Happy Birthday Settlement Agreements – 2 Today

It is two years today since the previously known Compromise Agreements were renamed as Settlement Agreements by the Enterprise and Regulatory Reform Act 2013.

Settlement agreements are entered into by parties to a dispute and record the terms of settlement reached to resolve that dispute.

The terms of settlement agreements can vary enormously on the circumstances of the dispute, this may include anything from a simple agreement to abandon exiting proceedings to a unilateral waiver of claims or a mutual waiver and realise of liability.

As such, settlement agreements are subject to relevant principles of contract law and can be declared void or rectified by virtue of a mistake in the same way as other contracts.

Most of the settlement agreements we come across are to agree a termination of an employee’s employment, and the waiver of their rights to bring any claim against the employer, in exchange for a termination payment. In order to be a legally binding settlement agreement the employee must seek independent legal advice on the terms and effect of signing the agreement, and the seriousness of waiving their rights. If the employee signs the agreement then the employer pays the fees of the legal advisor.

Whilst settlement agreements can avoid costly and lengthy tribunal proceedings for respondent, whilst, usually, providing instant compensation for claimants, it is not always the case that the employee gets the best deal.

It is apparent that some solicitors do not always fully consider the facts and circumstances that have led to the settlement proposal, which is key in order to advise the client as to whether the termination payment is satisfactory to waive all their rights to bring a claim. All the facts must be explored in order to advise the client as to whether it would potentially be worth more to them to refuse the agreement and indeed bring the claim. It would appear that some ‘lazy’ solicitors simply sign off the agreements in order to obtain the fees from the employer, which does not always benefit the client.

Michael Lewin Solicitors have a specialised Employment Team who are committed to providing our clients with the best possible service. If you have been offered a settlement agreement, or if you need one drafting, please do not hesitate to contact us, call us on 0844 499 9302 or email us employ@michaellewin.co.uk.

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