A settlement agreement is a written agreement signed by two parties (usually employer and employee) that outlines agreed terms and conditions to settle a potential employment tribunal claim or other court proceedings.
Settlement agreements are a way of ending an employment relationship in a mutually acceptable and amicable way. They usually involve the employer making a one-off payment to the employee in exchange for the employee agreeing not to make an Employment Tribunal claim in relation to a specific issue or issues.
However, there may be times when an employee does not want to sign a settlement agreement, which they are entitled to do, as a settlement agreement is entirely voluntary.
Reasons not to sign a settlement agreement
A settlement agreement is not something to be entered into lightly, so it is important for an employee to take the time to consider the offer carefully and to weigh up all their options.
Acas states that a minimum period of 10 calendar days should be given, to allow the employee to seek independent legal advice and to consider the details of the offer. The amount of time given may vary depending on the circumstances, however if the amount of time is deemed not reasonable, then this can be used as evidence if an unfair dismissal case is ever brought before an employment tribunal.
If an employee signs a settlement agreement, they will not be able to make any future claims against their employer in a tribunal in relation to the matter or matters covered by the settlement agreement. Employees must therefore be confident that any settlement offered is fair and that they understand all of the consequences of signing the agreement (such as agreeing not to keep the details of the settlement private).
It is a legal requirement that any employee who is offered a settlement agreement, must receive independent legal advice from a solicitor, union representative or from the Citizen’s Advice Bureau. Without this advice and a signature from one of these people, a settlement agreement cannot be made.
If an employee simply does not feel comfortable with the settlement agreement for any reason, they can refuse to sign it. However, it is worth noting that in certain circumstances, the employer may be able to fairly terminate the employment anyway.
It is also worth considering that, while an employer will generally cover the cost of an employee receiving legal advice on a settlement agreement, if the employee chooses to reject the agreement, they may become liable for these legal costs.
Can I negotiate a better offer?
An employee is free to turn down the offer they have been given and try to get a better deal, but it is wise to take advice from a solicitor who can help negotiate the fine details of the agreement.
Your employer is unlikely to cover the cost of your legal advice during settlement negotiations, so you should give careful thought to whether you believe you can achieve a significantly better settlement before taking this course of action.
If an employer and the employee cannot come to a mutual agreement, then the employee may make a claim against their employer in a tribunal. There is a time limit of three months less one day from the date the employment was terminated, in which an employee can make a claim. If the claim is for statutory redundancy pay, the time limit is six months less one day.
Get help negotiating a settlement agreement
If you’ve been offered a settlement agreement and need advice, Bird & Co’s Settlement Agreement Solicitor, Paul Hardy, can give you expert, tailored advice and provide you with a convenient and efficient service to ensure the matter is handled as quickly and as stress-free as possible. Call him today on 01476 372 052.