What is a settlement agreement and offer and how to get a settlement offer from an employer-HRSolver
What is a settlement agreement? A settlement agreement is an agreement which terminates employment by giving an employee money in exchange for the employee not taking the employer to an employment tribunal. A settlement agreement will normally cover a lot of legal jargon and employment laws and will reference your contract of employment. It will in short be saying the company or your employer will pay you X and define your notice and any holiday payments in exchange for you not taking an employment claim with all of the employment rights that you have. For instance, discrimination legislation and claims for unfair dismissal. In terms of size it’s normally 12 to 15 pages long with a couple of schedules that will list the legislation referenced within.
So now you understand the basic principles, let's talk about the process
A settlement agreement is normally drafted by an employer and handed to an employee to take to a solicitor. (Sometimes the employer might send the agreement to the solicitor).
A settlement agreement normally comes after an ‘off the record conversation’ or a ‘without prejudice conversation’ with you and a manager or and HR professional present after which a formal offer letter for settlement agreement is issued to you in writing. Sometimes an offer letter is bypassed, but the settlement legislation is clear that you should be given at least 10days to consider the settlement proposal made in writing, as well as being offered to be accompanied to any off the record conversation. The key point you should remember if you are considering a settlement offer right now, is that you are absolutely free to refuse the offer, you do not need to take it! You do not need to end your employment! You might love your job and this has come straight out of the blue for you! If that’s the case, don’t be hasty, ask for an extension to any deadline or better still refuse the proposal. Although the letter should spell out all of the proposed payments and termination dates and likely will also give you a deadline for the proposal and it might also have a line which says after a certain period the proposal will no longer be on the table. Believe me when I say don’t fall for it. Classic take away sales maneuver, if your employer is prepared to pay you to leave now, I am 99% sure they will still be prepared to pay you in a month to two months time when things seem even more strained, you might also get an even better offer then! So don’t be afraid to wait it out.