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Employment Law For Businesses

Termination And Settlement Agreements

Employment Solicitors in Manchester and London with a wealth of experience in dealing with Termination And Settlement Agreements

It is always unfortunate when an employment relationship needs to be terminated. These situations need to be handled with great care in order to avoid claims for unfair dismissal. We can offer you strategic advice and help on termination and settlement agreements so you avoid some of the common pitfalls and risks employers fall into, increasing their risks of an unfair dismissal claim.

Difficulties of terminating employment

Terminating an employment is tricky business. Some of the most common difficulties we encounter are:

  • Sickness absences
  • Preserving confidentiality
  • Tax free payments in settlement agreements
  • Bonus payments
  • Share options
  • Avoiding unfair dismissal, wrongful dismissal and discrimination claims
  • Redundancy

The most important advice we give to any clients in this situation is to follow the procedures. You should have a procedure and policy documents which will set out the termination process for issues like sickness and redundancy. It is important that you follow these procedures exactly. If you fail to follow the procedure you could expose yourself to liability at the Tribunal. 

Shares, share options and bonuses

For senior employees it is not just the pension and salary you need to consider, but also the additional compensation they receive for their employment. These rights can be incredibly valuable and need to be handled properly.

On the termination of employment there is no requirement to transfer shares or relinquish share options unless it is written in the shareholder agreement or equivalent document. If an agreement is struck regarding the shares on the termination of employment, this should be reflected in a separate agreement.

How to avoid unfair or wrongful dismissal claims

The best step you can take to avoid unfair or wrongful dismissal claims is to follow the correct procedure. Other steps you can take include:

  • Early legal advice
  • Follow your policies and procedures
  • Follow the ACAS guidelines

Settlement Agreements

A settlement agreement is a written agreement between the company and the employee outlining the terms of the termination of employment. The employee will agree not to bring any claims against the company in return for a payment. 

A settlement agreement can be used where you do not want to go through the procedure for dismissing an employee, or you are concerned about a potential claim and want to remove the risk.

For the settlement agreement to be legally binding your employee needs to get independent legal advice, otherwise the agreement cannot be enforceable. Employers generally pay for the legal advice up to a certain fee which will depend on the circumstances. You should provide a settlement agreement to the employee in advance so that they have reasonable time to consider the terms outlined in the settlement agreement. 

How can Monarch Solicitors help?

Our specialist employment solicitors have decades of experience dealing with employment issues. They are well equipped to deal with a whole manner of different cases no matter how big or small. 

Our team have had great success negotiating settlement offers, taking claims to the Employment Tribunal, and many more. Every person we represent receives the same high quality of treatment and personal service.

Legal Costs & Service Transparency

If you are considering taking Court action due to a breach of employment law the legal costs should be weighed against the amount likely to be received in damages.

We know it’s important to your business that the legal costs of the dispute are kept under control so as to not affect your cash flow.

We’ll not only ensure that you’re aware of costs implications from the outset, we’ll provide you with step-by-step cost estimates or fixed fees for each stage of the work. We’ll also consider funding options to suit your business needs so you can be sure that our legal services are cost effective.

For more information regarding legal funding options, please click here for more information.

About our Employment Team

At Monarch Solicitors, our employment lawyers have vast experience, expertise, and knowledge in resolving all kinds of domestic and international employment disputes, whether it be complex or technical or simply a disagreement over pay and working conditions.

We have particular expertise in relation to the following areas:

Contact our Employment Solicitors

Our expert employment lawyers are available to discuss about all aspects of employment termination and settlement agreements. 

Please contact our employment advisors for immediate assistance by sending an email to us at [email protected] and one of our employment solicitors shall call you back. 

Alternatively, please call our employment solicitors in Manchester on 0330 127 8888 for a no obligation discussion.

Monarch Solicitors award winning legal team are based in Manchester and London, serving clients nationally

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FAQ

Most frequent questions and answers

Employers generally offer a settlement agreement to an employee upon the termination of an employee’s employment position. However, employees can also provide their employer with a settlement agreement. The party receiving the settlement agreement are under no obligation to agree and sign the settlement agreement.

Employers tend to provide a settlement agreement to employees who have had their position terminated to prevent the risks and costs of any potential employment claims. A signed settlement agreement means the employee loses the right to make an employment claim against their employers in the future and restricts the employee from disclosing private information in relation to the company and their work to other companies.

A settlement agreement will typically state how the employment was ended, how much settlement monies the employee shall receive, and the employee agreeing not to make any employment or tribunal claims in the future. Other additional terms can be added onto the settlement agreement to implement post-termination restrictions, for example to prevent employees making any derogatory comments or disclosing private information to ensure confidentiality. It is important for employers to obtain legal advice in respect of settlement agreements so that their rights are protected.

Yes, the employee can negotiate on the terms of the settlement agreement but any proposed changes will need to be agreed by both parties. The employee can negotiate on the settlement amount they are to be paid, removing or altering the terms of the agreement, or to add on terms to the agreement such as providing a reference.

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