Should You Accept an Employment Settlement Agreement?

During an employment dispute, an employer may offer the disputing employee a financial settlement agreement to sign. As part of a settlement agreement, the employee is often required to drop their dispute to receive compensation. Companies hate dealing with long and complex employment disputes. This is one of the main reasons why many employers are so quick to offer a settlement agreement. The question for employees is this: should they accept the offer being presented to them? This article is a quick guide to the questions that employees should consider when they have received a settlement offer.

Why Are You Being Offered a Settlement?

Employees should scrutinize the reasons why a company might be offering a settlement before even considering accepting. Here are some of the most common reasons why companies offer Settlement Agreements to their employees:

Strength of Claim

Your employee may be offering you a settlement agreement because they are concerned about the potential strength of your claim. If you have a very strong claim, you could end up at a tribunal which leads to the company paying out far more money than the settlement they are offering. If you have a strong claim based on wrongful dismissal or discrimination, a company’s legal team may advise them that a quick payout is far better than the embarrassment or the bad publicity that a lengthy court case would entail. Ultimately, companies might be trying to save their own skin by offering a settlement.

Termination Protocol

Some companies offer settlement agreements as a matter of course following termination or redundancy. These settlements are far simpler and should generally be taken. They are not usually offered as a way of saving a company’s reputation, but rather as a method of tying up ‘loose ends’ at the end of employment.

To Keep You on Side

Some companies offer settlements to keep employees on side after an incident or termination. Before accepting one of these agreements, it is worth asking yourself: do you want to be obligated to loyalty?

Can You Negotiate?

Before accepting a settlement agreement, it is worth asking yourself whether you will be able to negotiate the terms of said agreement. Companies typically want to avoid protracted negotiation proceedings, but that should not obligate an employee to accept blindly. If you have good legal counsel, you will be able to negotiate unfair settlement agreements according to the conditions you have had to endure. Negotiation is a legal right in the United Kingdom.

Do You Have Good Counsel?

Before even considering whether you should accept a settlement agreement, you need to contact a lawyer. Most employment law teams will agree to look at a settlement free of charge so that they can consider whether to take on a case. If you don’t have the advice of a good lawyer, you may as well be going in blind – unless you have the legal experience yourself. This should be avoided if possible as you’ll be putting yourself in a difficult situation to being with.