Employment Law Solicitor Chris Hadrill takes a look at settlement agreements and what factors you should weigh up in deciding whether to bring an employment tribunal claim or sign a settlement agreement.

If you’ve been offered a settlement agreement then you’ll want to know whether you’re being offered a fair value for settling your potential employment tribunal claims, and should therefore sign the settlement agreement, or whether you’d be better served in bringing a claim in the employment tribunal to try to obtain compensation. In order to determine whether the settlement agreement you’re being offered is fair or not, you should have reference to the following key factors:

  1. The nature of the potential employment tribunal claims you have
  2. The strength of the potential employment tribunal claims
  3. The reasonable value of those claims in the employment tribunal
  4. The amount you’re being offered in the settlement agreement to settle your potential claims
  5. Other relevant terms in the settlement agreement

The nature of the potential employment tribunal claims you have

Settlement agreements are normally used to settle the following types of potential employment tribunal proceedings: unfair dismissal (including redundancy), constructive dismissal, detriment and/or dismissal due to protected disclosures being made (also known as “whistleblowing”), workplace discrimination (in any form), harassment and/or victimization. Obviously, the types of claim that you can bring will very much depend on the particular facts of your matter. When you talk to the solicitor advising you on your settlement agreement you should put all of the facts of your case to him or her so they can advise you on which potential types of claim you may have.

The strength of the potential employment tribunal claims

You will have to rely on your solicitor to advise you of the potential strength of your employment tribunal claims. Your solicitor won’t be able to provide you with exact chances of success in your case but they should be able to let you know whether they think your case will be successful or not, and why. You should try and provide any and all documentary evidence to your legal adviser so that they can properly assess your claim, as well as letting them know who you think could provide relevant, supportive witness evidence (should this be applicable).

The reasonable value of those claims in the employment tribunal

Again, this is not an exact science at a pre-action stage (i.e. before you issue any claim in the employment tribunal) but your legal adviser should be able to inform you (on a broad basis) as to how much they think your potential employment tribunal claims are worth so this can be factored into an analysis of whether you’ve been offered a reasonably sufficient amount to settle these claims.

The amount you’re being offered in the settlement agreement to settle your potential claims

Your employer will normally inform you of how much they’re willing to offer to settle your claim – this will generally include the statutory and contractual minimum sums that you are owed (such as notice pay, accrued but untaken holiday, any other contractual entitlement e.g. commision or bonus etc.), as well as an ex-gratia sum to compensate you for the manner in which your employment was terminated. You should, at this point, be able to compare and contrast what you’re being offered by your employer against what you have been informed is the reasonable value of your employment tribunal claims.

Other relevant terms in the settlement agreement

How much you’re being paid to enter into a settlement agreement will normally be the most important aspect to a client but it isn’t the only factor. Other important terms in a settlement agreement can include whether the client is deemed to be a “good leaver”, provisions relating to gardening leave and whether there are restrictive covenants contained within the agreement (among other things). You should – as above – provide your legal adviser with a copy of your settlement agreement so they may properly advise you on the entirety of the terms that you’re agreeing to.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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