Should you sign a settlement agreement?

The settlement agreement can be a great option and comes with many benefits including the elimination of the need to go to court, which saves both time and money.

It’s always a good idea for employers to try and resolve a dispute before it goes to the Employment Tribunal. In many cases, they’ll actually be better off because they’ll have settled the agreement by paying off their employee.

If you’ve been offered a settlement agreement by your employer, you must obtain independent legal advice from employment solicitors such as before signing.

If your company doesn’t pay legal representation costs you might need, you’ll need to consult an employment lawyer or a union representative.

What’s in an agreement?

Typically, an employee receiving a termination payment agrees in writing to drop some legal claims in exchange for money.

Below are some of the key clauses you’ll find in settlement agreements. It is important to be aware of what factors are most important for you to discuss when negotiating the content with your contract partner.

Confidentiality clauses

Confidentiality clauses are not rare and they mean that employees cannot disclose any information concerning the agreement, their received compensation, or the reasoning behind it.

NDA’s, also known as non-disparagement clauses, restrict someone following termination or departure to speak out about what they know.

It’s always a good idea to read before you sign. If there is a confidentiality clause in the settlement agreement, you must be conscious on what your employer can legally gag you for.

This is a myth. Confidentiality clauses are not allowed to be used against whistleblowers.

It’s a shame that confidentiality agreement law is so unclear and overdue for reform. It’s important that protection is given to whistleblowers, providing them with advice and guaranteeing them their rights to confidentiality.

If an employer tries to insist that you put your signature on a settlement agreement with a clause stipulating that you cannot take these actions, be sure to ask them politely to remove the clause and mention that they must do so according to the law.

Similarly, your employer can’t use any legal procedure in the agreement to stop you from doing so.

You won’t be able to give a guarantee specified by the terms of the settlement that there are no circumstances that could lead you to blow the whistle.

Is whistleblowing still possible?

Yes, it is possible. The Employment Rights Act states any clause that attempts to stop employees from disclosing is not valid. Even after you’ve signed a settlement agreement that says it prohibits you from blowing the whisle, this doesn’t actually prevent you legally.

Consequences of breaching your agreement

If the terms of your settlement agreement are breached, there are two options for your employer:

Ensure you comply with all of the agreement’s stipulations. Indemnity clauses are included in many settlements to protect the employer and require you to pay them a specified amount of money.

People who have been through a contract breach, but it can be difficult to put a figure on how much should be paid. The amount you will be entitled to by the Tribunal usually varies.