All businesses will be aware that claims from employees can arise at any time, and for several different reasons, including issues with the payment of wages, breaches of an employment contract, negligence, and many other different protections that employees benefit from. They could arise during the course of employment, recruitment and/or termination. The whole process can take a huge toll on a business and can drain vital resources in terms of both time and costs.
Sometimes an employer may take a commercial view and decide to make a payment to the employee, in exchange for an effective ‘waiver’ of their rights to bring any such claims. When doing so, it allows a business to carry on as normal, without the disruption that Court/Tribunal proceedings (or even grievance processes) can bring – so it often is a very attractive option. It is also quite attractive to the employee in question, as the first £30,000.00 of any compensation payment is (generally) tax free.
However, when considering this option, it is imperative to ensure that you have the benefit of legal advice, as the agreements themselves must comply with a variety of rules in order to become legally valid and enforceable contracts. There are also a few exceptions, being claims that cannot be compromised by way of settlement agreement (such as actions to enforce the agreement, claims for accrued pension rights and claims for future personal injury). Therefore, a proper understanding of how best to navigate the situation is key to the preservation of both parties’ interests.
For example, an employee must have received legal advice on the agreement from an independent advisor (usually a Solicitor), who must then sign a ‘certificate’ confirming the advice has been given to the employee on their ability to pursue Employment Tribunal claims (amongst other things). So, if you are new to the world of settlement agreements, a well-drafted agreement is absolutely essential in providing proper protection to both the business and employee alike, and can be tailored to your specific circumstances.
Our experienced Employment Team have overseen and advised on settlement agreements across a wide range of business sectors, and can guide you through the process efficiently and expertly. If you have any specific issues that you want to discuss relating to a prospective or current settlement scenario or indeed, any other employment issue, please do contact our team for a confidential and free discussion about your options.
We can, and do, act on behalf of both employers and employees, and understand the difficulties that both parties face when negotiating a settlement agreement. We appreciate that you may have a number of questions about the process, and we are readily available to assist.
Please do not hesitate to contact James or Lowri in the first instance, either via phone (01937 547000) or via email (james@hartlaw.co.uk or lowri@hartlaw.co.uk) for a confidential discussion.
