Settlements agreements

What is a Settlement Agreement?

Settlement agreements (formerly called compromise agreements) are legally binding agreements that set out the full terms of an agreement between an employer and employee, whereby an employee agrees to sign away their rights to bring a claim against their employer in return for a cash sum.

Settlement or Compromise Agreements are generally offered to employees when a dispute in the workplace arises, a redundancy process is being undertaken or when employee misconduct is alleged.  They can also be used when settling potential or actual Employment Tribunal Claims.

What are the common terms of a Settlement Agreement?

A well written Settlement or Compromise Agreement will include:

  • A tax-free compensation sums payable to the employee (up to a maximum of £30,000)
  • Confidentiality
  • Signing away of employment rights by the employee
  • A financial contribution towards the employee’s legal fees in obtaining advice on the agreement
  • The requirement for an independent Solicitor to sign the agreement confirming that they have advised the employee on the terms of the agreement.

What are the benefits of signing a Settlement Agreement?

  • In most cases, won’t pay for legal advice required
  • Any compensation received will be tax free (up to £30,000)
  • The agreement will be completely confidential
  • In most cases, you will receive an agreed form of reference, helping you find alternative employment
  • Your employer will be restricted from making negative statements about you

How much does it cost?

An employer routinely contributes towards an employees’ legal costs in obtaining advice on a Settlement or Compromise Agreement and therefore with our fixed fee prices starting from as little as £250 plus VAT, we are able to offer most employee clients a completely free service.

This means that as an employee, you will receive free, independent and impartial legal advice that doesn’t cost you a penny.  We send our invoice directly to the employer.

Only if substantial negotiations on sums and/or terms are required will an employee potentially be required to contribute towards their legal fees, but we will always first try and increase an employer’s contribution towards an employee’s legal fees where this is required.  Where it is not possible to obtain such an increase, we will offer you a reasonable fixed fee for any such work, taking into account your personal circumstances.

Why do I need your help?

As an employee, you are legally required to obtain independent legal advice before signing the agreement. A settlement agreement will not be legally binding unless you receive legal advice on it. Generally, your employer will contribute towards the cost of you obtaining legal advice on a settlement agreement.

At Attwells we will always endeavour to work within your employer’s contribution towards your legal fees, meaning you will receive a completely free service*. We invoice your employer directly for our fees.

*You will be required to pay additional fees if you instruct one of our expert employment lawyers to put forward and negotiate an enhanced settlement package. However, we offer a ‘No Increase No Fee’ option. Just ask one of our employment lawyers for more information.

What do I do next?

If you would like to have a discussion regarding a potential settlement agreement, or any other employment or workplace issue, please give us a call for a confidential, no-obligation consultation.

For Ipswich: Sun Buildings, 35-37 Princes Street Ipswich, IP1 1PU

Call on: 01473 229200 or request a call back

For Colchester: 18 North Hill, Colchester, CO1 1DZ

Call on: 01473 229200 or request a call back

For London: 88 St Johns Wood High Street, London, NW8 7SH

Call on: 01473 229200 or request a call back

Email Lloyd Clarke for a FREE initial no obligation chat.