement settlement covers the solicitor’s fee. If the amount is not sufficient enough to cover the cost of the solicitor’s fees, your solicitor could negotiate an increment in the compensation amount. However, you may be expected to cover the costs yourself.

6.) Why do I have to sign a settlement agreement?

Usually, a settlement agreement is offered by an employer to their employee to ensure that they give up/waive their right to lay claims in an employment tribunal. By signing a settlement agreement your employer is assured that you have given up your right to lay a claim. Usually, when there is a termination, especially if it is due to unfair treatment by an employer, a settlement agreement is offered in order to ensure that the employee doesn’t pursue a case against their employer in a court of law.

7.) How do I know I am about to enter into a valid settlement agreement?

Any settlement agreement you are about to sign is valid if it complies with the following requirements:

  • an employee who is about to sign a settlement agreement, must have received independent legal advice before agreeing to waive any rights to claims.
  • The legal advisor which has been consulted must be clearly stated in the agreement.
  • The claims waived must be clearly specified by the employer in the agreement
  • If the above requirements have been met, it must be clearly stated and highlighted in the agreement you are to sign.

8.) Is there a confidentiality rule attached to a settlement agreement?

Usually, your employer expects confidentiality regarding any protected disclosure.

9.) Is it compulsory that I sign a settlement agreement?

You are allowed to not agree to sign a settlement agreement if you, or your solicitor, feels that the compensation amount is not fair. Especially in relation to your history with your employer. If your solicitor concludes that you are not getting a fair deal, you can decide to instead pursue an Employment Tribunal claim against your employer. You should however note that, your employer would no longer be obligated to contribute to the fees acquired from hiring a legal advisor.

10.) Does it matter that there are parts of the agreement that I don’t understand and can’t comply with?

It is very important that your understand every part of the agreement before you sign it. This is why you need a solicitor. You have to carefully digest the agreement and then discuss areas you disagree with, with your solicitor so there can be negotiations.

11.) Can I negotiate a settlement agreement?

Depending on your background and history with your employer, if you don’t seek professional legal advice you may negotiate an unfair compensation amount or agreement clauses that you are unhappy with. However, it is important that you receive legal support before you sign a settlement agreement.

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