Settlement Agreement Lawyers Paisley

As with friendships and marital relations, relationships between employees and employers can also breakdown to the point of no return. Where this is the case often both parties will seek to exit the relationship with their rights intact and in the case of the employee some form of financial protection.

This relationship can be exited in a number of ways; each has their merits and can be dependent on an individual’s circumstances. One of the most well-known ways of resolving a dispute is through an

Employment Tribunal. While in certain circumstances a tribunal may be the best way of resolving the dispute, it is not always the case. Tribunals can be a very stressful environment and time consuming with no guarantee of you receiving the outcome you hoped for.

A less well known way of resolving a dispute where there is greater chance of a satisfactory result being achieved by both parties is through a Settlement Agreement (previously known as a Compromise Agreement). 

At Hunter & Robertson we have advised clients for a number of years on whether they are best to launch a claim at an Employment Tribunal or to settle a dispute through a Settlement Agreement.

Settlement Agreement Solicitors Paisley, Scotland

Quite simply a Settlement Agreement is a legally binding agreement between an employee and their employer to terminate the relationship on terms which they both agree on. The creation of the agreement is by negotiation between both parties. Unlike other forms of dispute resolution a Settlement Agreement can be created even after an initial claim has been raised at the Employment Tribunal. Each Settlement Agreement is unique and designed to meet the individual circumstances of the relationship between the employer and that particular employee. Unlike other forms of dispute resolution a Settlement Agreement provides greater certainty for each side as the end result is reached through negotiation.

I’m an Employee, do I need a settlement agreement?

It is important to seek independent legal advice to ensure the best course of action is taken for your particular circumstances. However, there are a number of advantages as an employee if you choose to utilise a Settlement Agreement.

Settlement Agreements normally provide for you to be paid a “lump sum”. The amount paid is dependent on your circumstances but it will normally consist of your contractual notice and an extra sum on top of this paid by your employer. As an added incentive the first £30,000 is paid tax free with any additional amount being paid in the same manner as your salary.

As well as a financial incentive to sign a Settlement Agreement, there may be the possibility of negotiating further rights such as the retention of a company car or accommodation. The agreement can also ensure your future career prospects are not harmed by stating the reason for the relationship ending was through a “mutual decision” and not through dismissal.

Furthermore, the procedure used for a Settlement Agreement is completely different from that of an Employment Tribunal. It is a negotiation and therefore there is a higher likelihood that you will receive a satisfactory outcome to your dispute. Finally, a Settlement Agreement is a private arrangement between the parties, unlike an Employment Tribunal where the dispute is aired in a public setting.

I’m an Employer, do I need a settlement agreement?

There are a number of advantages if you are an employer to choose to utilise a Settlement Agreement to deal with a dispute.

Firstly they can allow you to facilitate change in your business through the removal of low performing staff without fear of action being taken at an employment tribunal.

Moreover, unlike a tribunal, a Settlement Agreement is a quicker method of dispute resolution. This prevents unnecessary disruption to your business and could also minimise legal costs. It is also a private agreement meaning that unlike with an Employment Tribunal there is no risk of negative public exposure for your business.

Settlement Agreement Lawyers Paisley, Scotland

While as the employee or employer you are involved in the creation of the Settlement Agreement, you cannot make one without assistance. 

If you are an employee then you must receive independent legal advice when it comes to making a settlement agreement. Any agreement made without independent legal advice will not be valid.

If you are an employer you are under no obligation to receive legal advice yourself. However, here at Hunter & Robertson we would advise that you also seek independent legal advice to ensure the agreement protects you from any claim being raised by the employee in future.

What should I include in a settlement agreement?

As stated above the employee must receive independent legal advice for the agreement to be valid. There are also two further conditions to be met for an agreement to be valid. They are;

  • The agreement should make reference to the dispute; however it does not have to give a reason as to why the employment has ended.
  • Both the employee and employer must sign the agreement. The independent legal adviser may also sign the agreement.

Are there any restrictions?

While as an employee or employer you want to achieve the best result for yourself, in negotiating a Settlement Agreement you must be open to compromise. For example in the case of an employee as a result of receiving a financial lump sum you must be open to the fact that the agreement may restrict you from undertaking certain activities in the months after your employment ending. This however is not always the case and is another reason independent legal advice is important to ensure the best possible outcome can be negotiated for you.

Furthermore, there will usually be a restriction on employees talking about the agreement with anyone other than close family and their legal adviser. The agreement may also restrict both parties from discussing the agreement or making derogatory comments about the other party either in person or on social media after the Settlement Agreement has been made.

Is it expensive?

There are some financial costs associated with a Settlement Agreement. These costs normally involve the lump sum paid to the employee and the payment of legal fees the employee incurred from receiving advice from the legal adviser.

Contact Hunter & Robertson, Settlement Agreements Lawyers Paisley, Scotland

Here at Hunter & Robertson we regularly advise employees and employers on Settlement Agreements. Our Employment Law team have years of experiences negotiating for both employees and employers to ensure Settlement Agreements meets the needs of the individual parties. For more information contact our employment law solicitors in Paisley on 0141 530 4405 or fill out our enquiry form here.

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