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Settlement Agreements (Employment) – A Potted Guide

Settlement Agreements (Employment) – A Potted Guide

Your employment contract and Employer’s Handbook contain important information about your rights and how Grievances and Disciplinary matters are dealt with. This will tell you how to deal with issues such as bullying, harassment, performance and discrimination at work.

Whatever is happening with your job, it is always best to take advice and maximise your negotiating position so that you can eventually leave on the best terms.

The law permits an employer to have a “protected discussion” with you to explore ways in which you might part company. It is important that your employer makes clear to you that the discussion is a “protected” one. It is best to let your employer set out the terms of such a discussion rather than you asking if the discussion is “protected”. If a discussion is proposed without it being made clear to you that it is “protected” you may be able to argue that your employer has undermined the relationship of trust and confidence, which is part of every employment contract, and in turn that might give you grounds for resigning and claim constructive dismissal.

A “protected discussion” typically involves you being called to a meeting and an offer being made in the form of a Settlement Agreement. You will be given a short period to take legal advice and accept the offer. An employer can also offer you a Settlement Agreement after you have resigned in order to avoid the risk to the employer of you making claims.

If you are in employment and being asked to sign a Settlement Agreement, you need advice from an expert employment lawyer. We specialise in employment law and we would be happy to advise you if you are having difficulties at work or if you are being asked to accept a Settlement Agreement.

A Settlement Agreement is a very particular form of statutory contract which brings all of your potential claims against your employer to a legal end. It is also a tax document as it records how payments are to be treated for tax purposes. A Settlement Agreement is only binding if it is supported by an Adviser’s Certificate confirming you have been advised by an insured practising solicitor.

You do not need to sign a Settlement Agreement unless it is in your interests to do so. That is why the law requires you to have independent advice.

Depending on your circumstances, it may be that you should not sign any Settlement Agreement at all or that you should try to negotiate a better deal.

The core elements of a Settlement Agreement contain financial provisions. These comprise (i) payments from which income tax and NIC will be deducted, (ii) compensation or ex-gratia payments, the first £30,000 of which is paid tax free, and (iii) a contribution towards your legal costs of getting advice about the Agreement.

Some contracts permit an employer to make a payment in lieu of notice (“PILON”) which means you are paid your notice money but are released from your employment earlier than if you had worked your notice. If your contract allows for gardening leave you could be asked to not come to work during your notice period.

A word of warning about tax. Parts of compensation payments can be taxable if your employer is not paying all of your notice money, as in this example. You are entitled to 8 weeks’ notice, your weekly pay is £500. The Settlement Agreement provides for (i) a PILON of £1,000 and (ii) compensation of £5,000. The PILON and £3,000 of the compensation will be taxed. £2,000 of the compensation will be paid tax free.

It is only worth agreeing a Settlement Agreement if that will be better than what you are getting by resigning or being dismissed.

We specialise in employment problems and would be happy to advise you if you are having difficulties at work or if you are being asked to accept a Settlement Agreement. It is always best to take advice sooner rather than later in order to protect your interests.

You can also read our more comprehensive publication: “An Employee’s Guide to Negotiating a Settlement Agreement”

Contact our specialist settlement agreement lawyers today

Please contact Cormac Cawley at The Sethi Partnership Solicitors.

Cormac Cawley
T: 020 8059 4127
E: cormac.cawley@sethi.co.uk

The Sethi Partnership Solicitors I The Barn House I 38 Meadow Way I Eastcote I Ruislip I Middlesex I HA4 8TB

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

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Very happy going with Sethi for our house purchase, the estate agent recommend another firm but they completely messed up the other links in the chain but not Sethi who had their eye on the ball from start to finish. Misbha worked hard to help us get through before the tax deadline and helped explain the various legal issues.You may not get immediate responses but they are professionals and know what their doing - just let them get on!
I cannot praise Malcolm Turner highly enough. He dealt with my mother’s estate, including a complicated trust, in a prompt, efficient and sympathetic manner. From our very first conversation, I knew I could rely on him. He always responded speedily to my emails and patiently answered any queries I had. He went on to deal with two property sales and answered queries relating to my Will. I consider myself very lucky to have found him!
Excellent service for over 20+ years, Malcolm Turner has provided a very professional, prompt and friendly service for our family. He has dealt with 2 property purchases, 3 property sales. A Power of Attorney & a Will. He explains the transactions in a very clear precise manner and his service is extremely quick! Thank you
Cormac, Anna and Misbha were the amazing Sethi team who ensured first, that I got my house sale completed by the June stamp-duty deadline and second, when I bought another one at auction five days later, they managed to get that completed in just sixteen days following the hammer coming down! I was most impressed by the service and attention to detail of this firm on all aspects of the work they did for me. I highly recommend them if you are either buying or selling a home, or dealing with complex issues around title. Top marks. Five stars all round and thank you all very, very much, you are appreciated!
Anna Randall dealt with my move and was outstanding from day one. Always available when I needed advice with prompt responses and without doubt, my move wouldn't have completed in time if it wasn't for her. Cannot recommend highly enough and have already recommended to family and friends
I have been working in the property industry for over 13 years and have to say Anna Randall at the Sethi Partnership is by far and away the best conveyancing solicitor I have ever come across.I cannot recommend her enough. First class service, professional, polite and thorough.
I would not hesitate to appoint Anna again and I would highly recommend her to anyone looking into buying or selling their property. From the start to completion her services were exceptional. Very responsive and she made the journey of buying our first property stress free. It was an absolute pleasure working with her. Thank you Anna for being a superstar and working around the clock to get us into our dream place!
We were very impressed with the way our solicitor Malcolm dealt with our wills. He was very helpful and answered all our questions. He did not give us specific suggestions but helped us make up our own minds with confidence. J+S
Great Service at competitive rates. Mishba Ali was very helpful and prompt all through my dealings with her.All queries were dealt in timely manner and i would recommend her for the professional service provided and thank her for getting my paper work completed in time
We used Sethi Partnership for conveyancing and I would highly recommend Caroline Hornett-White. Caroline is very professional, efficient kept us updated and advised us where we needed through out the process. I have already recommended Caroline and Sethi partnership to my friend who will be looking at conveyancing in the future.
Anna Randall from Sethi Partnership supported in the sale of our house and purchase of our new home. It was clearly a very busy time with the rush to complete before the original stamp duty holiday deadline at the end of March, and can say that Anna was always professional balancing the communication between email and phone, and spending the time to provide advice when required.I have already recommended Anna at The Sethi Partnership Solicitors to family looking to purchase property.
I used the Sethi Partnership for the conveyancing of the sale of my house in Hatch End and was very impressed with the efficient and effective service provided. The firm carried out the sale with little fuss and with minimal input from me. They were also responsive when I had questions. Their fees were in line with their original quote and were reasonable. I have no hesitation in recommending their services.
Anna (in conveyancing) was brilliant and kept me in the loop throughout. She is very experienced and leveraged her knowledge from past cases appropriately, as well as being meticulous in her work. Thank you for all the hard work!
I was assisted by Anna Randall with my flat purchase. It was always very easy to get in contact with her by email and telephone and I received regular updates throughout the transaction. Anna's advice helped me make difficult key decisions regarding my purchase which put me in a much better position as a purchaser.
I'd highly recommend The Sethi Partnership Solicitors and in particular Anna Randall.Anna is extremely professional and most importantly responsive, we had daily call's/emails with updates regarding our sale & purchase.We cant thank you enough.
We instructed Sethi to look after the sale of our house and purchase of a different one. We were very happy with the outcome and welcomed the candid and professional advice offered about various difficulties that arose in the purchase.What stops us from giving 5 stars is that we would have preferred to have had regular updates, even if just to say that nothing had happened, and that some of the documentation we received was hard for us to follow as it was in the form of template drafts that had not been appropriately adapted for our circumstances.However, we would unreservedly recommend the company, and in particular Anna Randall, who took very good care of us throughout.
Anna Randall dealt with my house sale. Very professional and competent, would recommend her to anyone, and use her again in the future. Great service.
Anna Randall you are a star again.... extremely efficient with extensive knowledge, helped our long-winded house purchase/sale proceed to fruition despite all the pitfalls thrown at you by our buyers. Highly recommended and details already passed onto friends who are currently buying property..
We recently sold our beloved house in London right in the middle of the COVID lockdown and restrictions. Anna and team carried out a seamless job with the conveyancing from start to completion. They were responsive and pro-active at all times which was even more important when we were abroad at times. We look forward to working with you again. Thank you!
We were very happy with the way Sethi Partnership helped with the purchase of our new property.Anna was very professional and thorough in her approach which gave us extra piece of mind and security as we knew they had our best interests at heart. Would highly recommend the firm to anyone and will be sure to use them again in the future.
Anna was instrumental in making our house sale and purchase a success! She always seemed to have our best interests at heart and gave sound and timely advice with regards to some very complex matters. Excellent service and we will definitely be using The Sethi Partnership Solicitors again. Highly recommend!
I was pleased with and grateful for Caroline's work on my sale and purchase. Very responsive and provided a professional and efficient service. While other parts of the chain were being slow, Caroline was the sane voice at the end of the phone. Thanks!
We were very happy with the Probate services Malcolm Turner provided us with. He explained everything in the right level of detail and was extremely polite and understanding. The advice he gave us, and the action he took on our behalf lead to a successful conclusion of these matters. I have since recommended Malcom Turner & Sethi Partnership to friend who is now going through Probate with his Mother's estate.
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The Barn House,
38 Meadow Way
Eastcote
Ruislip
Middlesex
HA4 8TB
tel: 020 3974 1576
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