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What do I need to consider when offering an employee a settlement agreement?

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Settlement agreements can bring an end to any claims from an employee such as, claims for unfair dismissal or discrimination arising out of the employee’s employment or termination. If executed properly settlement agreements will remove the risk entirely of any claims being brought at a later stage by an ex-employee. There are several things you must consider when offering an employee a settlement agreement.

Does the package ensure that the employee is properly compensated?

Consider the salary and seniority of the employee– you would like to come to an agreement so it is important to ensure they are likely to accept the offer and a sensible figure is being proposed.

Do you want the employee to continue working from the date of the agreement until termination?

If not, a solicitor can deal with this in the agreement if their contract does not adequately provide for this.

Does the employee hold any property that needs to be returned?

Include arrangements for return of property – including the arrangement for destruction of confidential material (both physical and digital).

Does it adequately waive all claims?

A solicitor can draft the agreement to ensure that it not only covers actual claims they could bring but most other claims to ensure a line is drawn in the sand and both parties can move on.

Are there ongoing tribunal proceedings?

If so, a solicitor will help ensure the agreement is clear that the employee must withdraw their claim fully and adequate indemnities are in place in the event they do.

Are there adequate confidentiality provisions?

Ensure there is a confidentiality clause in the agreement that prevents the employee from sharing any confidential information belonging to the company. You should also make clear that they agree not to disclose the settlement terms to anyone unless in limited circumstances i.e. sharing that information with advisers and their immediate family.

As specialist employment solicitors our team will ensure that you will reduce as far as possible the risk of any claims being brought against you. To speak with a member of our employment law team regarding settlement agreements please contact us on 0161 696 6170.

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