Settlement Agreements for Employers

Our team of specialist employment solicitors advise employers on how best to manage difficult employment situations including ending employment and settlement agreements. Whether you need help with a large scale redundancy situation, business transfer or moving on an individual employee they can advise on strategy, risk-management and assist with the drafting of a settlement agreement that will protect your business.

More about our team: 

  • Fully Qualified Solicitors.
  • Regulated by the Solicitors Regulation Authority.
  • Employment Law Specialists.
  • ,Senior / Partner Level Lawyers.
  • Members of the Employment Lawyers Association.
  • Prompt advice by email and telephone – no need to make an appointment.
  • Skilled negotiators and employment tribunal advocates

Meet the team

For a confidential no obligation free telephone consultation call on 0800 0639 900.

Settlement Agreements Guides for Employers

Employer Ask an Expert:  Settlement Agreements

Q: We had a Compromise Agreement drafted by a lawyer a couple of years ago……and thought we could reuse this by substituting the reference to Compromise Agreement to Settlement Agreement. Is that risky? Have things really moved on in a couple of years? Fiona Martin of Martin Searle Solicitors answers…

Q: Do I need to give an employee a reason as to why I am offering them a Settlement Agreement?

Fiona Martin, Director and Head of Employment Department of Martin Searle Solicitors answers

Q: The ACAS guidance suggests an employer should give an employee 10 calendar days to consider the settlement agreement. What risks would we have if we only gave the employee one day to accept our offer?

A: The ACAS guidance expands on the provisions of the statutory ACAS Code of Practice on Settlement Agreements (under s111A of the Employment Rights Act) and sets out points for good practice. Read more.

Q: I’ve got an employee who’s been with us for 2 years but in the last year his performance has dropped off to an unsatisfactory level.  Can I offer him a settlement agreement to leave without having to go through a long process to deal with the performance problem?

Paul Reeves, partner at Stephenson Harwood answers...

Q: “I want to offer a member of our sales team a settlement agreement to leave but make sure he doesn’t take any of our customers. I’ve looked at his employment contract and there aren’t any restrictions preventing him from competing after his employment ends. I’ve also read the ACAS template settlement agreement but there doesn’t seem to be anything in there either that I can use to stop him competing.  The employee has a three month notice entitlement in his contract.  Any advice?”

Charles Millett, partner at Morecrofts LLP answers…

Q: We need to make two of our five-person sales team redundant. I don’t want to upset the whole team so plan to offer the two weakest team members a settlement agreement instead of having to go through a redundancy situation involving the whole team. Am I okay to do that and what would be considered a reasonable settlement offer? 

Sara Barrett, partner at Mills & Reeve answers…

ACAS Code of Practice on Settlement Agreements

Read our article: what do the experts think about the ACAS Code?’

The Code: Key Points

1. The Code is only relevant to one issue: is the settlement agreement offer admissible in relation to a particular employment tribunal claim?

2. A failure to follow the code will not of itself cause the dismissal to be unfair or discriminatory. Although the details of what was said and done may be relevant when deciding claims – if admissible.

3. Unlike the ACAS Code on Disciplinary Procedures and Grievances, a failure to follow the Code will not result in an uplift of compensation.

4. When an employer and employee cannot reach a settlement the employee may decide to bring a claim in the employment tribunal.

5. Whether the conversations (and correspondence) concerning the settlement agreement offer can be taken into account by the tribunal will depend on: (a) the type of claim (b) whether the discussions are caught by the ‘without prejudice rule’ and (c) whether the employer has acted ‘improperly’.

6. When deciding whether the discussions should be taken into account, the employment tribunal must consider the ACAS Code.

7. The Code explains what is meant by without prejudice – although careful consideration of relevant case law is sensible, to determine whether the discussions are genuinely without prejudice.

8. If it’s not without prejudice, the discussions will be admissible in relation to all claims except straightforward unfair dismissal.

9. Protection can be lost (i.e. the settlement agreement discussions become admissible) if the employer acts improperly.

10, The ACAS Code contains a non-exhaustive list of behaviour likely to be deemed improper.

PDF Document: The ACAS Code of Practice on Settlemeny Agreements.

ACAS Guide to Settlement Agreements

On 30 July 2013 ACAS published it’s guide to settlement agreements. The guide is helpful and detailed (running to over 80 pages). It contains template letters and a template ‘DIY’ settlement agreement to help employers. The guide makes it clear that it’s not compulsory to use the ACAS templates.  Sometimes they won’t fit the situation in hand and an employer would be better drafting a bespoke letter and settlement agreement.  Read more.

ACAS publication: Settlement Agreements: A Guide‘.

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