Settlement Agreements provide a way for you to leave an employment relationship with your professional reputation intact and a financial settlement to ensure you can pay your bills whilst you search for another position. The alternative – bringing a claim in the Employment Tribunal – can take many months and can be stressful for you and your family.
Our Employment Law Solicitors can negotiate a generous settlement package on your behalf, which can include financial and non-financial benefits.
We are a diverse, multi-lingual law firm that uses best-in-class technology to provide clients with streamlined, modern, and highly effective employment law advice and representation. Our years of experience in employment law means we have a robust reputation for excellence with the UK’s best Barristers and Queen’s Counsel, Independent Financial Advisers, and Counsellors who can bring additional support to our Employment Law Department if required. Our clients also benefit from our ability to instruct the country’s most respected expert witnesses.
Below are some of the most common questions we are asked about Settlement Agreements.
What is a Settlement Agreement?
A Settlement Agreement is a legally binding contract between an employer and an employee. It states that the parties will terminate their employment relationship, with the employee relinquishing their right to make a claim in the Employment Tribunal in exchange for a ‘settlement’. The settlement can consist of financial and non-financial benefits.
What are the legal requirements of a Settlement Agreement?
To be legally valid, a Settlement Agreement must:
- Be in writing.
- Relate to a ‘particular complaint’ or ‘particular proceedings’.
- State that all the legal requirements have been satisfied.
In addition, the Settlement Agreement must confirm that you have received independent legal advice from an advisor named in the agreement.
If any of the above stipulations are not met the Settlement Agreement will be invalid. In England and Wales, it is custom that the employer will pay for you to receive independent legal advice. Any proposal of this sort should be set out in the Settlement Agreement offer.
When instructing our Employment Law Solicitors, you can trust that we will negotiate the best deal possible. Furthermore, we will carefully analyse the agreement and make sure it is fair – for example, if you are bound by a confidentiality clause (which you undoubtedly will be) your employer must also be prevented from disclosing the reasons behind the need for the Settlement Agreement and the terms of the contract.
Can I ask for a Settlement Agreement?
An employer or an employee can ask for a Settlement Agreement. If you believe you have a claim for discrimination, unfair dismissal, or your relationship with your employer has irretrievably broken down, you can suggest that Settlement Agreement discussions begin. A Settlement Agreement is advantageous to your employer as it can include a confidentiality clause to prevent you from discussing the circumstances that led to the agreement, thereby protecting their commercial reputation. Furthermore, your employer will not have to worry about you bringing a future Employment Tribunal claim.
Before you suggest a Settlement Agreement to your employer, talk to our Solicitors to ensure that this is the best solution for your employment dispute.
Do I pay tax on the money I receive from a Settlement Agreement?
Settlement agreement payments are made up of two elements:
- Contractual payments
- Compensation payments
Contractual payments consist of monies you are due under the terms of your employment contract such as holiday pay. These will be subject to income tax and National Insurance (NI) payments.
The compensatory payment also referred to as the ex-gratia payment, is the compensation paid by the employer to cover the loss of your job. The first £30,000 of the compensation payment is tax and NI free.
What are the advantages of a Settlement Agreement?
Entering into a Settlement Agreement with your employer has many benefits, including:
- You will receive compensation without having to bring an expensive, stressful claim in the Employment Tribunal.
- You can negotiate a positive reference.
- The compensation payment is likely to be higher than what you would receive from an Employment Tribunal claim.
- You can ask for non-financial benefits such as paid-for access to a career coach or the right to keep your company laptop.
Why choose us?
We have successfully negotiated Settlement Agreements for senior executives, professionals, and highly-skilled workers in industries such as manufacturing, retail, finance, law, medicine, academia, and technology. Our results-driven Employment Law Solicitors will spend time understanding what you want to achieve and negotiate hard to acquire it. You can be confident that we will take care of the entire Settlement Agreement process and exceed your expectations.
People choose and recommend us because we care about them and their future career prospects. We are focused on results and achieving them in the quickest, most cost-effective way possible. Our Employment Law Solicitors will take care of your legal concerns so you can focus on your future.
To talk to us about a Settlement Agreement, please contact us using the form below.
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Depending upon the complexity we are able to offer fixed fees in some cases. In other cases our solicitors chargethe following hourly rate:
- Partner/Member SolicitorHourly rate of £250 + VAT
- Senior Solicitor or Head of Dept: (PQE 8yr+)Hourly rate of £225 + VAT
- Assistant Solicitor/Fee Earner (PQE 3/7yr)Hourly rate of £200 + VAT
- Newly Qualified Fee Earner (PQE 1/3yr)Hourly rate of £170 + VAT
- Paralegals/TraineesHourly rate of £120 + VAT
- Support ParalegalsHourly rate of £100 + VAT