Is a Settlement Agreement binding?
Yes! Once you enter into a Settlement Agreement there is no backing out. It constitutes a full and final settlement of all claims between the you as employee and your employer. It cannot be revoked and it cannot be set aside. It is because the Settlement Agreement is legally binding that the law requires the employee to take independent specialist advice from people like ourselves.
Do any formalities have to be followed?
For a Settlement Agreement to be binding, there are a number of legal formalities that must be complied with. These formalities include a requirement that the employee obtains independent, professional advice from a specialist who has adequate professional indemnity insurance.
What should the Settlement Agreement set out?
Settlement Agreements should always be in writing and set out all the terms of the settlement that have been reached between the employer and the employee. The terms of a settlement will vary enormously from case to case. However as a general guide settlements are likely to include terms dealing with the following:-
- Details of severance payments or compensation to be made to the employee;
- The tax treatment of those payments;
- The date by which payment must be made;
- Confidentiality issues;
- Restrictive covenants;
What is it likely to cost?
In most of the cases we deal with the legal costs are paid by the employer. It is in the employer’s best interests for any settlement to be binding on the parties and as there is a requirement that the employee takes specialist legal advice it is customary for the employer to pay the employee’s solicitor’s fees. A fee limit is usually specified and we will clarify what the position is regarding payment of costs before we commence work.
Is the legal advice independent?
Some people are worried that if the employer is paying for the legal advice to be given that advice will not be truly independent.
However, if you use a qualified solicitor you will be assured that the legal advice you receive will be genuinely independent and impartial. This is because a solicitor owes their duty of care to their client and not the person paying the bill.