If you have a settlement agreement presented to you by your employer you need clear advice on its effect, and you need that advice fast. I have advised on such agreements for many years and can assist you with yours.

Below I have answered a few common questions I am often asked about such agreements and, at the bottom of the page is a form you can fill out if you wish me to advise you on your agreement.

What is a Settlement Agreement?

At its most basic it is a legally binding agreement in which the employee agrees to sue their employer. In return for which the employer may offer the employee a payment or something else in return (e.g an agreed reference).

Section 203 of the Employment Rights Act 1996 requires that, for such an agreement to be binding, the employee must receive advice from a relevant legal advisor and that that advisor signs the agreement.

When Can Settlement Agreements Be Offered?

Often agreements are offered by employers who are going through a process whereby employees are being dismissed (e.g. a redundancy); alternatively they are often offered where there is a dispute between the parties (e.g. during a disciplinary process); or they can be offered when there is already litigation underway as a method of ending the claim.

Why Are They Offered?

They are offered to give both parties certainty of where they stand, what they will receive and to bring to a close the situation the parties faced (e.g. litigation, a redundancy process or disciplinary procedure).

Do I Have To Accept The Settlement Agreement Offered?

In short the answer is: “no” you do not. You can reject it, but if, for example the employer was intending to undertake a disciplinary process against you, it is likely that this would commence so the employer may, therefore ultimately end your employment and they won’t agree to pay for the legal advice you received relating to the agreement, meaning you would be liable for those.

ACAS is their Code on Settlement Agreements suggest 10-calendar days should be given to consider the agreement and take advice. The ACAS Guide however, notes this can be reasonably varied and neither the Code nor Guide are legally binding.

If you were to reject the agreement you could, however, bring tribunal or court proceedings, provided you satisfied the requirements of the claim and presented it within the relevant time limit.

How Are They Enforced?

Being a legally binding contract if any party breaches the terms of the agreement they can be sued in the courts for damages. Citizens Advice have a useful guide here.

If you were to reject the agreement you could, however, bring tribunal or court proceedings, provided you satisfied the requirements of the claim and presented it within the relevant time limit.

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