What are the benefits of settlement agreements for employees and employees?
What’s in it for you? The benefits include:
Benefits to the employee
- The ability to get compensation from the employer swiftly rather than going through the lengthy process of a tribunal and the courts
- Being able to get up to £30,000 on a UK tax free basis by way of compensation
- Avoiding the hassle, inconvenience, and stress that is involved in going through a traditional legal process
- Still having the ability to pursue the claim through the courts if the employer breaches any of the terms of the employment settlement agreement
Benefits to the employer
- Bringing the matter to a swift conclusion with a full and final settlement to the employee
- Being able to include clauses relating to confidentiality about the settlement and the agreement
- Avoiding the cost and time involved in tribunal and court proceedings brought by the employee
- Avoiding future claims from the employee by using the employment settlement agreement as a full and final settlement
I have signed a settlement agreement and still wish to bring a claim against my employer, where do I stand?
There are only 3 specific areas in which you are still able to take your employer to a tribunal despite signing an employment settlement agreement:
- Pension Funds – An employee may still be entitled to make a claim against their employer for any accumulated pension contributions owed during their period of employment
- Breach of Contract – If the employer fails to honour their terms and conditions provided for in the settlement agreement, the former employee has grounds for a legal claim. An example of this would be where the employer has not paid the full amount of compensation money agreed upon
- Personal Injury Claims – In certain circumstances this type of claim remains valid after the signing of a settlement agreement. One requirement is that the former employee was not aware of the pre-existing injury. If the employee was aware at the point of signing the agreement then a subsequent claim cannot be exercised.
What if my employer fails to pay the agreed compensation? Can I enforce the agreement like a Tribunal judgement?
A UK settlement agreement is a legally binding contract. If your employer fails to pay the compensation money in the time agreed, an employee can sue them for breach of contract to enforce payment. Conversely, if you do not stick to any agreed warranties under the agreement then you also can be sued for a breach of contract.
Don’t forget that you need to take independent legal advice on an employment settlement agreement for it to be valid – so make sure you consult specialist settlement agreement solicitors.
When will I receive the compensation?
That depends mainly on your emloyer, but once everything has been signed and agreed, the compensation will usually be paid in around 7 to 14 days or in the next company pay run. This date will actually be set in your settlement agreement.
What happens if I am not happy?
Remember. You don’t have to sign a Settlement Agreement if you are not happy with it.
It will just mean that there is no agreement between you and your employer and you’re free to make a claim to the Employment Tribunal. But, are you being made redundant or just leaving? In redundancy cases, your employer can refuse to pay you the full package and will instead pay the minimum state entitlement. In non-redundancy cases, you will be risking losing the payment being offered… so make sure you are just not pushing this for the sake of it.
Many settlement agreements can be negotiated in your financial favour but, in some cases, a tribunal claim may be necessary. In any event, when looking for legal advice, make sure that you consult a specialist settlement agreement solicitor.