Employment & Benefits > Settlement Agreement
FACTS AROUND TERMINATION OF EMPLOYMENT
If you have been offered a settlement agreement, it's important to understand more about your rights and the legal implications before entering into an agreement.
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A settlement agreement is a legally binding contract that is used to record the terms and conditions of an employee's departure from the business. You would have also recieved notice of termination for the current contract of employment.
A settlement agreement prohibits an employee from pursuing a claim in a court or an employment tribunal claim against their employer. These matters are specifically covered by the agreement. Settlement agreements are a useful way of bringing an employment relationship to an end in a mutually agreed way.
We are highly experienced in advising on settlement agreements and negotiating the terms with employers. An employee must receive independent legal advice from a relevant independent advisor for a settlement agreement to be valid. We are here to ensure that the process is handled in a professional and legal manner.
Part of the settlement agreement typically includes:
- payment to the employee of any outstanding salary and holiday pay (subject to tax deductions);
- the employer making an ex-gratia payment to the employee. This is a payment made by an employer where there is no contractual obligation to do so (taxed as a termination award under sections 402A(1) and 403 of ITEPA. The first £30,000 of such payments is exempt from tax and any excess will be subject to income tax);
- waiver of claims against the employer by the employee; and
- an agreed reference.
It is common for an employer to pay towards your legal fees after you have received independent legal advice. We will always try to cover our fees by seeking payment from them rather than you.
DECIDING TO ACCEPT A SETTLEMENT AGREEMENT IS LESS DAUNTING WITH TAYLOR ROSE
We provide employment law advice and can help you reach a resolution that is both legal and correct. If you need advice or legal assistance with any of the points mentioned above, contact us to find out more about how we can help.
DO YOU NEED ADVICE?
YOUR SETTLEMENT AGREEMENT | EMPLOYMENT LAW | TAYLOR ROSE MW EXPERTS
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