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If you’ve been offered a settlement agreement by your employer then there’s a number of reasons why you should obtain specialist legal advice on your agreement – one of these being that your solicitor will have the expert knowledge needed to negotiate your settlement agreement. Employment law solicitor Chris Hadrill takes a look at how a settlement agreement should and can be negotiated, with some practical tips

What is a settlement agreement?

A settlement agreement is a contract regulated by statute which allows for potential or existing legal proceedings (whether these are in the employment tribunal, county court, or high court) to be settled. If an employee signs a settlement agreement this normally means that they’re prevented from bringing any claims in the tribunal or court, whether the claim is for breach of contract, unfair dismissal, discrimination, failure to pay wages, or any other form of claim. Under the agreement, the employee will, however, be provided with some form of benefit for agreeing to waive their rights to bring such claims, with such benefit normally involving some form of monetary sum and the provision of a reference.

Do you have to sign your settlement agreement or can your negotiate it?

You certainly don’t have to sign your settlement agreement as it is and it is often (although not always) advisable that you push your employer (gently) to see how much you can potentially obtain from the negotiations. If you wish to negotiate your agreement then this can be done by one of two ways: you can either do it yourself or, alternatively, instruct a third party (such as a specialist employment solicitor) to do this for you. Which approach is best in the circumstances really depends upon a number of factors, such as the nature of your potential claims, whether you still have a good relationship with the management of the business, and whether you feel confident in doing so (among other things).

Tips and tactics for negotiating a settlement agreement

If you’re looking to negotiate your settlement agreement with your employer (or are looking to instruct a solicitor to do so for you), there are a number of helpful tactics and tips which might help you to get what you want. These include:

  1. Instructing a specialist solicitor to negotiate you or advise you on your claims – your employer will generally cover part – if not the whole – of the cost of doing so
  2. Research your potential claims and determine where your leverage is – if you look like you don’t know what you’re doing then your employer will take advantage of this
  3. Be aware that you potentially have a £30,000 tax-free allowance for your settlement agreement (depending upon the type of claims that are being settled) – take advantage of this if you can
  4. Bear in mind that there is a three months less one day limitation period for Employment Tribunal claims – if you miss this then you lose a great part of your leverage
  5. Employers often play ‘hard ball’ – don’t be intimidated if you get an aggressive response
  6. If you make a ‘counter-offer’ to your employer’s offer of the settlement agreement then your employer is entitled (potentially) to withdraw from negotiations – this isn’t likely but bear it in mind as a possibility

If you’ve got any further questions then please don’t hesitate to contact Chris Hadrill or one of our specialist employment team on 020 3397 3603

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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