Offering you a sense of closure and facilitating a smoother transition as a result of your employment termination.
Settlement agreements often reduce the time and stress of going through a difficult situation such as a grievance or disciplinary process for both parties involved in the process.. They can also provide effective compensation and in many cases a reference.
If offered correctly, settlement agreements are often an amicable way of terminating employment on good terms.
When you agree to a settlement agreement, this waives your rights to bring claims against the your employer (with some exceptions, including pension claims and personal injury claims that have not yet arisen etc.). As you are giving up your rights to bring about these claims, it is vital that you receive independent legal advice.
Our Employment team will be able to advise on any potential claims that you could be giving up by accepting the settlement agreement.
The agreement will specify any sums being paid. Normally this will include pay and other benefits up to the termination date, which will be subject to tax and national insurance in the normal way. In addition, you would expect to receive holiday pay (less tax and national insurance) for untaken holidays which have accrued during the period from the start of the holiday year up to the termination date.
Since you are waiving your right to bring any claims, the amount of compensation should reflect closely to the value of the claims they are giving up.
For a settlement agreement to be effective, you must have received independent legal advice on the effect of the agreement.
You must name your adviser in the agreement and have a current contract of insurance or professional indemnity insurance, covering the risk of a claim against them in respect of the advice. Hence why this will almost always be signed off by an employment lawyer. In most cases, your employer will agree to pay a contribution in relation to obtaining advice on the agreement.
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