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Settlement Agreements - why do I need to see a lawyer?

I am often approached by employees who have received a Settlement Agreement from their employer  indicating that “all I need is a signature from you and then I get my payment”.

Unfortunately, when executing a Settlement Agreement as a lawyer it is not quite a simple as providing a piece of paper to say that you have read the agreement and explained it to the employee.  In fact there is quite a bit more to it than that.

For a lawyer to properly advise an employee on whether they should sign away what could be substantial claims against an employer, it is necessary to do the following:-

  1. Have a detailed conversation with the employee to understand the circumstances which have led to the Settlement Agreement being produced.  There could be all kinds of issues relating to discrimination which may present the employee with a claim which could be substantial.
  2. It is necessary to have sight of the Contract of the employment and ideally the staff handbook so that the lawyer can understand the process that the employer may have followed.  The employment contract is a vital document to use to  cross check that  the employee receiving what they are contractually entitled to. 
  3. Any tax warranties and who should be paying and indemnifying  tax that needs to be paid have to be carefully checked
  4. Any restrictive covenants seeking to restrict an employee’s activity in the future labour market going forward often needs careful negotiation and drafting

    The contents  and wording of a reference is an example of an issue which frequently arises.  An employee seeking a new job on the labour market will want a good reference and this can be negotiated into the agreement

  5. The contents of the agreement have to be explained to the employee and the best practice is to ensure that the explanation is confirmed in writing.

Bear in mind the reason a lawyer is being asked to sign a certificate saying they are insured and they have explained the Settlement Agreement to the employee, is to remove the liability for claims from the employer to the advising lawyer.  If an advising lawyer effectively allows a client to sign a badly Settlement Agreement they (the lawyer) become liable to the employee. Time and care must be taken.

It is , as I hope I have explained, much more than a five minute conversation and providing a signature. 

If I can assist helping people with Settlement Agreements I am more than happy to do so.  Please contact me on telephone 01295 661 487

Mobile 07972 494945

Email rubyrai@brethertons.co.uk

Ruby Rai

Rubi Rai is a senior associate at Brethertons and works exclusively in the employment law team.