Settlement Agreements London

As an employee, you have many potential rights and claims where the law affords you protection.  Many of these claims are complex and, when your employment comes to an end, many of those claims crystallise and you have a relatively short window to pursue them.

It’s often difficult for individuals to fully appreciate and understand all the possible claims they may have and how to pursue or enforce them.

Therefore, to protect you, the law also provides that settlement agreements can only be effective if certain conditions are met.  This includes a requirement for you to take independent legal advice.  As such, the aim is to ensure that you benefit from such advice so you can appreciate and understand the claims you have and are settling by signing a settlement agreement.

Often, the employment relationship is seen as one where your employer has a position of strength.  To try and balance that, the law tries to ensure that you are protected, so has imposed this condition.

We regularly deal with people in this situation. As part of the offer, your employer should be contributing towards your legal fees and while some law firms impose minimum charges, we do not.

Sometime your employer is not making a reasonable contribution, but we always discuss cost and fees at the outset, so you know where you stand and are in control of your legal fees.

We work with all clients with all budgets so will be able to assist you. Just call us so we can explain how we can help you – there will be no charge for your initial call and no obligation to instruct us.

Matt: 07769 700 343 mk@kilgannonlaw.co.uk 

Emily: 07970 870 014 ek@kilgannonlaw.co.uk 

If the offer is acceptable, we will fix our cost to that being paid by your employer.  If your offer is not reasonable and you decide to negotiate then, as part of that, we will seek to ensure that a higher contribution towards your legal fees is made.

Whatever your budget or contribution from your employer, we can help.

We often advise clients who are pleased to be leaving and who have secured a payoff.  They generally want to accept the offer that has been made (and quickly).

If you are in this position, it’s fantastic news and we can help today – just call us now:

Matt: 07769 700 343 mk@kilgannonlaw.co.uk 

Emily: 07970 870 014 ek@kilgannonlaw.co.uk 

If you are in this situation, our view is that you should not be incurring any legal fees as terms are agreed. As such, we will agree to sign off your settlement agreement for the contribution from your employer.  This approach means there will be no fees for you to pay.  

This is a very common question.  Please click here to read a summary on this topic where we discuss the considerations we (and you) should take into account.

Owing to our expertise, we will be able to quickly identify whether the offer is fair and how you should react.

In our experience, the quality of employment solicitors varies greatly.  Usually those with more experience in this area are able to focus on the key issues and not get bogged down with irrelevant points that add little value.  

Obviously, we would be delighted to assist you.  Our work and success are founded on happy clients who kindly recommend us.  All our Solicitors have over 15 years’ experience, so are well placed to know how to help you.  

If we cannot help you then we suggest you look for someone who is recommended to you.  You may know local professionals (bankers, IFAs, accountants) who will know the local lawyers. If one or two names keep being given to you; that’s probably a good place to start.

Failing that, we suggest you contact, at least, two local law firms to talk to their employment solicitor, which should give you good insight. If the individual is not available, if they take time to return your messages or if you don’t feel confident in them when you speak with them, we suggest you keep looking and find somebody else. 

Yes, this is quite common.  If your situation means there is a delay between notice being given and when you sign the first settlement agreement (i.e. now) and when your employment actually terminates then it’s common for you to sign two settlement agreements; one now (when notice is served) and a second agreement at the end of your notice period.

The reason for this is that additional claims can occur between notice being served and your employment terminating  By asking you to sign a second settlement agreement / reaffirmation letter or reaffirmation agreement shortly after your employment terminates means that any claims that may have arisen since signing the first settlement agreement will also be settled by virtue of you signing the second settlement agreement.

As such, this structure/approach is normal in certain situations and one we will be happy to explain further.

If this situation applies to you, then it’s vital you agree the terms of the reaffirmation letter/agreement / second settlement agreement before you sign the first settlement agreement.  When you sign the first settlement agreement, you become contractually bound to sign the second agreement so there will be no later opportunity for any further negotiation/changes.  Also, the payments and benefits you are due to receive are usually loaded into the second settlement agreement, so if you fail to sign that, you won’t get the financial terms/benefits you’re expecting.

Over the years we have dealt with thousands of settlement agreements.  It’s fair to say there is no standard size or type.  Some settlement agreements are reasonably short; others are very lengthy.  It really depends on your position/role, the size of your employer etc as to how you are treated and what your settlement agreement will look like.

However, there are usually certain standard clauses that appear in most if not all agreements, which we have detailed and which you can read by clicking here.

Your employer is under no obligation to provide a reference for you.  Most employers are willing to give a ‘factual’ reference, by which we mean confirming your start date, end date and job title.  

A benefit of a settlement agreement is that you can agree the wording of a reference and ensure your employer is contractually bound to provide that reference to any prospective employer. 

In your settlement agreement, you should ensure that verbal references will be provided and that they will be consistent with the agreed written reference.

Potentially, yes, there is scope for the first £30,000 of compensation to be paid free of tax.  However, we (nor any other employment lawyer) is expert on tax so will not be able to give any guarantee that it will be tax free. You need to ensure that all and any contractual payments (salary, bonus, notice, holiday pay) are being paid subject to deduction of tax, so no salary or wages appears within any tax-free settlement amount.

Please note that, while your employer may say it will pay you a tax-free sum, there will be a tax indemnity form you to your employer meaning that you will be taking all the risk; more information about which can be found here. 

Outplacement support is a common additional benefit of a settlement agreement especially for senior executives.  This usually involves your employer paying for an external provider to help and support you in looking for and finding a new job.

We regularly see employers engaging the services of large outplacement support providers and we received mixed feedback about them. Where outplacement support is offered, we suggest to our clients that they should, instead, secure the services of a provider of their choice, and we can help make recommendations, if needed.

Sometimes, clients want to retrain, and so we often negotiate with your employer to use this money to pay for retraining costs instead.

These are often agreed as part of your exit and you need to think about announcements to your colleagues (internal) and to suppliers/clients (external). 

If you want staff and suppliers/clients to receive a certain message about your exit, we can negotiate an appropriate announcement as part of your settlement agreement.  These are important to try and ensure that your reputation is maintained. 

The general rule is that upon your employment terminating all your benefits will end. However, there can sometimes be negotiation on this.  Occasionally, it’s possible for health benefits to be extended if your employer renews its policy annually and is willing to co-operate. In our view, this may not guarantee cover, as, ultimately, it’s for the insurance provider to agree cover and should it become aware that your employment has ended, it may refuse to provide cover.

If you earn commission or bonuses as part of your employment terms, these need to be addressed as part of the overall settlement.  You may secure agreement for a bonus to be paid, but not know the amount until your employer has finished its financial year. Here, staying in contact with colleagues to try and find out how much they’ve been paid can help ensure you’ve been treated consistently.

You may have a long-term incentive plan or share option scheme. Your employer will have detailed scheme rules that govern your rights and entitlements under these type of incentive schemes. They both often need you to be treated as a “good lever” in order for any benefit to be paid or investment refunded.  It’s highly unlikely that your employer will agree to re-write the scheme rules as part of your settlement agreement, as to do so will affect numerous other staff and have potential tax implications for it. Therefore, there is often very little you can do to try and renegotiate the scheme rules, but that does not stop your settlement agreement being used to try and ensure you secure as much as possible in line with those rules. 

If you are a shareholder, then your rights and obligations will be governed by any shareholders agreement that you may have signed.  Usually, these require outgoing employees to sell their shares and the shareholders agreement will provide a mechanism for this to happen and the shares to be valued (should there be disagreement).

If no-one wishes to buy your shares, you may be allowed to keep them and benefit from any future dividend payments.  Equally, if your shareholders agreement is silent on the point or if you don’t have a shareholders agreement you should be able to retain your shares, which may prove to be a valuable negotiating point when agreeing your exit; should your employer be keen to retain ownership of your shares.

If you own less than 49%, you will be a minority shareholder and have fewer rights to force a value/sale.

As ever, your rights, obligations and duties will depend on your particular circumstances, so specific advice will need to be taken.

We provide a detailed summary of usual clauses you should consider here.  

Whether there are specific clauses that you need included given your situation we will be able to discuss and agree with you as your expert adviser.  These can range from you retaining items of property (e.g. laptop) to certain restrictive covenants being carved out; the list is endless, but we will be able to help and resolve these issues for you.