When the relationship between an employer and an employee breaks down, there is a risk that the dispute could result in legal action that can be long, expensive and damaging to both parties. A Settlement Agreement allows you to agree a solution, usually involving the employer making a one-off payment to the employee, bringing the matter to an end and allowing both parties to move on.
Our highly experienced employment law solicitors regularly act for both employers and employees, negotiating, drafting, reviewing and amending settlement agreements to ensure both parties’ interests are protected. We have the expertise to ensure all of the legal details are covered, while having the non-confrontational dispute resolution skills to keep the process as amicable as possible. We will make sure that the agreement is fair and reasonable in all the circumstances, and will ensure that you know exactly what you are signing before proceeding.
With more than 30 years experience in employment law, our team have worked with employers and employees across a wide range of businesses and industries. We work with companies and individuals throughout Rhonda Cynon Taff and the surrounding area, as well as across the rest of South Wales, providing a personal, local service with the high levels of legal expertise.
Speak to one of our friendly, expert settlement agreements solicitors today by contacting your local Devonalds office.
How settlement agreements work
Settlement agreements (formerly known as ‘compromise agreements’) effectively involve an employee agreeing not to pursue legal action over a specific matter, usually in exchange for a one-off payment. This allows employment disputes to be resolved quickly and cost-effectively while keeping the matter private.
Settlement agreements are commonly used when terminating a person’s employment and are designed to allow both parties to achieve a satisfactory conclusion and avoid the need to take the matter to an Employment Tribunal.
To be legally binding, the agreement must:
- Be in writing
- Be related to a specific complaint or complaints
- Only be signed by the employee after they have had independent advice from a lawyer or certified, authorised trade union member with appropriate insurance or professional indemnity cover
- Identify the employee’s adviser
- State the relevant statutory conditions regulating the agreement
The employee also needs to be given reasonable time to consider the agreement, with the Acas Code of Practice suggesting this should be a minimum of 10 days.
Settlement agreements can be complicated to create, as the agreement must be very specific about the issues being settled to prevent the possibility for future legal action. It is therefore essential for the employer to have expert legal advice and guidance, as well as the employee.
Common questions about settlement agreements
What is the difference between a settlement agreement and a compromise agreement?
Settlement agreements replaced compromise agreements in July 2013. They two types of agreement are broadly similar, however with settlement agreements employer and employee will now normally have a pre-termination negotiation to try to agree a settlement deal before the employee’s employment is ended.
Are settlement agreements tax free?
In most cases, you will not have to pay income tax or National Insurance on a payment made as part of a settlement agreement up to the value of £30,000. However, this will depend on the circumstances, so it is worth discussing this with your solicitor before signing the agreement.
Is a settlement agreement the same as redundancy?
Settlement agreements are often now used by employers during redundancy proceedings to prevent employees from taking legal action over the termination of their employment. However, they can be used when terminating someone’s employment for any reason and for many other types of employment disputes.
Why choose Devonalds’ settlement agreements solicitors?
Our employment law solicitors have been helping employers and employees to resolve employment disputes for decades. We have an exceptional track record of success in these matters, allowing both parties to avoid the need for an Employment Tribunal wherever possible.
Our calm, practical approach, focused on non-confrontational dispute resolution means we are able to keep the process of negotiating settlement agreements amicable, diffusing any potential conflict and allowing you to agree a solution quickly and smoothly.
We aim to make the process transparent and will keep you up-to-date at all times, ensuring everything is explained in plain English, so you can have complete confidence in the service we are providing and the results we achieve for you.
Get in touch with our Settlement Agreements solicitors in Bridgend, Rhondda Cynon Taff and the surrounding area
Find out more about using a settlement agreement to prevent or resolve employment disputes by contacting your local Devonalds office.