At Progeny, we’re experts in dealing with Settlement Agreements. If you’re an employee, senior executive or director, we can help you negotiate and secure the best possible terms.
What is a Settlement Agreement?
A Settlement Agreement (formerly known as a Compromise Agreement) is a legally binding agreement which ends an employee’s employment on legally binding terms agreed between the employer and the employee. The employee’s employment will terminate on an agreed date, and the employer will pay a severance payment in return for the employee’s agreement not to pursue any claims in a Tribunal or a Court. The employee must take independent legal advice on the terms of the Settlement Agreement.
Why choose Progeny to help?
At Progeny, we have many years’ experience in negotiating Settlement Agreements, on both sides of the negotiation table. We provide fast, efficient, and cost-effective advice to help you negotiate your Settlement Agreement. Whether you are looking to sign your Settlement Agreement with as little hassle as possible or aiming to maximise the settlement sum being offered, our friendly and experienced specialist lawyers will tailor their advice towards your individual needs.
“The process was smooth and painless was due to his clear guidance at each stage. Our face to face meetings were friendly as well as helpful. In general I felt I was well represented and was very satisfied with the outcome.”
“I found the support thoughtful, responsive and astute in working through the various clauses and options. I would certainly seek out their advice in future if the need arises again.”
“Progeny made what was a difficult and stressful time much easier. Their calm, knowledgeable and pragmatic approach meant that things were dealt with quickly and with total professionalism. I highly recommend Progeny to anyone in a similar situation.”
“Received excellent service and advice. Really helped in facilitating the entire settlement agreement review and signing protocols.”
“I needed to secure legal advice quickly to manage a settlement agreement. I was immediately impressed with the speed and professionalism of Progeny. I had every assurance that they would deal with my matter promptly and efficiently. I would not hesitate to recommend them.”
“Progeny were responsive with clear communications. In the matter of my settlement agreement, they were detailed, accurate and I really felt that I had someone on my side.”
“Progeny helped me during my negotiations with my previous employer. I cannot praise them highly enough. What I appreciated about Progeny is how straightforward they made the whole process and the speed at which they communicated with me throughout. In short – Progeny is client focused, modestly priced and worked hard for me. Thank you.”
“Progeny were fantastic. They were on the case from the moment I contacted them. Had my settlement agreement sorted swiftly and efficiently.”
Frequently Asked Questions about Settlement Agreements
What are the requirements of a Settlement Agreement?
There are a number of specific legal requirements that must be met in order for a Settlement Agreement to be valid. It must be in writing; relate to a particular complaint; identify the independent legal adviser; state that the independent adviser has given the employee advice and is covered by a contract of insurance; and state that the statutory provisions governing Settlement Agreements have been met.
Why are Settlement Agreements used?
When an employment has come to an end, either because of redundancy or a disagreement, a settlement agreement is used to agree the terms under which the employee will leave their job. Usually, the agreement involves the employee receiving financial compensation in return for agreeing not to take the employer to court.
What are the benefits of Settlement Agreements?
From an employee’s perspective, it gives you the comfort of knowing that the matter is settled, and that your employer is legally obliged to pay you the settlement sum being offered. From an employer’s viewpoint, it gives them the comfort of knowing that their employee will not take any further legal action (whether potential or otherwise) in relation to any dispute.
Should I take my case to Tribunal, or accept a Settlement Agreement?
Terms negotiated through Settlement Agreements can often represent a better deal than what can be achieved through fighting the case at Tribunal, not just because of certainty over the financial package, but also by securing terms which a Tribunal can’t award, such as a reference wording or handover arrangements. Effective negotiation of Settlement Agreements can remove the need for you to bring formal proceedings against your employer, which can be a time-consuming and costly route to take.
What is the difference between a Settlement Agreement and a Compromise Agreement?
There is no difference – they’re the same thing. The government renamed Compromise Agreements to Settlement Agreements at the end of July 2013. Sometimes people still use the old name.
What happens when I sign a Settlement Agreement?
By signing a Settlement Agreement, you are effectively giving up the chance to make a claim against your employer, usually in exchange for a settlement payment.
Do I have to take legal advice?
As an employee, you must take independent legal advice on the terms and effect of your settlement agreement before it will be considered legally binding.
Do I have to pay the legal fees?
In most cases, the employer will agree in the settlement agreement to contribute an amount towards your legal fees arising from having to obtain legal advice on the meaning and effect of the settlement agreement. This costs contribution is usually sufficient for us provide the required legal advice, meaning that you as the employee won’t have to pay anything towards our fees, assuming you are happy with the settlement amount being offered.
How are the legal fees paid?
We invoice the employer directly for payment. If the employer’s contribution towards our fees (see above) is insufficient, we will advise you, the client, at the outset and make necessary arrangements. Sometimes we can agree an increase with the employer.
Do I have to pay tax on the money I receive?
Generally speaking, any sums owed to you under your contract of employment, such as wages, holiday pay and bonus will be subject to tax in the normal way. Any redundancy payment, compensation for loss of employment or injury to feelings, or amount that can be treated as damages can be paid tax exempt up to £30,000.
When does the Settlement Agreement take effect?
The agreement only takes effect when you (the employee) have taken independent legal advice, signed the agreement, and we have issued a certificate to confirm the advice taken and returned this to the employer.
When will I be paid the settlement sum due under the settlement agreement?
Normally you’ll be paid the settlement sum once the Settlement Agreement has taken effect (as above).
Do I have to sign a Settlement Agreement if my employer asks me to?
No. Settlement Agreements are completely voluntary and their terms must be agreed by both parties. Neither the employee nor the employer can be forced to enter into one of these agreements if they don’t wish to do so.