Settlement Agreements – Follow My Link

It is very important to have a basic understanding of admissibility rules when raising the issue of possible settlement with an employee. A failure to do this will mean a high risk of prejudice to any legal claim that may follow.

Without Prejudice – this rule only covers situations where there is an existing legal dispute

Section 111A Employment Rights Act 1996 – this provides a limited amount of protection but only engages if a monetary offer is actually conveyed and conduct is reasonable (i.e. no undue influence is brought to bear)

It is most advisable to appoint a suitably skilled advisor to conduct settlement negotiations.

It will be essential to agree ‘heads of terms’ first, these usually include:

termination date
compensation amount (excluding notice pay)
approach to accrued annual leave
referencing
statements about reason for leaving

When these essentials are in place, you will need a suitably drafted settlement agreement.

The form below should be completed if you would like me to assist further:

Name of the legal entity that is the employer*

* this must be a real person, a limited company, a public limited company, a group of real people (e.g. a trust or partnership), a company limited by guarantee or a limit liability partnership.

If the employer's activities are subject to regulation please identify the regulator:

Registered or business address of the entity that is the employer:

Name of the employee who will agree settlement:

Employee's title:

Address of the employee:

Agreed date of termination to employment:

Note: this may be immediately (if there is to be a payment in lieu of notice), or at the end of the notice period.

If there any associated entities who could be cited as Respondents in any legal claim list them here:

Date of commencement of employee's continuous employment:

If in doubt refer to http://www.legislation.gov.uk/ukpga/1996/18/part/XIV/chapter/I

Employee's job title:

If the employee has raised a claim in the Employment Tribunal give the ET Case Number:

Provide details of accrued annual leave:

Note: annual leave year that operates, total annual entitlement (including bank holidays), less number of days taken in the current annual leave year.

Pay in lieu of annual leave:

Office holders:

Post employment restrictions:

If there is to be an agreed statement about the employee's departure include this here:

Note: this should be worded so that it can be given by both the employer's management and the employee (in answer to a question from a third party).

Confidentiality cut outs (i.e. where the employee can make disclosures regarding the settlement):

Amount of compensation for loss of employment:

Note: only compensation over and above notice pay can be paid tax and NIC free.

Contractual notice period

Note: months or weeks as per the contract, or statutory minimum - see http://www.legislation.gov.uk/ukpga/1996/18/part/IX

Rate of remuneration:

Amount of annual salary, or hourly rate of pay

Amount of pay in lieu of notice (if applicable):

Amount of pay in lieu of accrued annual leave (if applicable):

Payment due period:

Note: payment must be made within this number of days after settlement agreement executed and received.

Contribution to employee's legal fees incurred receiving advice on settlement agreement:

Note: this is for the employer's benefit to make the settlement binding and is therefore payable by the employer.

If there is to be an agreed reference, provide the main text:

Note: this is advisable for both parties.

Approach to reference follow up enquiries:

no response will be provided
response will be compatible with agreed reference
response will answer truthfully and honestly irrespective of effect on employee

Third party rights:

Provide details of any 3rd parties who may enforce terms here (if applicable):

Employer protections required (tick all that apply):

all employer property to be returned
data protection undertaking
no adverse comments
indemnity in relation to tax payable by employer in relation to compensation element of settlement
indemnity in circumstances of material breach of settlement agreement
warranty that no claim or legal proceedings have been initiated
warranty that employee is not guilty of undiscovered fundamental breach of contract
warranty that employee has not received undisclosed income affecting compensation element of settlement

Please tick to confirm you understand and accept:

The employee must receive independent legal advice for the agreement to be legally binding
No action may be taken in reliance of settlement until executed copies have been received
It is normal for confidentiality agreement to be mutual between both parties
You must carefully review the draft agreement provided and raise any queries or amendments

Your name:

Your email address:

Your telephone number:

Confirm you are duly authorised by the employer to provide instructions:

I confirm I have authority

Fees:

I agree on behalf of the Respondent to pay the fee agreed separately within 30 days of invoice