Slater & Gordon is a legal firm with a specialist employment office in Edinburgh in Scotland, which is a part of our award winning UK wide Employment Department with top ratings in Legal 500 and Chambers for acting exclusively for employees.  Because we act exclusively for individuals, we never have a conflict of interest between your needs and your employer’s needs and we understand the issues that are most important for protecting your reputation.  We offer quick, thorough and independent legal advice that is tailored to Scottish law and your needs.  We service clients all across Scotland, including Glasgow and Aberdeen. To speak with one of our team call us free on 0161 830 9642 or request a free callback online

What is a settlement agreement

A settlement agreement, formerly called a compromise agreement, is a legally binding contract that is entered into usually between an employee and an employer. It is often entered into at the end of an employment relationship to bring about termination of the employment by agreement. However, sometimes it is entered into after the employment relationship has been brought to an end by other means, such as redundancy, dismissal or the expiry of a fixed term contract.

The main purpose of the settlement agreement is generally to confer benefits on both sides. Often, for the employee, it is payment of compensation and logistical arrangements dealing with matters such as references and any other contractual restrictions which may continue to apply. The employer generally obtains promises and warranties from the employee as to how the employee will treat confidential information he or she had access to during their employment and requires the employee to give up their right to bring any legal claims against the employer, which otherwise may have arisen during and are connected to the employment relationship.

This mechanism is designed to create certainty and finality for both parties.

Is there a difference between a settlement agreement in Scotland and one in England and Wales?

The law pertaining to settlement agreements is generic across England and Wales but your employment contract is likely to have aspects that need to be considered specifically in relation to the law in Scotland (rather than the law in England and Wales), in particular regarding post termination restrictions/restricted covenants, and contract matters in Sheriff Court. It is essential that you get the right legal advice in these circumstances and that is why if you are based in Scotland, you need a Scottish lawyer. In our Edinburgh team, we have solicitors and partners with experience working on both sides of the border.

Do you need a solicitor for a settlement agreement?

Yes. In order to enter into a valid settlement agreement, you must have independent legal advice from a solicitor or other suitably qualified person (such as a suitably qualified trade union representative). More importantly, under a settlement agreement you are asked to give up your legal rights and give warranties and promises about matters and it is essential that you understand what it is you are signing.

For some clients, they are resolute that the deal is a good one and they wish to proceed. Others may need more advice on their options in order to make a decision. |Some people may want to invest time in other options rather than signing a settlement agreement straight away and we can assist with this too. We have a very unique service that we offer to employees going through a disciplinary or grievance process, which other firms do not have. Click here for information on our Executive Representatives service [click here].

Who pays for the costs of a settlement agreement?

Generally speaking, your employer will make a contribution towards the costs of obtaining legal advice about the agreement if you choose to sign the settlement agreement. Your agreement (or draft agreement) should specify the employer’s proposed contribution. We can provide advice to you within your employer’s contribution, limiting any costs which you are personally liable for. However, some clients choose to seek out wider legal advice to assist them with their decision. We can discuss with you what it is that you are looking for.

Is a settlement agreement confidential?

Generally settlement agreement conversations are “protected conversations” and are offered “without prejudice” to your legal rights. We will treat all our conversations with you as 100% confidential unless otherwise instructed. We never share the advice we give to you with your employer. Many settlement agreements contain specific clauses dealing with confidentiality of the terms of settlement and we would advise you on this.

What happens if I decide not to sign a settlement agreement?

Whether or not you elect to sign a settlement agreement is entirely your choice. We will advise you and guide you through the process. When you enter into a settlement agreement, it is normally the position that it confers benefits on you and the employer. The employer generally obtains the benefit of any claims that you may have against them are waived by you. If you elect not to sign the agreement, then you generally will not get the benefits. In that situation, if you have taken legal advice, your employer generally will not make the contribution to your legal costs, as their contribution to your legal costs was one of the benefits available under the agreement. You will remain free to pursue any legal rights that you have against your employer subject to time-limits and merits.

To speak with one of our Edinburgh team call us free on 0161 830 9642 or request a free callback online.