Does a settlement agreement need to be witnessed?

An employment settlement agreement does not generally need to be witnessed - once signed by the employer and employee it becomes legally binding. However, if a settlement agreement has been prepared as a deed, it will need to be witnessed.

Why would an employer offer a settlement agreement?

Employers (or employees) may seek to offer the option of entering into a settlement agreement when they feel the employment relationship is no longer working and has broken down. This agreement allows for a clean break for both parties.

Do I have to agree to a settlement agreement?

Neither party is required to enter into a settlement agreement or engage in a 'without prejudice discussion' or 'protected conversation' should they not wish to do so. This process is entirely voluntary and both parties are free to decide whether they want to enter into discussions and continue with negotiations. Subsequently, both parties are entitled to decide not to sign the settlement agreement – the agreement is not legally binding until correctly signed by both parties, and the employee’s qualified advisor.

Do I need legal advice to make a settlement agreement?

Prior to signing a settlement agreement, an employee must receive independent legal advice regarding the terms and effect of signing of the agreement (the terms of which must be provided to them in writing). In the absence of this advice, the agreement will not be legally binding.

How much does a settlement agreement solicitor cost?

Solicitors would be classified as a 'qualified advisor'. The cost of a solicitor to advise on the settlement agreement will vary depending on the complexity of your agreement and situation. However, they will generally be able to provide you a fixed fee for advising on the terms of the agreement. Please do get in touch with us today for further help and confirmation of our fixed-fee offerings.

What is a confidentiality clause in a settlement agreement?

Confidentiality clauses are commonly included to ensure that the employee doesn’t disclose the existence of the settlement agreement and/or any negotiations as well as the terms of the agreement, apart from a few limited exceptions. It is common for the same obligation to also be placed upon an employer, again with some limited exceptions. Confidentiality clauses are also used to remind an employee of their ongoing duty of confidentiality in respect of confidential information relating to the company, often already included in their contract of employment.

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Settlement Agreement Solicitors

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What is a settlement agreement?

Employment settlement agreements are legally binding contracts between employers and employees (or, in rare cases, perspective employees). These are often used in the event of employer and employee wanting to agree an amicable end to the employment relationship, or, less commonly, to resolve an ongoing disagreement/dispute between parties without bringing an end to employment.

"The team at WH have a very consultative and collaborative approach with their engagements. We have actively avoided employment disputes and solved employment disputes through their consultative and collaborative approach."

Settlement agreement process

Settlement agreements can help ensure a clean break at the end of the employment relationship for both parties, with the employee waiving their right to bring claims against their employer in the future in the Employment Tribunal. From the employee’s perspective, they can often forgo a lengthy formal process and/or receive an enhanced exit package to what they would legally be entitled to if their employment ended in absence of the settlement agreement.

Prior to parties signing a settlement agreement, there will usually be discussions between the employer and employee as to the agreement’s terms, referred to as either a ‘protected conversation’ or a ‘without prejudice discussion'. This provided protection to the discussions, which are classed as then being 'off the record', so that pre-termination negotiations will not generally be admissible in any future Employment Tribunal proceedings in the event that parties cannot reach an amicable arrangement under a settlement agreement.

When entering into a settlement agreement, the legal principles and practical implications can be complex. At the very least, the employment settlement agreement should conform and comply with all formalities set out in legislation to make sure it’s legally binding. The agreement should be in writing and state that the requirements relating to the settlement agreement have been agreed, the employee must receive legal advice by a qualified advisor on the terms and effecting of signing the agreement, and the agreement should subsequently be signed by both the employee and their qualified advisor.

The terms of the settlement agreement will likely cover, inter alia:

Arrangements on termination, such as any payments in respect of notice and holiday
The agreed date of termination of the employment relationship
Any additional ex-gratia payments and the date of which the payment is to be made
The overall tax implications of the agreement based on the payments being made
Any contribution form the employer in respect of the employee’s legal costs
Arrangements in respect of company property
If the employee will be provided with a reference
If the employee is subject to any post termination restrictions
Any confidentiality obligations that parties are subject to
Any warranties that either party is agreeing to.

Navigating a settlement agreement with Wright Hassall

At Wright Hassall we pride ourselves on providing our clients with the support with their current situation as well as cost effective guidance, tailored to their specific needs.

Our employment lawyers work with employers and employees across England and Wales to help resolve any employment law issues. We work with clients in a range of industries, giving us the knowledge and skills needed to assist and advice on a wide variety of matters arising across multiple sectors.

Get in touch with us today to see how we can help!

FAQs

Does a settlement agreement need to be witnessed?

An employment settlement agreement does not generally need to be witnessed - once signed by the employer and employee it becomes legally binding. However, if a settlement agreement has been prepared as a deed, it will need to be witnessed.
Why would an employer offer a settlement agreement?

Employers (or employees) may seek to offer the option of entering into a settlement agreement when they feel the employment relationship is no longer working and has broken down. This agreement allows for a clean break for both parties.
Do I have to agree to a settlement agreement?

Neither party is required to enter into a settlement agreement or engage in a 'without prejudice discussion' or 'protected conversation' should they not wish to do so. This process is entirely voluntary and both parties are free to decide whether they want to enter into discussions and continue with negotiations.

Subsequently, both parties are entitled to decide not to sign the settlement agreement – the agreement is not legally binding until correctly signed by both parties, and the employee’s qualified advisor.
Do I need legal advice to make a settlement agreement?

Prior to signing a settlement agreement, an employee must receive independent legal advice regarding the terms and effect of signing of the agreement (the terms of which must be provided to them in writing). In the absence of this advice, the agreement will not be legally binding.
How much does a settlement agreement solicitor cost?

Solicitors would be classified as a 'qualified advisor'. The cost of a solicitor to advise on the settlement agreement will vary depending on the complexity of your agreement and situation. However, they will generally be able to provide you a fixed fee for advising on the terms of the agreement. Please do get in touch with us today for further help and confirmation of our fixed-fee offerings.
What is a confidentiality clause in a settlement agreement?

Confidentiality clauses are commonly included to ensure that the employee doesn’t disclose the existence of the settlement agreement and/or any negotiations as well as the terms of the agreement, apart from a few limited exceptions. It is common for the same obligation to also be placed upon an employer, again with some limited exceptions.

Confidentiality clauses are also used to remind an employee of their ongoing duty of confidentiality in respect of confidential information relating to the company, often already included in their contract of employment.