Used properly employment settlement agreements can be an effective tool for dealing with workplace problems in a discrete and controlled way:
If you have an issue at work, negotiating a mutually acceptable resolution is often the best way to deal with things. Recording the terms of that resolution in a settlement agreement ensures there can be no change of heart and enables you to move on, safe in the knowledge that the matter is done and dusted.
Your may also be interested in Redundancy Settlement Agreements
When might a employment settlement agreement be appropriate?
A employment settlement agreement may be appropriate in any case where a contract of employment needs to be ended or where an ongoing workplace dispute needs to be resolved, and terms for dealing with the matter can be agreed.
So, for example, a settlement agreement could be used to record an employee’s agreement to resign their position in return for the payment of compensation, in circumstances where grounds for lawfully dismissing the employee do not exist. A settlement agreement could also be used to draw a line under a long-running dispute with a group of workers about the rate at which overtime is paid.
The approach of employers to settlement agreements varies: some take a belt and braces view and use settlement agreements to record the terms on which any potentially contentious issue is resolved. Others, however, reserve their use to those occasions where they want to do something they are not sure the law would otherwise permit.
How to initiate discussions about a possible settlement
Having ‘off the record’ discussions can be a useful way of finding out whether someone you are having problems with might be interested in trying to reach some sort of compromise rather than taking the matter as far as an employment tribunal or the court.
Genuine off the record discussions are treated as private and confidential, which means you can talk freely about possible terms for compromise without fear that anything you say or suggest may subsequently be held against you if settlement is not possible and the matter escalates.
In employment disputes, there are two main types of off the record discussion:
- ‘without prejudice’ discussions, which cover cases where a dispute with an employee or someone else who works for you has already arisen; and
- ‘protected conversations’, which cover cases concerning employees where a dispute may not yet have arisen (and indeed the employee may not even be aware that a problem exists) but there is a risk that if a dispute did occur it could give rise to an unfair dismissal claim.
The rules on both types of discussion are complicated.
Care, in particular, is needed with protected conversations where there is a risk that a dispute may give rise to claims other than unfair dismissal, for example where a pregnant, disabled or ethnic minority worker is involved and there may therefore also be potential issues of discrimination which could be alleged.
You also need to choose your words carefully with protected conversations because if an employee can show they have been subjected to undue pressure to sign an agreement, for example by being told they need to ‘sign a settlement agreement now or face dismissal’, it is unlikely that protection will be available.
ACAS have published a code of practice on settlement agreements which, among other things, gives helpful guidance on protected conversations: ACAS Advice and Templates
However, you should still talk to your a settlement agreement advice solicitor before taking any action to ensure that negotiations are handled correctly and the terms of the settlement agreement fully reflect what has been agreed and protects your position to the fullest extent possible.
Other Things to Consider
To be legally binding, a settlement agreement must be made in writing and entered voluntarily. An employee who is offered a settlement agreement by their employer must also be given independent settlement agreement advice from a solicitor on the terms and effect of the agreement and the employer usually pays a contribution towards the solicitors costs.
The taxation of any payments made under the terms of the agreement also need to be considered, particularly in light of new rules due to come into effect in April 2018.
If you are in need of settlement agreement advice either to rectify an employment dispute or for a redundancy settlement agreement please get in touch. Our experienced settlement agreement solicitors provide remote legal advice over the phone or video call. It’s easy to book via our online system (same day appointments often available) and it’s a fast turnaround on the paperwork. For more information visit: Settlement Agreement Advice
