My employer has suggested a settlement agreement, but not given me a draft.

My employer has suggested a settlement agreement, but not given me a draft.

Here, your employer may want to establish whether you might accept a financial offer or engage in a discussion before having the agreement drafted. If so, you must be careful about how you reply. 

Often the best thing to do is to reply and say you need to take legal advice and to ask for a copy of the settlement agreement; this way you won’t waste time or money.  

If your employer refuses to provide a draft, you probably have three choices. Firstly, you can seek legal advice before replying to your employer, but this is the most expensive option. Secondly, you could accept the offer, but that will make it harder for your solicitor to undertake any negotiation to improve the offer. Lastly, you can confirm that you are minded to explore the offer but are unable to confirm acceptance until you have seen the settlement agreement and taken legal advice on it (effectively repeating your request for a copy of the settlement agreement).

Often, the best negotiating tool you have is time; especially if your employer approaches you about a settlement agreement. Therefore, while knowing you are not wanted impacts your motivation, you may not want to rush your reply; equally, you shouldn’t seek to antagonise your employer by taking too long.

Whether the offer is acceptable or fair really depends on your circumstances and we address the areas to consider here.

When building to potential litigation in the Employment Tribunal, there are two forms of communication:

1. “open” conversations, which will be seen by an Employment Tribunal judge; and 

2. “off the record” discussions, which are kept secret from a judge (until s/he has decided the case). 

There are two ways in which your employer is able to have an “off the record” conversation with you:

a. The first is known as “without prejudice”. While many employers will use this term, it only applies if a there is a dispute is in existence beforehand and the offer is a genuine attempt to settle that dispute. 

If, for example, you raise a grievance, your employer will be able to use this protection to make an offer, and its offer will be without prejudice to its open position, so can’t be used by you.

Without prejudice protection is much broader than the section option, in that, where it applies, it covers all claims, not just claims of unfair dismissal.

b. The second is usually known as a “protected conversation” and will apply by virtue of section 111A of the Employment Rights Act. 

This gives your employer protection against that conversation being treated as “open” and it enables your employer to offer a settlement agreement with you. 

Assuming your employer has this protection, it will mean you cannot rely on the offer should you fail to agree terms and pursue a claim of unfair dismissal. 

There are rules that need to be considered to ensure this protection applies. Your employer cannot put you under “undue pressure” to accept the terms; if it does, it will lose the protection. Further, the protection only applies to claims of unfair dismissal, so if your claim is for, say, discrimination you can rely on the discussion and, importantly, your employer’s desire to dismiss you. 

Your employer is likely to communicate with you via both forms and, to do so, it should label the letter or email accordingly.

When this happens, you ought to reply in the same vein; using the same heading that your employer has used. Equally, you probably want any offer you make to have both forms of protection stated, so you know your employer cannot rely on your offer should the dispute not settle.  

If you want to challenge the reason your employer advances for dismissal, that can be raised in “open” correspondence; provided your employer has raised those concerns/reasons in that way. For example, if you are subject to disciplinary proceedings, you may be given an open letter explaining the allegations and an “off the record” letter proposing a settlement agreement. Here, you can reply with two letters; an open letter to challenge the allegations (as part of your defence) and an off the record letter to negotiate or agree the offer.

If you are in receipt of an offer, but you have not been given a copy of the settlement agreement, the trick is to try and secure a copy of the agreement as quickly as possible.

One of our expert employment solicitors based in London will be happy to help achieve this and provide some guidance on what to do.

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