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I have been given a Settlement Agreement to sign to leave my employment. What should I do?

This is a legal document that, once signed, waives any claims or rights of action you may have to sue your employer and any other parties named in the agreement like Group Companies or the employer’s officers or employees. In return for this waiver, the employer usually pays you (the employee) a sum of money or gives you some other benefit – like an agreed reference, letting you keep items of company property, or releasing you from certain contractual restrictions.  The Agreement will often contain other terms to control the exit and protect the employer, like confidentiality clauses and specific warranties for you to sign. It should also specify a termination date, if it is envisaged that your employment is to come to an end.

As a Settlement Agreement waives your legal rights, there is a statutory obligation that it is counter signed by a solicitor or legal executive acting purely on your behalf.  This is so that a solicitor / legal executive can explain exactly what you are agreeing to. You also then have the opportunity to take legal advice on whether what is being offered is appropriate and consider if you wish to negotiate any changes to the Agreement.

If you are interested in entering into a Settlement Agreement (whether on the terms that have been proposed or on different terms) you should make an appointment as soon as possible with our specialist employment law team to talk this through. We are happy to meet face to face or by telephone, Skype or video conference if that suits you better.  It is best not to agree any deal until you have taken legal advice.

Please do let us know If there is a date that the Agreement is to be signed by. It is helpful also for us to see a copy of your contract of employment, if you have one.

You may be concerned about the costs of getting legal advice on the Settlement Agreement: your employer should pay a contribution to your legal costs to get the Agreement properly signed, given that this is a legal requirement for the document to be valid. Check the terms of the Agreement to see what contribution has been offered.

If you already know you don’t want to sign the Agreement or you decide after taking advice that you don’t wish to, there is absolutely no obligation for you to do so. Our specialist employment law team can help advise you on your best course of action and whether you have any claim against your employer that you may want to pursue. Do be aware that if a Settlement Agreement is not signed, your employer will not pay a contribution to your legal fees and you would need to pay them yourself. Do discuss this with our team if you have any concerns in this regard.

Chris Morse, a Legal Executive within the Employment Team talks  through some of the key issues and what you should be considering on an agreed exit or Settlement Agreement in the following video:

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