Understanding Your Rights with an Agreed Settlement

Settling a legal dispute outside of court with an agreed settlement can often save time, reduce costs, and eliminate court fees.

Whether you’re dealing with an employment tribunal, a personal injury claim, a divorce, or a business disagreement, it’s essential to understand your rights before signing anything.

Taking employment law as an example, this blog aims to help you understand your legal rights during a settlement agreement.

What is a Settlement Agreement?

A settlement agreement in employment law is a legally binding contract between an employer and employee which ends an employment contract, usually with a severance payment.

Negotiations typically involve a financial payout, an agreement to waive legal claims, the return of property, and a confidentiality clause.

When companies offer settlement agreements, they tend to be in exchange for employees forfeiting their right to an employment claim such as unfair or constructive dismissal and discrimination based on gender or disability.

Legal Rights Before Signing

Before signing such an agreement, it’s important to understand your legal rights, particularly your right to legal advice, right to clarity, and right to compensation.

Right to Independent Legal Advice

In the UK, you have the right to independent legal advice before you sign a settlement. In many cases you may find that your employer covers at least a portion of these legal fees, helping to ensure that you’re fully informed.

Right to Consideration Time

While an agreed settlement is usually used to avoid a drawn out process of a court case or tribunal, you do still have the right to time to consider whether or not to accept or to pursue statutory claims against your employer.

Right to Negotiate

There’s no requirement for you to accept the first offer in compromise agreements, you have the right to negotiate for more money, or even remove certain restrictive covenants. Of course, negotiations can increase the time the proceedings take to resolve. So it’s important to weigh up how fast you want a settlement, whether you’re happy with the offered terms, and whether you have a grievance that you’d likely win.

Key Clauses to Watch Out For

Agreed settlements typically come with clauses, and breach of these could require you to pay back any money given.

Common clauses include, but are not limited to, confidentiality whereby parties are prevented from discussing the circumstances that led to termination or even the details of the settlement contract; a waiver from making a potential claim regarding prejudice, the redundancy procedure, or unfair dismissal; or a reference for future employment.

What Happens After You Sign Compromise Agreements?

Once you have signed your agreed settlement, it becomes legally binding, and you can no longer pursue any claims against your employer. It is a clean break for both parties.

There are some circumstances in which this can be overturned, for example if it’s found that you were misled, forced to sign, or did not receive legal advice.

However, it is rare for agreed settlements to be voided, so it’s important that you consider your options carefully before you sign.

Do you need legal advice for a settlement agreement or employment tribunal?

Contact our team at Dickinson Parker Hill today!