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If you are faced by a situation where you wish to exit an employee, or even multiple employees, our nationally-recognised team advise and prepare settlement agreements that best protect your interest, your customers and your confidential information by binding the employee to enforceable conditions.

We can provide scripts for settlement discussions, advice on handling settlement negotiations and ensure that your settlement packages are structured as efficiently as possible.

If you have already agreed a settlement, we can also provide independent legal advice to affected employees to comply with the legal requirements of the agreement.

Where large scale redundancy and reorganisation exercises involving over 10 employees are required, we design, manage and implement mass settlement agreement projects and act as independent advisors.

We have extensive experience in drafting settlement agreements in commercial transactions.

This includes corporate restructures and company sales and purchases, where the sensitive exit of senior executives is often crucial to the success of the transaction.

We are renowned for acting on behalf of employers, providing pragmatic and practical solutions that are tailored to your business needs.

Our employment law solicitors have drafted settlement agreements for a wide range of employers and sectors for numerous years, placing every client that we work with in the strongest position with the lowest level of risk.

We also have significant experience in advising employers on the amount that they should offer to their employees to seek independent settlement agreement legal advice.

If you have already agreed on a settlement with an employee, we can also provide independent settlement agreement legal advice to them to comply with the legal requirements of the agreement.

What is a settlement agreement?

A settlement agreement, also known as a compromise agreement, is a legally binding document that outlines the terms of an agreement between your business and an employee, often in the context of ending employment or resolving a dispute.

Why might I offer a settlement agreement to an employee?

Settlement agreements can be offered for various reasons, such as addressing redundancy situations, disputes, performance issues, or situations where both parties agree to part ways under specific terms.

Can I initiate a settlement agreement with an employee?

Yes, as a business, you can initiate the offer of a settlement agreement to an employee. However, it’s crucial to approach the process fairly and ensure the employee understands their rights.

Can an employee reject a settlement agreement?

Yes, an employee has the right to reject a settlement agreement if they choose to do so. It’s important to provide them with adequate time to consider the offer and seek legal advice if needed.

Can an employee negotiate the terms of a settlement agreement?

Certainly, employees have the right to negotiate the terms of a settlement agreement. This includes discussing financial compensation, reference clauses, and other relevant terms.

What is the tax implication of settlement agreement payments?

Payments up to £30,000 as compensation for loss of employment are usually tax-free. Amounts exceeding this threshold may be subject to income tax and National Insurance contributions.

Can I include confidentiality in a settlement agreement?

Yes, you can include confidentiality clauses in a settlement agreement to ensure that both parties agree not to disclose the terms or circumstances of the agreement.

Can an employee challenge a settlement agreement after signing it?

While it’s generally challenging for an employee to challenge a signed settlement agreement, specific circumstances such as legal errors or coercion could potentially lead to challenges.

What claims can be waived through a settlement agreement?

A valid settlement agreement can waive an employee’s right to bring certain employment-related claims against your business, such as claims for unfair dismissal and discrimination.

Should I provide legal advice to the employee?

Yes, it’s legally required to ensure that the employee receives independent legal advice on the terms and implications of the settlement agreement. Your business typically covers the cost of this advice.

How long does it take to finalise a settlement agreement?

The timeline for finalising a settlement agreement can vary based on negotiation complexity and the responsiveness of all parties involved. It usually takes a few weeks to a couple of months.

Legal disclaimer

Remember, this FAQ provides general information and should not replace personalised legal advice. Customising the questions and answers to reflect your business’s practices and policies is recommended. If you have any doubts or concerns, consult with our experienced employment solicitors for tailored guidance.

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