From the end of?July 2013, the until-now-known-as Compromise Agreements will be termed Settlement Agreements with new rules to protect so-called pre-termination discussions taking place between employers and employees to end a working relationship.
It seems that there will be little difference noticed by the average employee/employer as independent legal advice will still be required to make the agreement binding although it is envisaged that simpler templates can be used by employers to be approved by ACAS.
ACAS have produced a Code of Practice for Settlement Agreements which aims to explain what is and what isn’t allowed.
Whether you are an employee or employer, it is vital that you get this right to give you peace of mind and a clean break.
There are serious implications and consequences to consider when reaching agreement including tax liabilities and ongoing legal responsibilities.
The whole point of such an agreement of course is that there will be no future court of Tribunal proceedings to bother about so the employee waives most or all of his/her legal rights once the document is signed. Of course, if one party fails to abide by the terms of the agreement then this can be pursued through the civil courts.
What is normal to include in a Settlement Agreement:
- The amount of any compensation and/or remuneration to be paid (if any)
- whether this is taxable or subject to any other deductions
- Tax indemnity if amount paid free of tax
- an agreed reference letter to be used in all future requests from prospective employers
- an agreed confidentiality clause
- an agreement to make a contribution to the departing employee’s legal fees for taking advice
- what, if any, restrictions apply to the ex-employee when attempting to obtain future employment
- an agreement to return of company property and documents
- Waiving all possible employment claims such as unfair dismissal, all types of discrimination, breach of contract,unlawful deductions etc under the Employment Rights Act 1996, Equality Act 2010 and other important legislation.
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IF YOU NEED ADVICE ON DRAFTING OR NEGOTIATING A SETTLEMENT AGREEMENT
NO FEES GUARANTEED FOR EMPLOYEES
PAYMENT WILL BE NEGOTIATED DIRECTLY WITH YOUR EMPLOYER