Frequently Asked Questions about Settlement Agreements
Leaving a job can be an emotional and overwhelming experience, especially when legal documents and negotiations are involved. But don’t worry—if you are facing a settlement agreement, Geoffrey Caesar is here to make things as smooth and straightforward as possible.
His goal? To help you navigate the process confidently and get the best outcome.
Geoffrey’s Settlement Agreement Solicitor podcast dives into the details of every aspect of settlement agreements. Browse episodes to find what you are looking for.
Looking for a quick answer without listening to a podcast or reading the transcript? This FAQ page answers some of the most common questions Geoffrey gets about settlement agreements.
1. What is a settlement agreement?
A settlement agreement is a formal contract between you and your employer. In short, it ends your employment, and in return for a financial settlement (and sometimes other benefits), you agree not to pursue claims in an Employment Tribunal.
2. What makes a settlement agreement legally valid?
For a settlement agreement to hold up legally, it must:
- Be in writing.
- Address a specific complaint or dispute.
- Be signed only after you’ve received independent legal advice from a qualified solicitor with the necessary insurance.
- Confirm that all relevant legal conditions have been met.
The agreement won't be enforceable if any of these conditions are missing.
3. When is a settlement agreement a good option?
A settlement agreement can be a win-win solution in many scenarios, especially when both sides want to avoid a tribunal.
Typical situations include disputes over unpaid wages, discrimination claims, breaches of contract, or even performance disagreements. Sometimes, high-level employees facing changes in company strategy or mergers also opt for a settlement to move on amicably.
4. What are the benefits of a settlement agreement?
By choosing a settlement agreement, you:
- Avoid the lengthy, costly, and stressful tribunal process.
- Secure a guaranteed financial settlement.
- Can negotiate a positive reference and even other perks, like extended benefits or a confidentiality agreement.
- Gain the ability to wrap things up quickly and amicably.
5. How much money will I receive?
The amount you receive depends on several factors, such as your role, the nature of your dispute, and how well you negotiate. Geoffrey is a highly skilled negotiator with over two decades of experience and will work hard to get you the best possible outcome.
6. What types of payments are typically included?
Most settlement agreements cover:
- Your regular pay up to the end of your employment.
- Payment in lieu of notice (PILON).
- Termination payments (including ex gratia payments).
- Bonuses, shares, or long-term incentive plans (LTIPs).
- Compensation for any post-employment restrictions or confidentiality clauses.
7. Can non-financial terms be part of a settlement?
Absolutely. You can ask for non-financial perks like a reference, gardening leave, career coaching, or even keeping your company car, phone, or laptop. The key is to negotiate terms that make the transition smoother for you.
8. I’ve been offered a settlement agreement—what should I do next?
Getting expert legal advice is crucial as soon as you’re offered a settlement. Geoffrey focuses exclusively on settlement agreements, so you’ll be in the hands of a specialist who knows precisely how to guide you through this process.
9. Will I have to pay tax on my settlement payment?
Payments under a settlement agreement are generally split into two categories:
- Contractual payments (like holiday pay or bonuses) are taxable.
- Compensation payments (ex-gratia payments) are tax-free up to £30,000.
10. Is the agreement confidential?
Most settlement agreements include a confidentiality clause. Breaking it can result in losing part (or all) of your compensation, so it’s vital to get legal advice. Geoffrey can advise you on what you and your employer can and cannot say and to whom.
11. What claims am I giving up?
Signing a settlement agreement usually waives your right to bring any further employment-related claims against your employer. However, some claims, such as personal injury or breaches of specific statutory rights (like redundancy or TUPE issues), cannot be waived.
12. How does a settlement payment compare to a tribunal award?
A settlement will usually result in a higher payout than a tribunal. Plus, you avoid the risk of losing in court. Settlement agreements also benefit you from confidentiality, unlike a public tribunal process.
Settlement Agreements tend to be concluded in days or weeks. By contrast, the tribunal process can take years from the time of issuing the claim to the conclusion of the matter, with no guarantee of a successful outcome.
13. Does my age affect my payout?
It can. Younger employees might face fewer challenges in finding a new job, potentially reducing their settlement. However, if you’re older or more specialised, and therefore less likely to find a comparable role, that could increase your payout.
14. Can I still settle if I’ve already left my job?
If you’ve already left or found a new job, your employer may be less inclined to offer a generous settlement as the financial need for compensation diminishes. However, negotiations are still possible.
15. How does my salary impact the settlement?
Your salary, along with any bonuses or commissions, directly influences the size of your settlement. Higher earners typically receive larger payouts.
16. Can bonuses or commissions be included in my settlement?
While bonuses and commissions aren’t always guaranteed, Geoffrey will fight to ensure that as many of these entitlements as possible are included in your final payout.
17. Does having a disability affect my settlement?
Yes. If your disability makes it harder for you to secure another role, you may receive a higher settlement as compensation for that challenge.
18. What if I’m facing disciplinary action?
If your employer blames you for the relationship breakdown, this could reduce your settlement. However, Geoffrey can still push for a favourable outcome if discrimination or unfairness is involved.
19. I’m a victim of discrimination. Do I get a higher payout?
If you can prove discrimination under the Equality Act 2010, this could lead to a higher payout due to the reputational risk to your employer.
20. I’ve submitted a grievance. Does that impact my settlement?
Yes, it might. Employers often prefer to settle rather than spend time and resources investigating grievances.
21. What does ‘without prejudice’ mean?
‘Without prejudice’ means that any offers or discussions made under this label can’t be used against you if the dispute escalates to a tribunal.
22. Does my notice period matter?
Yes, your notice period is a key factor in negotiations. A longer notice period may give you leverage to negotiate for additional pay.
23. Does company size matter?
The size of your employer can influence the settlement. Larger companies often have more resources but may also be more aggressive in their legal defence.
24. Will long service get me more money?
Typically, the longer you’ve been with the company, the better your chances of securing a larger settlement.
25. Can I settle if I’m on a performance improvement plan (PIP)?
Employers may prefer to settle if you’re on a PIP rather than continue the process, as this allows them to part ways without the risk of a tribunal claim.
26. What if I’m on sick leave?
Employers may find it easier to offer a settlement rather than continuing to pay sick leave, allowing them to move forward and you to focus on recovery.
27. I’ve already filed a tribunal claim—can I still settle?
Yes, you can still reach a settlement even if your claim is already in the tribunal process.
28. Does whistleblowing affect my chances of a settlement?
If you’ve made a protected disclosure under whistleblowing laws, certain clauses (like confidentiality agreements) might not be enforceable. We’ll ensure your rights are protected in these cases.
For personalised advice or to get started, contact Geoffrey now.
Freephone: 0800 0614 816
Email: geoffrey@settlementsolicitor.uk