Settlement Agreements

Settlement (Compromise) Agreements

Since the introduction of compromise agreements (now called settlement agreements) in 1993, Andrew has advised on literally thousands of dismissals and settlement agreements, for employers and employees, with individual deals worth from a few hundred pounds to well in excess of £1million. For even the most basic agreement, there are lots of things to consider on both sides, such as:

• Termination date.
• Payment of salary until the termination date.
• Payment of any outstanding expenses or loans.
• Bonuses and incentive schemes - what is to happen?
• Payment in lieu of any accrued but unused holiday entitlement (or repayment of any holiday taken in excess of entitlement).
• Payment in lieu of notice.
• Compensation for loss of employment.
• Compensation for loss of collective consultation rights.
• Continuation of specified benefits after termination, including any conditions to which the compensation or continuation of benefits are subject.
• Pension rights/enhancements.
• Disability/health issues; tax implications.
• Purchase of company property, such as company car.
• Payment of outplacement fees.
• Contribution to legal fees.
• Waiver of claims by the employee, including warranty that the claims listed are the only claims which the employee has against the employer.
• Reciprocal settlement of claims.
• Withdrawal of any tribunal proceedings.
• Tax treatment 
• Indemnity from employee in relation to tax and National Insurance contributions.
• Consequences if claim is subsequently pursued.
• Return of the employer's property.
• Warranties from the employee that the employee does not have an existing job offer and that they have not committed a serious (but undisclosed) breach of contract.
• Sale or transfer of any shares held by the employee in (or on behalf of) the employer or any parent, including both shares held beneficially and those held in a nominal capacity because of the employment.
• Reference.
• Resignation from all directorships, offices, trusteeships or other appointments held because of employment by the employer.
• Garden leave until termination.
• Re-assertion or modification of existing restrictive covenants.
• Confidentiality of the employer's information.
• Confidentiality of the terms and existence of the severance information.
• Employee living in employer’s property?
• Agreement on announcement or press releases.
• No derogatory comments clause.
• An entire agreement clause (but first check if there are any existing terms that should remain in place).
• A governing law and jurisdiction clause.
• A clause which provides that the agreement is without prejudice and subject to contract until signed and dated by both parties.

If you are thinking of using - or have received - a settlement agreement, please contact us to discuss what needs to be done. 

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