Should I Accept a Settlement Agreement from My Employer? Read on, and we will help you tackle this common question. If you’ve been offered a settlement agreement by your employer, you’re likely feeling a mix of emotions, relief, confusion, anxiety and, you may have lots of questions. Is it a good offer? Can I ask for more? What if I don’t agree to sign it? Will this impact me getting a new job? In this article, we answer the most common questions and explain what a settlement agreement is, what to look out for, and how to decide whether to accept the offer or push for a better deal.
What Is a Settlement Agreement?
A settlement agreement (formerly known as a compromise agreement) is a legally binding contract between you and your employer. It is most commonly used to end the working relationship, so it brings the employment to an end with the employee (or worker) agreeing to waive any legal claims against the Company, usually, in exchange for certain payments.
In most cases, it involves:
- You agreeing not to bring legal claims against your employer (such as for unfair dismissal or discrimination).
- In exchange for a financial payment, a reference, and other agreed terms, such as keeping certain matters confidential and not saying bad things about one another.
You must take independent legal advice for it to be valid. For example, you must receive independent advice on the “terms and effect” of the settlement agreement for it to become binding. Your employer is likely to cover the costs of this session.
Why Have I Been Offered A Settlement Agreement?
The reasons behind being offered a settlement agreement can vary, but they are often used to enable the employee and employer to part ways and achieve a “clean break,” so no future disputes. Receiving a settlement agreement can either be expected or a total shock, but either way, the best way to approach it is to carefully consider your options and decide what your ideal outcome is. This will make it easier to determine what to do next.
Settlement agreements are usually offered:
- When your employer wants to bring the relationship to an end without formal dismissal.
- If there’s a potential dispute (e.g. performance concerns, grievances, redundancy).
- To avoid legal proceedings and reach a clean break.
Being offered one doesn’t necessarily mean you’ve done anything wrong, but it does mean your employer is trying to manage risk.
Do I Have To Accept The Settlement Agreement?
In short, no. You do not have to accept the accept the settlement agreement. Employers will often pressure you to accept their first offer, but making the “alternative” option look undesirable. For example, your employer may say, you can take this settlement agreement, and leave with a deal, if not, we will have to place you on a performance improvement plan or commence disciplinary proceedings.
However, these are often tactics to attempt you to take the settlement agreement. It is important to understand how to negotiate a settlement agreement, so you can leave on better terms, such as more money, a reference, your reputation intact.
When offered a settlement agreement it is important to Stay Employed. Our mantra is to Stay Employed, Take Advice, Act Quickly.
Do I Need Legal Advice?
When addressing the question, should I accept a settlement agreement from my employer, it is important to take advice. A settlement agreement is only binding if you take independent legal advice on its terms and effect. You will also want to discuss if the deal offered is fair and reasonable. If you have been offered a settlement agreement, we can discuss the offer and our method of putting you in a low risk position for us to negotiate a better deal. Feel free to call us to discuss this (these calls are free and no-obligation).
Should I Accept a Settlement Agreement from My Employer? – Common Mistakes
The most common mistakes we see when employees are offered settlement agreements are:
- Reacting too quickly/accepting the first offer. People often accept the first offer (leaving money on the table) and rush (agreeing to prohibitive clauses).
- They react too slowly. They either don’t respond or wait too long, frustrating the process and making it more difficult to negotiate better terms.
- Using a generalist. Lots of lawyers are happy to just “sign off” on the settlement agreement and do not address whether a better deal was feasible. It is important to work with a settlement agreement specialist that is experienced in negotiation.
Top Tips
- If you have a settlement agreement, it is important that you do not accept the offer presented, just ask for time to consider your position.
- You must then (as quickly as possibly) make contact with an employment law specialist that is well versed in dealing with settlement agreements.
- The aim is not just to get the agreement “signed off,” as quickly as possible, but instead to tap into the specialist’s skills and experience and make sure you are leaving on the best terms possible (such as more money, a reference, with your reputation intact) and avoiding some of the pitfalls outlined above (such as agreeing to clauses that will hinder your ability to get a new job).
If you have been given a settlement agreement, then please get in contact with us. We are an expert team of employment lawyers with specialist expertise in handling settlement agreements on behalf of employees. We act for employees only, not employers.
Here’s Why You Should Choose Us If You Have A Settlement Agreement:
- We will react immediately.
- We have a track record of fast turnarounds and getting you the best terms possible.
- Our team are genuine specialists in dealing with Settlement Agreements.
- When you speak to us, we will put you at ease, answer your questions, and help you resolve the issues you are facing at work.
- Our fees for advising on Settlement Agreements will be covered by your employer.
- If you want us to negotiate on your behalf, we have a unique approach that gives you a no-risk approach.