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Settlement Agreement Solicitors

What is a Settlement Agreement?

A settlement agreement is a legally-binding agreement between an employer and employee.

Both parties enter in to the agreement to record and implement the terms on which they agree to settle any potential or actual claims which the employee has or may have in connection with his or her employment.

This type of agreement is becoming a tool that is increasingly used by employers to ensure employees do not bring a claim against them in an employment tribunal. They are most commonly used in dismissals and redundancy situations as they waiver an employee’s right to bring a case to a tribunal, in exchange for a financial settlement. However, you may be offered an agreement in any of the following circumstances:
  • If you are being harassed, treated unfairly or bullied at work
  • If you have been dismissed or are facing redundancy
  • If you have grounds to take your employers to an employment tribunal

How Are They Different to a Compromise Agreement?

In short, they are not.

In July 2013, compromise agreements were renamed as settlement agreements as a more accurate description of what the parties intentions were.

In addition to the name change on 29th July 2013, the government introduced the concept of pre-termination negotiations. This intended to make it easier for employers to initiate settlement conversations with employees, with less risk of those conversations being admissible in subsequent tribunal proceedings.

What Costs Are Involved?

In order to become legally-binding, the employee must obtain independent legal advice to ensure that they understand the terms of the agreement.

The employer will usually make a contribution toward such costs, typically around £250 +VAT upwards, depending on complexity.

Should I Accept the Settlement Agreement?

An independent advisor is only required to advise on the terms and effects of the agreement. However, when considering whether or not to accept the terms, it is also important to weigh the pros and cons of the deal on offer.

At Howells Solicitors, our employment department can advise on whether the package constitutes a ‘good offer’ with reference to your other potential claims. We can also conduct negotiations with the legal knowledge to deliver the best outcome.

What Should I Consider?

When making a decision, give thought to the following:
  • What statutory rights you have and what you are giving up
  • The financial value of the offer
  • The non-financial value of the offer
  • The restrictions placed upon you by entering in to the agreement
  • The impact upon your entitlement to any future benefits

Removing the Stress from Settlement Agreements

We know that a dispute at work can be a stressful and alienating experience. That why we offer a prompt and sensitive service to ensure that you can resolve the issues with your employer quickly. We aim to help you receive a fair financial settlement, helping you to put a potentially distressing experience firmly behind you.

If you need professional and experienced advice then Howells Solicitors in Cardiff, Swansea and Newport can help. Call 0808 178 2773 email: info@howellslegal.com or complete our online enquiry form and we will call you back when it’s convenient for you.


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