Tips for Employees Considering a Settlement Agreement With Their Employer


There are numerous reasons why workplace problems can arise and usually, they can be mitigated by utilizing performance management, disciplinary procedures, or mediation, to name just a few. However, when these don’t lead to the desired outcome settlement agreement is the way to end the employment relationship in a mutually satisfying way. 

Employers should make sure to avoid cardinal mistakes when ending an employee’s contract and aim at smoothly ending the employment relationship or resolving an ongoing issue in the workplace, like disputes over sick pay. 

Once the employee signs the agreement they are giving up their right to take a claim to the employment tribunal. That’s why employees must be well-informed before entering into a negotiation process so they can make decisions in their best interest. If you are considering a settlement agreement with your employer, here are some useful tips! 

Settlement Agreement: the basics

Simply put, settlement agreements are made between employers and employees when there is an issue in the workplace that needs to be resolved. These issues typically involve disputes that have arisen from the termination of employment, but they can be used for other issues as well.

Disputes over pay, workplace harassment, discrimination, unfair dismissal, redundancy, breach of contract, and claims regarding outstanding salary and bonuses can also be resolved via this contract. At their essence, settlement agreements are designed to help both sides reach a mutually acceptable outcome and agree on terms that both parties are legally obliged to adhere to. 

The standard terms of the agreement


Compensation from your employer for agreeing to terminate the contract is a standard part of a settlement agreement. So is a reference about your employment that has to be true and accurate. In addition to this, both parties need to agree on the form and the wording of it.  Also, it is common for the employer to contribute to covering the employer’s expenses of getting legal advice. An expert employment lawyer will help you negotiate this part.  

Consider thoroughly what to negotiate

Before entering into a settling agreement, make sure to determine your minimum entitlements and what you wish to gain with this legal document. Research the law relevant to your matter, so you understand your rights and position better.

It is not uncommon for businesses to face legal challenges, so they probably have defined packages they typically offer. It can be helpful to find out what your employer’s general approach to settlement agreements is. For example, when the goal of the settlement is to end the employment relationship, it can order your employer to give you a reference. 

Get independent legal advice

Getting qualified legal guidance is always a smart move. And in this case, independent advice is a legal requirement. You need to be protected and your settlement has to meet certain legal conditions, so getting legal advice is vital for it to be valid and binding. 

For instance, you may not be aware that pursuing a claim individually with a specialized refund team can help you receive a better class action refund and a larger payout in comparison to joining a class action.   A skilled and experienced lawyer will know what needs to be included in the agreement and they will know exactly how to negotiate the benefits you wish to receive. Also, they will make sure you are fully informed and the agreement is in your best interest. 

Understand the negotiation process

Typically, the employer will propose the agreement. Bear in mind that the process of reaching the final agreement has to be fair and voluntary. So, when an employer asks you to sign a settlement agreement you can negotiate the terms, including the amount of the financial compensation. 

Even when the employer tells you that the agreement is non-negotiable and final, in most cases there is room for negotiating the terms further. You want to increase the value of the settlement agreement, so make at least one attempt towards terms that meet your expectations. 

Check the terms of the offered settlement agreement carefully

Regardless of what your employer is offering, always bear in mind that you are not legally obliged to agree to those terms and sign the agreement. The purpose of the negotiation process is to get a settlement that meets your expectations. When you receive the agreement, review it thoroughly to determine whether the terms are in line with your interests. 

Final thoughts 

A settlement agreement can be a good way to decently end an employee-employer relationship that is no longer working well. It can help you receive the compensation that you deserve and take a good reference into your new place of employment. Whatever benefits you are hoping to receive, it is vital to research the law, understand the negotiation process, and get quality legal advice from experienced lawyers. 

About the author: Mike Johnston is an avid blogging enthusiast and experienced freelance writer. He’s a regular contributor to numerous online publications, where he writes about business, finance, technology, and management.