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My employer has mentioned a settlement agreement/offer, but not given me a formal settlement agreement.

Here, your employer may be trying to establish if you want to accept a financial offer before incurring the cost of having the agreement drafted. If so, you need to be careful about how you respond. 

If you are in this situation, often the best thing to do is to respond to your employer saying you need to take legal advice and to ask for a copy of the agreement, so you don’t waste time or money.  

If your employer refuses and insists that you confirm if you want to accept the offer, you probably have three choices. Firstly, you can seek legal advice on the offer before replying to your employer, but this will be the most expensive option. Secondly, you can simply accept the offer, but that will make it more difficult for your lawyer to engage in any subsequent negotiation. Thirdly, you can say you are interested in exploring the offer and are considering accepting it but won’t be able to confirm your acceptance until you have taken legal advice on the settlement agreement (so repeating your request for a copy of the agreement).

Often, one of the best negotiating tools you have is time; especially if your employer approaches you about a settlement agreement. Therefore, it may be best not to rush your reply, but, equally, you don’t want to antagonise your employer by taking too long.

Whether the offer is acceptable or fair really depends on your personal circumstances; click here to see the factors to consider.

When dealing with employment law there are two forms of communication:

1. “open” conversations that can be shown to an employment tribunal judge; and 

2. “off the record” conversations which are generally kept secret from a judge until the issue of liability has been decided. 

There are usually two ways in which your employer can have an “off the record” discussion with you:

a. The first is typically known as a protected conversation under section 111A of the Employment Rights Act. 

This potentially gives your employer (or you) protection against that conversation being treated as “open” and it allows your employer to try and negotiate a settlement agreement with you. 

The rules governing these need to be considered to ensure the protection applies. For example, your employer cannot put you under undue pressure to accept terms and, if it did so, it may lose the protection. Also, the protection only applies to claims of unfair dismissal (and constructive unfair dismissal), so if your claim is for, say, discrimination you could, potentially, rely on the discussion and your employer’s desire to terminate your employment as part of your claim and allegations. 

Assuming your employer has this protection, it means you will be unable to rely on the offer if you fail to agree terms and ultimately pursue an unfair dismissal claim. 

b. The second is “without prejudice”. While many employers use this term in their offer, it usually only applies if a dispute is in existence beforehand and the offer is an attempt to settle that dispute. 

For example, if you have raised a grievance your employer can probably rely this rule. However, if it simply wishes to end your employment, it probably cannot.

The without prejudice protection is broader and section 111A, in that, if it applies, it covers all claims and is not just limited to unfair dismissal; the trick is to ensure it applies in the first instance.

Your employer may communicate with you via one or both of the above forms and, to do so, all it needs to do is label the letter or email accordingly.

If so, you ought to ensure you reply in the same way, so if you have queries regarding the offer, you should reply using the same heading that your employer has used. You probably want any offer you make to have both forms of communication listed, so you know your employer should not be able to rely on your offer in the event the matter does not settle and ends up in an Employment Tribunal. You may be able to change your mind and later rely on your offer, but there are many important legal considerations that go into making that decision, so you should take legal advice before waiving either form of privileged communication.

If you have issue with the reason your employer has given for proposing a termination, then that can be raised in “open” correspondence; provided your employer has raised those concerns/reasons in that way. For example, if you are placed at risk of redundancy, you may be given an open letter explaining the situation and an off the record letter proposing a settlement agreement. If so, you can reply with two letters; an open one to challenge the redundancy and an off the record one to negotiate or agree the offer.

If you are in a situation where an offer has been made but you have not been given a copy of the settlement agreement, the trick for you is to try and secure a copy of it as soon as possible.

If you are in this situation, one of our expert employment solicitors based in xxxx will be happy to give some initial guidance in this point in our initial call.

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