HM Insights

All you need to know about Settlement Agreements

The UK labour market has shown real resilience in spite of the uncertainty caused by Brexit. The employment rate (the proportion of people aged from 16 to 64 who were in work) for September to November 2018 was estimated at 75.8%. This was higher than the previous year (75.3%) and the highest since estimates began in 1971. Data released in February 2019 showed this upward trend continuing.

However, notwithstanding this high employment rate, we've seen an increase in the use of Settlement Agreements to end the employment relationship. Whilst we deal with these types of agreement every day, for individuals presented with these often legalistic and lengthy documents, they can appear daunting. We've therefore highlighted the following to de-mystify some aspects of the documents.

what-are-settlement-agreements-agreement-law-lawyer-solicitor-employee-work-employer-redundancy-payment-scotland.jpg

What are Settlement Agreements?

Settlement Agreements are legally binding contracts which, although they can be used to settle claims arising during employment, are most commonly used to end an employment relationship on agreed terms. The agreement records such terms and usually contains additional obligations on the parties, such as in relation to confidentiality.

ACAS (the Advisory, Conciliation and Abritration Service) has published both a guide and code of practice with respect to the use of Settlement Agreements, which can be found here.

Why do I have to see a solicitor?

If you are offered a Settlement Agreement then you must receive independent advice on its contents, most usually from a qualified solicitor. If you receive no such advice, then the Settlement Agreement will have no legal effect. It is common that your employer will make a contribution towards your legal costs for this advice, but this is not required by law.

What payments can I expect in an agreement?

There is no fixed amount or formula as to what an employer will pay in an agreement. Every agreement is different and it depends on the facts and circumstances of the situation. For example, the payments offered when there is a redundancy situation may follow the terms of an enhanced redundancy scheme, but often there is no clear reason for the amount offered and an employer is not obliged to provide this detail. However, sometimes negotiation can increase the terms offered in an agreement.

What rights am I giving up?

If you choose to sign a Settlement Agreement offered to you, then you will be agreeing to waive your rights to raise almost all claims arising out of your employment or its termination, in that you will not be able to raise claims in an employment tribunal or civil court.

I've heard a lot about "gagging clauses" - are they legal?

Settlement Agreements often contain clauses requiring parties to keep certain matters, such as the payments within the agreement, confidential. This is not the same a stopping someone from whistleblowing or it being a "non-disclosure agreement" – a term that's been used recently, particularly in relation to the #MeToo movement, regarding preventing people from speaking out about alleged abuse. Providing that these confidentiality clauses are appropriately drafted, then they are permitted in such agreements.

How can Harper Macleod help?

The employment team at Harper Macleod are all specialist employment lawyers and advise employees in relation to Settlement Agreements on a daily basis. We will carefully talk you through the terms and effects of the Settlement Agreement in a plain and straightforward manner. We can also negotiate the terms of the agreement on your behalf if you instruct us to. We can almost always accommodate same-day appointments, including outside normal office hours.

If you've been offered a Settlement Agreement, please get in touch on our dedicated line: 0141 227 9680 or use the form here.

Find out more about our free upcoming Employment Matters Seminars 

EMPLOYMENT MATTERS SEMINAR - GLASGOW 10TH MAY

EMPLOYMENT MATTERS SEMINAR - EDINBURGH 21ST MAY