A settlement agreement refers to a legally binding agreement reached between an employer and an employee with regard to the employee’s exit from a company. Such agreements are commonly used to resolve disputes between employers and employees, notably in cases when an employer wants an employee to leave the company without going through formal disciplinary or redundancy procedures. It is essential to note that the parties involved entirely agree with the terms of settlement agreements.
However, the fact that employees are presented with an agreement to sign during a period of high stress and anxiety about their future can often result in the feeling of having no other option. In this post, we will delve deeper into the voluntary nature of settlement agreements and the key things employees need to know to arrive at a fully informed decision.
When an employee is presented with a settlement agreement, they are given a specific time frame, usually 10 days or more, to consider and seek professional advice before signing the agreement. This allows the employee time to evaluate the terms of the agreement before committing to them. Employees are always advised to seek professional advice from settlement agreement solicitors, and their employer may offer to pay for the advice or even recommend an individual or firm to help support them.
It’s also important to bear in mind that the terms of the agreement are negotiable. Employees should review the terms of the agreement carefully and make a note of any concerns or objections they may have. They can then discuss these concerns or negotiate the terms with their employer before finalizing the agreement. An employee can agree to some parts of the deal but refuse others, and their employer may accept or reject these proposals. The employer can also table a counteroffer.
Employees should note that the standard settlement agreement may contain restrictions on their future activities, such as restrictions on working for competing companies, soliciting clients, or discussing their employment with the company. It’s crucial to seek advice to ensure that the restrictions are fair, unambiguous, and no more than is necessary for the protection of the employer’s interests.
It should be noted that the primary aim of the settlement agreement is to resolve the differences between the employer and the employee. In return for a lump-sum payment, the employee agrees not to pursue, or drop, any claims against the employer. The employee typically also agrees to not disclose the existence or terms of the agreement to anyone else. This, in turn, provides clarity and certainty to both parties and saves them from the time and expense of going to an employment tribunal.
However, it’s important to remember that the employee always has the right to refuse to sign a settlement agreement. If an agreement cannot be reached, the employee may choose to pursue a claim through an employment tribunal. Employees should not feel under pressure to sign a settlement agreement immediately without investigating the terms and considering their options.
Conclusion
In summary, settlement agreements provide a method for employers and employees to resolve their disputes quickly and efficiently. Employees should be aware of and understand the voluntary nature of these agreements. An employee can refuse to sign a settlement agreement, and the terms of the agreement can be negotiated.
A settlement agreement may include restrictions that a professional solicitor can help you evaluate. It is crucial that employees seek professional advice from solicitors or other relevant professionals before proceeding with a settlement agreement. Remember, settlement agreements are there to ensure that any separation is as straightforward as possible for both parties.