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It is not uncommon that employers and their employees occasionally find themselves in disagreement. Whilst in most cases such disagreements can be easily dissipated by observing the necessary disciplinary and grievance procedures, there may be times when a more permanent resolution needs to be found. Whether looking to bring a particular matter to a close or to end an employment relationship with an employee, it is in these moments that employers may wish to consider making use of a settlement agreement.

Fixed fee settlement agreement legal help for businesses

Settlement agreements are one of the most useful tools available to employers looking to resolve an issue with an employee in a permanent, legally binding way.

If you are experiencing difficulties in resolving difficulties with an employee, contact us to confidentially discuss your matter and find out how a settlement agreement could help.

How do settlement agreements work for businesses and employees?

A settlement agreement is a legally binding contract that can be used to bring the employer-employee relationship to an end or resolve an on-going dispute with an employee. The utility of a settlement agreement lies in providing both the employer and employee with a mutually acceptable permanent resolution that limits an employer’s legal liability.

The substance of these agreements tends to depend on the situation in question. Typically, they waive the individual’s rights to bring a claim covered by the agreement to an employment tribunal or a court, with the individual receiving some level of financial payment in return.

When are settlement agreements most useful?

Whether or not a settlement agreement is the best way to resolve an issue with an employee will depend on the circumstances. In most cases, settlement agreements are used when there has been irreparable damage done to the employer-employee relationship, and termination of the employee’s contract is under consideration.

Settlement agreement’s are also used during redundancy to confirm the amount payable to the employee as redundancy pay, whether it be statutory redundancy pay or enhanced redundancy pay.

Alternatively, they can also be used to settle an on-going workplace issue, for example, a disagreement over holiday pay or fringe benefits.

When can I suggest the use of a settlement agreement?

The use of a settlement agreement is a matter of judgement. It is important to understand that an employer must not use settlement agreements in such a way so as to indicate any level of discrimination. Furthermore, it is also unwise to present a settlement agreement to an employee without there having been some mention of it during previous discussions with an employee, e.g. as part of a wider performance review.

It is advised that any suggestion to an employee of using a settlement agreement follows some kind of review of their work. Alternatively, their use would be preferable where both parties make it clear that there is a need for a ‘clean break’, and where there is scope for amicable terms to be agreed.

It should also be borne in mind that employees themselves may suggest making use of a settlement agreement. While this should not be agreed to or dismissed unnecessarily, employers should consider whether or not this is in the interests of their business.

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