Negotiation for settlement agreements might seem daunting at first, but it’s a necessary part of the process to achieve an outcome that both parties are happy with.
Because settlement agreements are usually part of a process that’s been particularly stressful for all involved, it can feel like the weight of the world is on your shoulders.
The good news is that it doesn’t have to be complicated or daunting, though, and we are on hand to help guide you through the process.
If you would like to be connected to a specialist employment solicitor near to where you live or work now to discuss negotiation of a settlement agreement, please either call us now on 0845 1391399 or complete a Free Online Enquiry
What Is A Settlement Agreement?
In its simplest terms, a settlement agreement involves an employee waiving their right to legal action after leaving their employment in exchange for a settlement payment.
It’s regularly used in redundancy arrangements and every settlement agreement is likely to look different, given the individual circumstances, differences in salary, other benefits and where there is evidence of unfair dismissal or other extenuating circumstances.
You might have been offered a settlement agreement and you’re not sure what to do next, which is perfectly understandable.
If you find yourself in a position where redundancy is a possibility, you should be aware that your employer MUST follow a fair redundancy procedure in order to avoid unfair dismissal or legal action in the future.
This means applying fair selection criteria, consulting with employees, explaining the reasons for redundancy, exploring alternative options, and allowing employees the opportunity to appeal the decision.
Settlement Agreement Negotiation Tactics
The best thing to do in this situation is to seek expert legal advice from an employment solicitor to ensure that you get the best possible support from the very beginning.
Employment law can be tricky to navigate and having a solicitor fighting your corner will ensure you get the best outcome for you.
A settlement agreement must include everything relevant to the situation, which certain things such as:
- A termination payment – this is financial compensation for the end of the employee’s time in your employment
- Any remaining salary, notice pay, holiday pay, bonuses, commission, and any other figures as a payment
- A written agreement for the employee to waive their right to bring legal action at a later date via employment tribunal or otherwise
- A signature by a solicitor, union official, or Citizens Advice Bureau advocate
- A non-disclosure clause
- A ‘non-derogatory clause’ where both the employee and employer agree not to say anything negative about each other
It might be that there are additional clauses, payments, terms, and agreements included, but this is all a part of the negotiation process.
Settlement Agreement Negotiation Template
The most important thing to remember when you’re negotiating a settlement agreement is that you’re probably not going to get everything you want.
That’s because you are going to have certain things that you want out of the agreement and so is your employer.
Knowing and understanding that will stand you in good stead when it comes to negotiations; what is it that your employer is looking to achieve and how can you use that to strengthen your negotiating position?
The best template for any settlement agreement negotiation is to have a clear idea in your mind of what represents a fair agreement, start at your ideal point and then meet in the middle.
The reality is that you’re probably looking for a quick resolution to give your financial security and certainty in your future.
When you’re negotiating, you’ll also need to be aware of the tax rules on compensation and termination payments.
The first £30,000 of any termination payment (not including notice pay or pay in lieu of notice) is tax-free, but anything over and above that figure will be subject to tax rules.
The rules cover statutory redundancy pay, additional severance or enhanced redundancy pay, and non-financial benefits such as company cars, tech, and any other property you keep.
Employers will also pay employer Class 1A National Insurance on any cumulative amount over £30,000, which could affect their willingness to agree to certain compensation amounts.
Settlement Agreement Solicitors Near Me
Settlement agreements can be difficult to negotiate.
Knowing where to begin in what is already a difficult situation isn’t always easy…
But the good news is that if you need any help with negotiating a settlement agreement, or just the process in general, we’re here to help.
Solicitors Near Me have expert employment solicitors we can connect you with for FREE…
You’re under no obligation to press ahead with the solicitor we connect you with and until you decide to proceed, everything is completely FREE.
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