Can I get a Settlement Agreement for Unfair Dismissal?

​When workplace disputes around unfair dismissal arise, the thought of engaging in a lengthy tribunal process can feel overwhelming. A settlement agreement can provide a practical and efficient solution: it offers closure and certainty for both employees and employers.

What is a Settlement Agreement?

A settlement agreement is a legally binding contract between an employee and their employer. It outlines the terms of a mutually agreed resolution to end an employment relationship. Often, this includes financial compensation, a reference and agreed terms regarding confidentiality or non-disparagement. 

In return, the employee waives their right to pursue legal claims against the employer, including claims for unfair dismissal.

Why Consider an Unfair Dismissal Settlement Agreement?

Unfair dismissal occurs when an employer terminates an employee’s contract without a fair reason or fails to follow the proper procedure. Employees have the right to challenge such dismissals through an employment tribunal. However, this can be a time-consuming, stressful and costly process. An unfair dismissal settlement agreement, sometimes called an unfair dismissal compromise agreement, can offer a faster, more amicable resolution.

Here’s why settlement agreements are relevant in cases of unfair dismissal:

• Avoiding Tribunal Costs: Employment tribunals can be expensive for both parties, with legal fees and time off work adding to the burden. A settlement agreement helps avoid these costs while still providing fair compensation.
• Time-Saving: Tribunals can take months, if not longer, to reach a conclusion. Settlement agreements, by contrast, can be negotiated and finalised relatively quickly, allowing all parties to move on sooner.
• Certainty and Control: A tribunal’s outcome can be unpredictable. With a settlement agreement, the terms are negotiated and agreed upon by both parties. This provides certainty over the outcome.
• Preserving Professional Relationships: A settlement agreement keeps things professional by avoiding the conflict that often comes with going to a tribunal. It offers dignity for both the employee and the employer.

 

 

Avoid Accepting the First Offer of a Settlement Agreement

When presented with a settlement agreement, it may be tempting to accept the initial offer. However, doing so without careful consideration can lead to significant drawbacks.

• Importance of Understanding Your Rights: Before agreeing to any terms, it’s important to fully understand your rights as an employee. Settlement agreements often involve giving up your right to sue. Knowing what you’re entitled to ensure you’re not undervaluing your claim.

• Risks of Rushing Into an Agreement: Rushing to accept the first offer can result in agreeing to terms that do not adequately compensate you for your loss. Employers may initially present a low offer, anticipating negotiation.

Examples of Improper Behaviour by Employers

Unfortunately, some employers may pressure employees to accept unfavourable terms. This can include:

• Imposing tight deadlines to limit your ability to seek advice
• Threatening reduced offers if negotiations continue
• Misrepresenting your legal options

Challenges of Renegotiating After Accepting an Offer

Once a settlement agreement is signed, renegotiating terms is nearly impossible. It is essential to carefully review and negotiate the agreement before committing to it.

By taking the time to think about the initial offer and seeking settlement agreement legal advice, you can ensure your settlement agreement is the best for you.

Key Requirements of a Valid Settlement Agreement

For a settlement agreement to be valid and legally enforceable, it needs to meet several key requirements. It must: 

• Be in writing
• Cover the specific dispute (e.g., unfair dismissal)
• Involve an independent legal advisor
• Outline mutual obligations (e.g., payment terms, confidentiality)
• Meet statutory rules to be binding

What are the Common Clauses in Settlement Agreements?

Settlement agreements often include additional clauses designed to protect both parties and clarify their post-employment relationship.

• Tax indemnity clause (responsibility for taxes on the payment).
• Non-disclosure clauses (protection of trade secrets or confidential information).
• Restrictive covenants (limits what you can do after leaving your job).

 

Understanding these clauses is crucial, as they can have long-term implications on an employee’s future opportunities and financial obligations.

Claims That Cannot Be Resolved by a Settlement Agreement

While settlement agreements can cover many workplace disputes, certain claims are excluded to protect employee rights. For example:

• Accrued pension rights cannot be waived as they are protected by law and remain unaffected by any agreement. Accrued pension rights are protected by law to ensure employees receive the retirement benefits they’ve earned.
• Claims for personal injuries that have not yet arisen are typically excluded. This ensures employees retain the right to pursue compensation if future injuries related to their employment come to light. 
• Some statutory rights, such as those under the Equality Act, may also be excluded to ensure fairness and compliance with broader legal standards. 

 

Being aware of these exclusions can help manage expectations and ensure that employees fully understand the scope of their settlement agreement.

Settlement Agreement Legal Advice

Navigating a settlement agreement can be complex, especially when certain claims or rights are excluded. This is where expert settlement agreement legal advice becomes indispensable. A qualified legal advisor ensures that you understand the terms of the agreement and the implications of signing it. For instance:

• Accrued pension rights are legally protected and cannot be included in a settlement agreement. An advisor will confirm that these rights remain unaffected.
• A settlement agreement lawyer will highlight exclusions, such as future personal injury claims or specific statutory rights under laws like the Equality Act. This will help you avoid unknowingly waiving rights you should retain. 

 

By working with an expert, you can negotiate a fair agreement, manage expectations and ensure that your long-term interests are safeguarded.

Get in Touch with our Settlement Agreement Lawyers

Do you believe you’ve been unfairly dismissed? A settlement agreement might be the right choice for you. Our expert team of settlement Agreement lawyers can guide you through the process, ensuring your rights are protected and you get the best deal possible. Contact us today for a consultation!