Settlement Agreements – DAY 3 of 3 – The role of the lawyers and finalising the agreement

Bob is now seeking independent legal advice on his settlement agreement. He wants everything finalised as soon as possible. We explain to the employee the terms and effect of the settlement agreement and, importantly, the agreement is a full and final settlement of any issues or potential claims. Bob therefore will understand the terms of the agreement and its effect upon his or her ability to present a complaint to an Employment Tribunal. Usually, the employee accepts a sum of money in return for agreeing not to bring certain legal claims against the employer. In this way, the employees’ rights are ‘settled’. It is usual for us to sign a certificate confirming that independent legal advice has been given. In a settlement agreement, there is generally a clause setting out that the employers offer to pay a contribution towards the legal costs incurred by the employee in taking advice on the terms and effect of the agreement, although, law does not require the employer to make such a contribution. The contribution normally ranges £250 to £1,000, and may or may not include the VAT element. The present ‘going rate’ varies across the country and different occupations, and may depend upon the amount of compensation being paid to the employee. Most contributions usually range from £350 plus VAT, up to £2,000-£3,000 plus VAT for more senior employees. We do not tell an employee whether or not to sign a settlement agreement. As stated above, our role is to advise the employee on the terms and effect of the agreement. We aim to give the employee the best possible information to enable them to make the most informed decision possible. After advising the employee and obtaining their signature, we aim to finalise the agreement as soon as possible, we may need to propose some amendments to the agreement but we aim to finalise the agreement as swiftly as possible, subject always to the instructions of the client.