Settlement Agreement

An Employment Settlement Agreement is a contractual agreement which has legally binding effect, between an employer and an employee. They are commonly used for settling a dispute between the employer and employee, or can be used for other purposes like ending employment between the employer and employee. Ben is able to assist and advise employers and employees on Employment Settlement Agreement matters.

These agreements can also have tax implications depending on the compensation amounts, which again Ben can assist and advise on.

Fees for Employment Settlement Agreement work depends on the matter and the file handlers involved. However, you can expect a fixed fee arrangement whereby the fees start at approximately £500 to £600 (excluding VAT) and rise to an average of £1000 (excluding VAT), but this could rise significantly depending on the facts and intricacy of the matter. For instance, the complexity is contingent on key factors like the contractual obligations on the employee’s contract, the compensation package, the employer which the employee works for, and the length of negotiations involved between the parties to resolve the matter and put the agreed terms in writing. As a general example, you could expect the complexity and negotiations involved for employment contracts at multinational corporations, to vary quite considerably to an employment contract at modest, high-street establishments.

On all matters, 20% VAT is charged on top of the legal fees which have been described above.

There are no disbursement charges for Employment Settlement Agreement work.

The following are examples of factors which influence the intricacy of a matter:

· Confidentiality agreements;
· Compensation structure, such as base pay, bonus payments and commissions;
· Pension structures;
· Restrictive covenants;
· Non-complete clauses;
· Termination agreements;
· Nature of the termination agreement, i.e., the language which is negotiated;
· The compensation package;
· The nature of the dispute (if any) between the employer and employee, why this dispute came about, and the negotiation process involved in trying to resolve this dispute;
· Notice period as part of the employment settlement, if any;
· Whether the matter at hand is currently being dealt with at an employment tribunal, or if the matter is in the process of being considered to be taken to the employment tribunal

Key stages (this may change depending on the facts of your matter):

· The Employment Settlement Agreement needs to be legally binding, and certain criteria needs to be fulfilled in order to have that effect.
· For instance:
o The document needs to be in writing;
o The language and purpose of the document needs to relate to the specific dispute/issue at hand between the employer and employee;
o The document needs to be signed by the employee involved in the matter, and this employee must have received independent legal advice.
§ This independent legal advice can be provided by either an authorised union representative or solicitor. In addition, the adviser needs to be clearly identified and have insurance in place;
o The Employment Settlement Agreement needs to make very clear that the requirements which are regulating the Employment Settlement Agreement are fulfilled;
o Reasonable time limits need to be given, to allow both the employer and employee to consider the Employment Settlement Agreement

Further to the above, in the most basic sense, the Employment Settlement Agreement needs to be negotiated, agreed, signed, and complied with.

Duration of a matter:

How long it takes to draft the Employment Settlement Agreement will of course vary case to case, and be dependent upon the facts of the case.

However, compensation payments following the acceptance and signature of the agreement can be expected to be made within one month.

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The payments made as part of a settlement agreement are usually tax-free up to the first £30,000. However, it must not include any standard pay, holiday pay, or pay in lieu of notice as this is taxable.

Ben Posner

Ben Posener

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