Settlement Agreements Manchester

When Does A Settlement Agreement Happen?

There are numerous cases when a Settlement Agreement might be offered. The three main areas where Settlement Agreements regularly occur are in performance disputes, disciplinary actions and in making redundancies.

Disputes in business can be timely and create unnecessary costs to an employer. A Settlement Agreement can draw matters to completion quickly and efficiently saving an employer both time and money. The failure to find resolution can easily become longwinded and stressful. Utilising legal professionals and a lawful process can provide a simpler, fairer, less problematic way to solve disputes, avoiding on-going anxieties and conflict that could lead to tribunals or court cases employers would much prefer to avoid.

Larger businesses and corporations often instigate Settlement Agreements where there is no case of a claim or unlawful activity. For example, when a large number of redundancies are being made a Settlement Agreement can give the business or corporation the peace of mind that there will be no follow up action to contend with. There may be no dispute or claim risk involved yet the peace of mind in being able to proceed in business life without the interference of old employees returning to raise issues that could interfere with the smooth running of operations.

The Standard Terms Of Settlement Agreements

A Settlement Agreement can include a wide variety of terms and conditions unique to the specific situation between employer and employee. There are however, a number of standard terms that feature in nearly all agreements:

• Termination date – The agreement will outline the termination of employment date, the amount of notice to be worked, and how the notice period should be handled.
• Reasons for termination – The agreement should also state the full reasons for the termination. In some cases it may be stated that it is simply a ‘mutual agreement’.
• Compensation – The agreement will outline the lump sum that the employer agrees to pay the employee in compensation for loss of employment.
• Payment in lieu – The agreement can contain the information where an employee is to be paid in lieu of notice, also known as the PILON. PILON can be added to the lump sum as an additional payment and bringing the completion of notice date forward to an agreed date.
• Garden leave – The employee may be put on ‘garden leave’. This means they do not have to attend the workplace during the notice period.
• Waiving of future claims – The employee agrees not to pursue any legal action whether by tribunal or civil court action.
• Tax indemnity – The employer provides a statement of fact that the first £30,000 of compensation can be paid tax-free. In return, the employee will provide tax indemnity to the employer regarding any tax required to be paid on the compensation amount.
• Confidentiality agreements – The agreement will contain information of confidentiality relating to trade secrets, the existence of the Settlement Agreement and its terms and conditions.
• Derogatory behaviour – Inappropriate criticisms, accusations or derogatory remarks about the employer are prohibited in discussions with third parties.
• Payment up to termination – The agreement should outline all payments outstanding and other benefits up to the termination date. It should include holiday allocation earned, holiday pay, commissions, bonuses, and expenses.
• Pension information – There should be information regarding pension contributions up to termination and the handling of the pension policy after termination. There could be a different process for employees where the PILON is in operation.
• Employer’s property – There will be a schedule for the return of company equipment to the employer.
• Warranty – An employee should disclose any information and make no attempt to cover up actions whereby the employer may have had grounds to dismiss them without notice. This is called a warranty and is active in all areas of negligence and misconduct.
• Restrictive covenants – The outlining of restrictive covenants after completion of termination should be outlined.
• Reference – A reference should be supplied by the employer with agreed suitable content as laid out in the agreement. The reference information should also stand for any verbal references delivered to prospective employers in the future.
• New job offers – A Settlement Agreement will generally require an employee to disclose new employment offers under consideration at the time of negotiation. Ordinarily work offers wouldn’t be expected to be discussed but there is a possibility of being offered new employment this would affect the compensation calculations towards loss of earnings.
• Whistleblowing – A gagging clause on termination will not be effective where an employee has FCA or PRA approval to carry out ‘regulated activities’. The following clause is mandatory in all Settlement Agreements: “For the avoidance of doubt, nothing precludes [name of worker] from making a “protected disclosure” within the meaning of Part 4A (Protected Disclosures) of the Employment Rights Act 1996. This includes protected disclosures made about matters previously disclosed to another recipient.”
• Breach of agreement – There will be a clause to state that breach of the rules of the agreement will result in the employee paying back some of all of the payments being made by the employer.
• Legal fees – Generally the employer will agree to pay towards or cover the full cost of legal advice necessary for the employee to partake in the Settlement Agreement. This is not a legal demand on the employer but is nearly always accepted as the employer’s responsibility.
• Agreement to all terms – There will be confirmation that on signing the agreement the terms are the full terms of the termination and no other document or additional information will affect the structure laid out by the settlement.

The 10 Day Cooling Off Period

You do not have to accept a Settlement Agreement just because it has been presented to you by your employer. For the contract to be binding both parties have to agree on all the matters it contains and of their resolution. If you do not like how your employer has presented their case and also of the agreement you are entitled to dispute their process and request that they follow the correct procedure as laid out by ACAS. ACAS have introduced a statutory code of how Settlement Agreement process should operate. It contains acceptable practices and how negotiations ought to take place. The code is not enforced by law but it is wise for employers to follow the process and they must show good reason for not adhering to the suggested roles and pathways if they choose to do so.

ACAS dictates that an employee has 10 days in which to accept or reject an employer’s agreement and outlines many areas of improper practice. These include the use of improper pressure, lying, bullying or harassment to force you into making a decision against your will.

You should take the time to consider all offers properly, thoroughly and with expert legal guidance. By revealing any information or intention at the start of the process you may find it difficult to negotiate a better sum or circumstances further into negotiations. At a first meeting you should simply listen to what is being presented and show no signs of your inclination of acceptance or refusal. You can’t accept an offer at this stage because you haven’t fulfilled the requirement of legal advice; so it’s in your best interest to keep all intentions, thoughts and disputes to yourself until you’ve discussed the issues of the agreement with your legal advisor.