What is a settlement agreement?
A settlement agreement is a legally binding contract between an employer and an employee that resolves disputes or potential claims that could arise during or after employment. It typically involves the employee agreeing to waive their rights to bring claims against the employer, often in exchange for a financial settlement or other benefits.
The agreement must meet specific legal requirements to be valid, including the employee receiving independent legal advice and the agreement being in writing. Commonly, settlement agreements are used to end employment amicably, avoid lengthy legal proceedings, or resolve disagreements, such as claims of unfair dismissal or discrimination.
Are you an Employer looking for settlement agreement advice? Check out our Employment Settlement Agreement Q & A- For Employers and Businesses Blog.
Why do I need legal advice before I sign a settlement agreement?
You are required to get independent legal advice before signing a settlement agreement to ensure that you fully understand your rights and the implications of the agreement. The main reasons for this requirement are:
1. Protection of your interests
Legal advice helps you understand the terms of the agreement, including any waivers of legal claims you may be making. An employment solicitor will ensure you’re not agreeing to something that could harm your future rights or that you may later regret.
2. Informed decision
A settlement agreement often involves waiving your right to bring legal claims against your employer. Legal advice ensures you know exactly what rights you’re giving up and whether the settlement offer is reasonable.
3. Ensuring the agreement is fair
An employment solicitor can help assess whether the financial terms, such as compensation, are appropriate given your situation and the circumstances of your employment.
4. Legal requirements
The agreement is only legally binding if you receive independent legal advice. Without it, the agreement may not be enforceable.
5. Negotiation
As part of the legal advice you receive, the employment solicitor will provide you with advice as to whether the package offered is fair. This will depend on your individual circumstances. You may decide that you would like to negotiate your package further. Your employment solicitor can help you do this or negotiate on your behalf to help you secure a better offer.
How much does it cost to have a settlement agreement reviewed by an employment solicitor?
Typically, your employer will contribute to the cost of the legal advice, so you won’t bear the full cost of consulting an employment solicitor. Our consultation fees start from between £350 + VAT to £750 + VAT dependent on the agreement. The cost will be higher if you would like amendments or for your employment solicitor to negotiate the terms. Costs will be discussed with you in full before being incurred and we will always seek to recover the full cost of the legal fees from your employer.
How long does it take to finalise a settlement agreement?
A typical settlement agreement can be signed off and finalised by all parties within 1 -2 weeks. Often it will be even quicker than this, but if you would like to negotiate your package, then this can sometimes take a little longer.
How do I book an appointment and what happens next?
To book your appointment, please call us on 0114 299 4890 or request a free initial consultation here.
Our expert employment team, will take down some initial details and then arrange an appointment with you to go through your agreement. Appointments are generally over the telephone or via video call. You can also request an appointment at our Sheffield office.
Our employment team are experts in advising on and negotiating settlement agreements to make sure that you get the best outcome possible.
