Chris Hadrill, a specialist employment solicitor at Redmans, answers the question:
“What are the requirements for a valid settlement agreement?”
For a settlement agreement to be valid, certain conditions have to be complied with:
- The agreement must be in writing;
- The agreement must relate to a “particular complaint” or “particular proceedings” (for example, reference to an unfair dismissal claim (or other forms of claim) or a particular Employment Tribunal claim number);
- The employee who is entering into the settlement agreement must have received legal advice from a relevant independent adviser on the terms and effect of the proposed settlement agreement and the effect of the settlement agreement on the employee’s ability to pursue their rights before an employment tribunal;
- The independent adviser who is advising the employee must be covered by a contract of insurance, or professional indemnity insurance, covering the risk of a claim against them by the employee in respect of that advice;
- The settlement agreement must identify the relevant independent adviser; and
- The settlement agreement must state that the conditions regulating settlement agreements under the relevant statutory provisions (whichever apply in the circumstances) have been satisfied
Further, if the independent adviser is a solicitor then they should hold a current practicing certificate.
If one or more of the above-listed criteria are not met then the settlement agreement will not be statutorily binding and, therefore, not a valid settlement agreement.
When you discuss your settlement agreement with your adviser (whether this is a solicitor, barrister, or otherwise suitably-qualified person) you should ask them the following questions:
- What are the “proceedings” that are being settled under the settlement agreement? Sometimes this will be obvious, but your legal adviser should advise you on the potential claims that you have in the circumstances and, therefore, what you are settling
- Is your legal adviser independent on the other party or parties to the settlement agreement? This should normally be the case, as your legal adviser should carry out a conflict check prior to agreeing to advise you on your matter, but it’s worth asking anyway
- If your legal adviser is a solicitor, what qualifications does he hold, is he an expert in the field of employment law, and what experience does he have with settlement agreements?
- What is the effect of the settlement agreement on your ability to bring a claim in the Employment Tribunal or any other courts?
- Is your legal adviser covered by a contract of insurance or, specifically, professional indemnity insurance? All solicitors should be covered by a contract of professional indemnity insurance but it is always worth checking.
- Does the settlement agreement state that the conditions regulating settlement agreements under the relevant statutory provisions are satisfied?
Chris Hadrill, a specialist employment solicitor at Redmans Solicitors, commented: “If you want to enter into a settlement agreement to settle your employment tribunal claims then you must ensure that you get appropriate and proper legal advice, otherwise you may find that your settlement agreement is not valid or enforceable.”