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Settlement Agreements – Employees


At ELP Arbuthnott McClanachan we deal with new Settlement Agreement cases on a daily basis. You may never have come across a Settlement Agreement before, but we can advise you on what is a good deal, what is a bad deal, what you should negotiate on, and what else you need to do to protect yourself. And we can do all the work for you!

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Employment Law Team who deal with Settlement Agreements at ELP Arbuthnott McClanachan

ELP are Edinburgh’s experts in Settlement Agreements. We are specialist employment law solicitors, and we deal with all aspects of employment law and Settlement Agreements on a daily basis.

If your employer has issued you with a Settlement Agreement you should contact us straight away for a no-obligation discussion. We guarantee:

We have provided some information below in relation to questions which we are commonly asked about Settlement Agreements. If you feel that we can be of assistance please do not hesitate to telephone or email us in the first instance. We appreciate that employment law situations can be sensitive and even upsetting, and for that reason we try to ensure that our clients feel as comfortable as possible when dealing with us.

Why Use ELP – Employment Law Practice?

ELP are Edinburgh’s leading specialists in Settlement Agreements. We are specialist employment law solicitors, and we deal with all aspects of employment law and Settlement Agreements on a daily basis.

Settlement Agreements can cover a whole range of issues, such as compensation payments, notice pay, holiday pay, share options, pension arrangements, employment references, confidentiality, intellectual property, and restrictive covenants (which seek to restrict employees’ ability to work in certain areas after their employment ends). All of these issues can involve complicated points of Employment Law, and it is important that employees take advice from a specialist Employment Law solicitor who can give well-informed advice. ELP seek to ensure that any payments or benefits being offered to employees are sufficient to justify them signing a Settlement Agreement and waiving their legal rights against the employer. We also seek to ensure that the other terms of any Settlement Agreement are reasonable, and will not adversely affect the employee in the future. Settlement Agreements can also raise complicated tax questions, and we seek to ensure that employees understand these before proceeding.

At ELP we are in a position to offer employees the best possible service on all aspects of Settlement Agreements and Employment Law. Here are some examples of the benefits that we offer our clients:

What is a Settlement Agreement?

A Settlement Agreement is a contract which employees often enter into with employers when they are leaving their employment. Settlement Agreements are particular kinds of contracts which derive from Employment Law legislation. They have to be in a specific form to be effective, and they can only be entered into if the employee has been advised by a specialist Employment Law adviser, such as an Employment Law solicitor.

Settlement Agreements are entered into in a variety of situations. The most common situation is when an employee has agreed with the employer that the employment is to come to an end, for example because of redundancy, or by mutual agreement, and the employer has proposed a severance package under which the employee will receive various benefits on leaving the employer. The kinds of benefits typically covered by a Settlement Agreement include compensation for loss of office or employment, notice pay, holiday pay, share options, pension arrangements, employment references, and any other benefits arising from the employment itself.

Settlement Agreements are also entered into in more contentious situations where there has been a dispute between the employee and the employer, or where there is a potential dispute between them. For example, an employee may feel that there has been an unfair dismissal, or an unfair selection for redundancy. The employee may feel that there has been a breach of the employment contract, or that the employer has discriminated against the employee unlawfully. The employee may simply feel that the employer has been treating the employee unfairly. Either the employee or the employer may feel that the employment relationship is not working, and that the best thing to do is to bring it to an end by way of a Settlement Agreement. In all of these situations the employee will have potential Employment Law claims against the employer, and Employment Law provides that the only way in which to validly settle these claims is through a Settlement Agreement. Settlement Agreements can be entered into either before the employment relationship ends, after it has ended, or even while Employment Tribunal proceedings are ongoing.

Settlement Agreements have different purposes for different parties. For employees, Settlement Agreements provide details of the payments and benefits which the employee is to receive on leaving the employer, and they give the employee a contractual right to receive them. Settlement Agreements can also provide that the employee will receive a particular form of employment reference in the future. For employers, the real purpose of Settlement Agreements is to allow them to agree with the employee that in exchange for giving the employee certain payments and benefits, the employee will agree that there will be no future legal action by the employee against the employer. Settlement Agreements are designed to give the employer peace of mind, in that they provide that the employee will waive any Employment Law claims that might be made against the employer.

Because an employee who signs a Settlement Agreement is likely to be agreeing to waive their Employment Law rights against the employer, Employment Law legislation has put in place strict requirements that have to be followed when entering into a Settlement Agreement. These requirements, in particular the requirement that the employee be advised by a specialist Employment Law adviser, such as an Employment Law solicitor, are designed to safeguard the interests of the employee, and to ensure that the employee does not waive any Employment Law claims without receiving proper professional advice.

At ELP we are in a unique position to provide employees with the best possible advice on all aspects of Settlement Agreements and Employment Law.

Who Can Advise Employees On Settlement Agreements?

In order to protect the interests of employees, Employment Law legislation provides that employees can only validly waive their Employment Law claims if they have been advised by a specialist Employment Law adviser, such as an Employment Law solicitor.

When an employee enters into a Settlement Agreement, they must receive advice from what is known in the legislation as a “Relevant Independent Adviser”. Employers will insist that employees do this. The reason for this is that if an employee does not take the proper advice, the employer could find that the employee does not validly waive all Employment Law claims, and that the employee can still take legal action against the employer despite the employer having made payments to the employee under a Settlement Agreement!

“Relevant Independent Advisers” include not only Employment Law solicitors, but also some some trade union representatives and advice centre workers. However, we would strongly recommend that employees take advice on Settlement Agreements from specialist Employment Law solicitors such as ourselves. The reason for this is that Employment Law is a complicated area, and it is important that employees obtain specialist advice before they sign away their Employment Law rights.

At ELP we are in a position to provide employees with the best possible advice on all aspects of Settlement Agreements and Employment Law.

Possibility of Free Legal Advice:

Although Settlement Agreements are beneficial for employees, in that they can provide employees with a contractual entitlement to receiving payments, benefits, and employment references on leaving an employer, it is fair to say that it is the employer who has a real interest in concluding a Settlement Agreement. The reason for this is that employers want to be as sure as possible that if they pay an employee a reasonable sum of money when ending the employment relationship, they will not also be faced with any Employment Law claims or other legal action by the employee. If a Settlement Agreement is entered into, this gives the employer the best possible peace of mind that the relationship will be brought to an end by agreement, and without litigation. Employers are therefore keen for employees to sign Settlement Agreements when a severance package or settlement is being agreed.

As a result of this, the standard practice that has emerged is that employers will offer to pay an amount towards the legal fees incurred by an employee when taking legal advice on a Settlement Agreement. The amount paid by the employer can vary, but at ELP we have adopted a policy that wherever possible in straightforward cases we will only charge the employee the amount of legal fees that the employer is willing to pay. We have this policy because we know that if an employee’s employment is ending, the last thing they want to be faced with is a bill for legal services. We also feel that as it is often the employer who tells the employee that the Settlement Agreement must be “signed off” by an Employment Law solicitor, it is fair for the employer to meet the cost of this.

However, it is important to stress that even if an employer is paying for an employee’s legal advice, as a firm of solicitors ELP always ensure that whatever we do is in the best interests of the employee. The employee is our client throughout the Settlement Agreement transaction, and the employer is not. If we feel that the provisions of a Settlement Agreement are unfair or unfavourable, we will make sure that the employee knows this, and we will ensure that the employee is aware of the other options available, whether they be to refuse the Settlement Agreement, to seek to negotiate better terms, or to proceed with formal legal action through a Court or Employment Tribunal. Our aim is to make sure that our employee clients make the best decision for them with a full understanding of their options and the relevant aspects of Employment Law.

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This was our first time buying a property, and we were extremely nervous, but Lisbeth-Ann and the team held our hands and stepped us through each stage of the process; from advising how much to offer, to helping with a mortgage problem, to ensuring the smooth exchange of contracts and keys. We always felt like we were welcome to call at any time, and when Lisbeth-Ann took a short holiday part way through the process, her colleague Barbara picked our case up seamlessly and with no hassle. We would certainly recommend ELP’s services to anyone thinking of buying a property for the first time, and will happily use them again in the future.

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A highly efficient service from the team at ELP. Took the stress out of buying our property.

Thanks Barbara

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