8 Mistakes to avoid when negotiating a settlement agreement banner


8 Mistakes to avoid when negotiating a settlement agreement

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A settlement agreement is an agreed document that is often used by employers to terminate an employee’s Employment in a controlled manner. If you find yourself being offered a settlement agreement, you may experience many different emotions. After your initial response has worn off, you need to act swiftly but thoughtfully to make sure you achieve the best result. Many recommended employment solicitors can advise you on the terms of a settlement agreement and support you through settlement agreement negotiations. We look here at some mistakes to avoid when negotiating a settlement agreement, so you will have a better understanding of the process.

1. Feeling forced to sign

For any employee offered a settlement agreement by their employer, it’s key to remember that a settlement agreement is voluntary. There is no obligation on you to sign; likewise, if as an employee you are hoping to secure a package from your employer by asking them for a settlement agreement, there is no obligation on the employer to agree. You can enter negotiations with your employer but if the you can’t reach a position with your employer that you are happy with, you can refuse to sign.

2. Not taking independent legal advice

It’s a requirement of any valid settlement agreement that the employee takes independent legal advice before signing. You don’t have to see a solicitor, although taking advice from a lawyer experienced in employment law for employees will put you in the best position possible. Your employer may well pay a contribution towards your legal fees, but you are free to choose the UK Employment lawyer or independent adviser of your choice.

3. Ignoring the flexibility that a settlement agreement offers

A settlement agreement isn’t just about the money. As the best employment lawyers in London will advise you, terminating your Employment through a settlement agreement gives you the opportunity to negotiate on several matters. You can seek an agreed reference, or perhaps ask for any contractual obligations which restrict you from working for a competitor, or with customers of your existing employer, to be eased. You might like to ask for your mobile phone number to be transferred to you or agree the wording of any announcement made to the organisation about your departure. Your employer may not agree, but these can both be effective points of negotiation.

4. Failing to prepare with your Employment claim solicitors

You may feel under pressure to sign – but as already indicated, there is no obligation on you to sign, or to sign quickly. It’s worth taking some time to consider what the best outcome would be for you from the whole process of concluding a settlement agreement with your employer. You need to take legal advice on the contents of the settlement agreement. Before the appointment with your adviser, think about what’s happened to prompt the settlement agreement, and think about the impact of terminating your Employment. Consider points such as whether you would like a reference and whether there are any restrictive covenants in your contract of Employment that you might like eased. Think also about factors that can help in negotiations – your length of service and how easy it will (or won’t) be to find a new role are some things to consider.

5. Forgetting that the employer will have reasons to sign

In what may be a stressful time, it can be easy to forget that your employer may have good reasons to conclude a settlement agreement with you. They may be keen to avoid an Employment Tribunal or have other reasons why a settlement agreement is their preferred method of proceeding. Working with a top employment law firm means that they will be able to help you pinpoint key negotiating points that strengthen your position.

6. Not including the reason for dismissal

This is not a required element of a settlement agreement, but you may need to prove the reason for the termination of your employer to receive payments under an income protection policy, if you have one. If your employer offers you a settlement agreement, it’s worth checking any policies you hold to see if compensation under the policy is linked to the reason for dismissal.

7. Assuming that all claims can be covered in one settlement agreement

Some employers will try to include a ‘catch all’ provision in the settlement agreement to prevent you from bringing any future claims against them. This will only be valid if the claims can be ‘known’ at the time the settlement agreement is signed. If something happens later which gives rise to a new claim, the settlement agreement will not cover it.

8. Forgetting to address the confidentiality clause

Your employer will almost certainly want the settlement agreement to contain a confidentiality clause to stop you talking about what has happened. You may also want to keep things quiet and want to make sure your employer similarly doesn’t discuss the settlement agreement with others. It’s important to remember that if you talk about the settlement agreement in breach of the confidentiality agreement, you could find yourself facing legal action for breach of contract, so it’s important to consider what the terms of the confidentiality agreement are. You may want to make sure you can discuss the agreement with your partner, and potentially with professional advisers (including financial advisers) and your insurers.

OTS Solicitors are experienced at negotiating settlement agreements on behalf of employees, with positive outcomes. Our team of top employment solicitors can advise you on every aspect of your Employment. Contact us today or call 0203 959 9123 to book your appointment with us today.

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