I’ve Been Given A Settlement Agreement, What Now?

Being offered or asked to sign a settlement agreement can be a stressful and uncertain experience. Many employees can feel overwhelmed by the many questions they need answers to.

If you’ve been given a settlement agreement, the first step is to carefully read through it and seek independent legal advice. For the agreement to be legally binding, a solicitor or qualified legal advisor must explain the terms and implications, ensuring you fully understand what you’re agreeing to. 

After the meeting, your settlement agreement lawyer may suggest negotiating better terms if necessary and they will provide a certificate confirming that legal advice has been given. Only once both parties have signed will the agreement become legally binding.

To learn more in-depth information about the process, read some of the most common questions we get asked by employees.

What process do I need to follow?

 

Read through your agreement and try to understand it the best you can. For it to be legally binding, you will should take a copy of your agreement and your employment contract if possible and contact an employment lawyer. In some cases, your employer will recommend a local law firm or you’re free to make that choice yourself.

You will need to arrange a meeting with an employment settlement agreement lawyer, either in person, by phone, or using an online meeting platform.

During this meeting, your lawyer will explain what the agreement means and how that affects you now and in the future. 

You will have the chance to ask any questions that you may have. Your lawyer may conclude some of the terms are unfair. If they feel there is a strong case, they will recommend negotiating more favourable terms on your behalf.

The settlement agreement lawyer will sign a certificate that legal advice has been given to you.

​

What should my settlement agreement include?

 

Every settlement agreement will be unique and dependent on the result of any negotiations that may have taken place beforehand.

Here are some of the most common attributes included:

• Confidentiality clauses or NDA agreements

 

A confidentiality clause is a provision in the settlement agreement that prevents either party from disclosing the terms of the settlement to anyone else. 

• An agreed reference

 

Although not a standard inclusion, an agreed reference will certainly be helpful to the employee.

An agreed reference is a document in which an employer agrees to provide factual information about the past or current work and performance of an employee. 

Positive professional references are a valuable part of settlement agreements for most employees.

• ​​​​​Termination payment or compensation

 

A termination payment is one of many potential payments in a settlement agreement. It may also include an “out of goodwill” or “ex-gratia” payment. 

Ex-gratia payments are tax-free but only applicable in situations where an employee’s employment termination is a result of either redundancy or a dispute.

• Legal fees

 

A settlement agreement should include a clause stating that the employer will contribute towards any incurred legal fees. For the simple process of processing and signing your agreement, employment solicitors’ fees would be covered in full by the employer.

What is a fair settlement?

 

Many factors dictate the terms set out in an agreement. Length of employment, how strong the claim is and the nature of the claim are all contributing factors that affect the proposed agreement. Since fairness is subjective, it’s hard to define a clear answer.

Who benefits the most in a settlement agreement, my employer or me?

 

A settlement agreement should be mutually beneficial. An employee should benefit from a lump sum or compensation payment and in some cases,  an agreed reference. 

For the employer, the biggest benefit is the peace of mind that the employee cannot raise a future claim in an employment tribunal.

What happens if I refuse a settlement agreement?

 

Refusing to sign your settlement agreement could lead to losing your job and your employer’s contribution to your legal fees.

However, if your employment is terminated or you are threatened with termination, make sure your employer follows a fair disciplinary process. If you feel your treatment is unfair, you may be able to raise a grievance against your employer.

What if I don’t agree with the terms, can I negotiate my settlement agreement?

 

Employees are within their rights to negotiate the terms in their agreement if they feel they are unfair.

Negotiations aren’t just about money. An employee might ask the employer for a fair reference or to reduce restrictions that apply after leaving the job.

Should I sign my settlement agreement?

 

You’re under no obligation to sign a settlement agreement if you have received one from your employer. There can be advantages for an employee to accept and sign the agreement but there are also distinct advantages for the employer.

Remember, it is in your employer’s best interest for you to sign and waive the right to make a future claim against them. By not signing it, that right remains.

When does my settlement agreement become legally binding?

 

When both parties have signed the agreement, it then becomes legally binding. Until that point, it is still possible for either party to withdraw.

Both signed parties are now bound by the terms laid out in the agreement. Violating these terms constitutes breaking the law.

Take Control of Your Settlement Agreement

The first step in controlling your settlement agreement is getting the right legal advice. Our expert employment settlement agreement solicitors are here to guide you through the process. We’ll help you understand the terms, protect your rights and negotiate better terms if needed.

Don’t sign anything without understanding your rights! Contact us now to schedule your consultation and secure the best outcome for your future.