As a business owner, you may need to part ways with an employee. Settlement agreements are an established way of ending a period of employment with a clean break. In return for a payment, the employee will agree to waive certain rights, including the right to make a legal claim against you.
At Ashtons HR, we regularly represent employers in drafting and negotiating settlement agreements for senior executives and employees. We can advise you of the best course of action and ensure that any agreement you enter into adequately protects the interests and reputation of your business.
We can also provide our legal advice services to your employees in bulk if you are making redundancies or going through a TUPE transfer process. Our settlement agreement lawyers can travel to your place of business where necessary or provide the service remotely.
Our employment law experts have been helping businesses put comprehensive settlement agreements in place for many years. We will ensure that your organisation has the protection it needs and provide advice on related issues, including avoiding legal claims and ensuring that fair processes are followed.
Contact our settlement solicitors today
If you need to put a settlement agreement in place, contact our settlement agreement lawyers today and we will be happy to help. We have offices in Bury St Edmunds, Cambridge, Ipswich, Norwich and Leeds.
When you work with us, we can provide HR consultancy support, as well as legal advice and representation, depending on your needs.
Settlement agreement services for employers
Settlement agreement legal advice
Our settlement agreement solicitors can provide advice on the implications of entering into a settlement agreement and go through the terms and conditions that you are advised to include.
If there is the possibility of an employee making a legal claim against you, we will discuss the potential of their case and the outcome they might be able to achieve. In many cases, employees waive their legal rights to make a claim when signing a settlement agreement. An exception is the right to make a future personal injury claim of which the employee is unaware.
Drafting a settlement agreement
We will draft a sound agreement that treats your employee fairly but ensures that your business is protected from future liabilities and derogatory comments.
Negotiating a settlement agreement
Where necessary, we will negotiate on your behalf with the settlement agreement solicitor representing your employee. We will advise you of the strength of your position and work to achieve the best possible result for your business.
Why choose our settlement agreement solicitors?
Our employment law experts have wide experience in drafting and negotiating settlement agreements in all circumstances, including following a dispute or in the event of voluntary redundancy. We will provide the advice and representation you need and ensure that when your employee leaves, your position is as secure as possible.
Settlement agreement fees for employers
Our settlement agreement costs will depend on the level of advice and negotiation needed. We offer fixed fees in some cases, or charge on an hourly rate. We will ensure that you have a solicitor with the right level of legal expertise and provide you with an accurate breakdown of our fees at the outset.
If you would like to discuss settlement agreement fees, please feel free to call us.
Frequently asked questions about settlement agreements
What is in a settlement agreement?
A settlement agreement should be tailored to the circumstances of the particular case and will include clauses designed to protect your business and your reputation. Terms that are usually set out in a settlement agreement include:
- The amount that is being paid to the employee
- The date by which the payment will be made
- The date on which employment will end, if this is part of the agreement
- Confirmation that legal claims have been settled or waived
- A note of any claims not dealt with in the settlement
- An indemnity clause requiring the employee to pay any tax liabilities
- Restrictive covenants and warranties
- A confidentiality clause
- A non-derogatory clause
- An agreement that the employee will return property belonging to the business and delete data held by them
- An agreed reference that you will provide for the employee in the future, if asked
How do I negotiate a settlement agreement?
We can advise you of your position and whether your employee may have a valid claim against you. This will inform your negotiating position and what it might be reasonable to agree to.
If your employee has a potentially valid claim, we can discuss the amount that they might receive if this claim goes ahead.
By putting a settlement agreement in place, you can avoid protracted legal proceedings and have a clean break from your employee, which can be a cost-effective option and free you from ongoing legal action.
Our team have many years of experience in handling settlement agreement negotiations and we will discuss strategy with you and provide firm representation to deal with your employee’s solicitor.
What happens if my employee refuses to sign a settlement agreement?
If an employee refuses to sign a settlement agreement, as the employer, you must ensure that you follow a fair process if you bring disciplinary action against them or make them redundant. They should already be aware of your disciplinary or redundancy procedures, which should be set out in a policy document or employee handbook. You must follow the right steps or you could face a claim for wrongful dismissal.
Where necessary, we can advise you of your rights and the best way of tackling a situation if the employee will not sign a settlement agreement.
How long should I give my employee to consider a settlement agreement?
ACAS best practice requires that an employee is given ten days in which to consider a settlement agreement and seek legal advice on the offer. Employees should not be pressured into signing quickly, as this could count against an employer if a case is taken to an employment tribunal. Once the employee has had the chance to go through the agreement with their legal representative, it is usual for negotiations to commence.
Who pays legal fees for a settlement agreement?
It is a legal requirement that an employee has independent legal advice before signing a settlement agreement. As the employer, you will usually be expected to pay their reasonable legal fees for this. The figure can be capped and could be part of the negotiations. It may be reasonable to pay more for settlement agreement advice for a senior executive or in a complex situation than for a junior employee.
How long does a settlement agreement take?
The length of time taken to negotiate an employment settlement agreement will depend on how easy it is to agree on the terms and conditions and decide on the amount to be paid. In some cases, a settlement can be reached in a couple of weeks if you and your employee are able to agree on matters. If there are sticking points and the situation is complex, it will take considerably longer.
Is a settlement agreement tax free?
The first £30,000 of a settlement agreement payment is generally tax-free. This is the ex gratia or compensatory sum and not a payment that the employment contract requires you to make. Statutory and contractual redundancy payments are also tax-free for the first £30,000.
Other sums which may be tax-free include payment for training and counselling as well as money paid directly into an employee’s pension where their pension allowance covers the amount contributed.
Salary payments made up to the date on which the employment ends are taxable, as is any payment in lieu of notice and holiday.
If you have questions about tax on settlement agreement, contact us today.
Contact our settlement agreement solicitors
If you are considering offering a settlement agreement to an employee, we will be pleased to give you the help you need. To speak to an expert settlement agreement solicitor, contact our offices in Bury St Edmunds, Cambridge, Ipswich, Norwich and Leeds.
When you work with us, we can provide HR consultancy support, as well as legal advice and representation, depending on your needs.