ਸੈਟਲਮੈਂਟ ਸਮਝੌਤੇ 'ਤੇ ਗੱਲਬਾਤ ਅਤੇ ਦਸਤਖ਼ਤ
ਰੁਜ਼ਗਾਰ ਵਿਵਾਦ ਦੇ ਨਿਪਟਾਰੇ ਲਈ ਸੈਟਲਮੈਂਟ ਸਮਝੌਤੇ 'ਤੇ ਗੱਲਬਾਤ ਕਰਨ ਦਾ ਤਰੀਕਾ।
ਸੰਖੇਪ ਜਾਣਕਾਰੀ
A settlement agreement (formerly called a compromise agreement) is a legally binding contract between an employer and an employee under which the employee agrees to waive specified employment claims in exchange for a financial payment and/or other benefits. For a settlement agreement to be valid under section 203 of the Employment Rights Act 1996 and the equivalent provisions in the Equality Act 2010, it must be in writing, must relate to a particular complaint or proceedings, and the employee must have received independent legal advice from a relevant independent adviser — typically a solicitor — who is identified in the agreement and covered by professional indemnity insurance. Employers commonly pay a contribution towards the employee's legal costs, usually £300–£500 plus VAT. The first £30,000 of a genuine termination payment can be paid free of income tax and National Insurance Contributions under the Income Tax (Earnings and Pensions) Act 2003, though this threshold requires careful drafting to avoid HMRC challenge.
ਇਹ ਪ੍ਰਕਿਰਿਆ ਕੌਣ ਵਰਤ ਸਕਦਾ ਹੈ
- You are likely eligible to use this guide if your situation involves negotiating and signing a settlement agreement.
- You have a genuine legal basis for the matter (contract, tort, statutory right, etc.).
- You have made reasonable attempts to resolve the matter directly with the other party first.
ਕਦਮ-ਦਰ-ਕਦਮ ਪ੍ਰਕਿਰਿਆ
Receive and Review the Draft Agreement
Your employer will provide a draft settlement agreement, usually following a protected conversation under section 111A of the Employment Rights Act 1996 or formal without-prejudice discussions. Read it carefully before taking it to a solicitor. Note the proposed financial package, any reference terms, post-termination restrictive covenants, and the list of claims you are being asked to waive.
- You are under no obligation to sign — the offer can be negotiated
- Check whether the employer is offering to pay a contribution towards your legal costs (the 'legal fees contribution'); if not, ask for one
- Note the deadline given — employers commonly allow 7–10 days, but ACAS Code of Practice guidance recommends at least 10 days
- Identify all claims listed in the waiver clause — ensure none relate to claims you did not know you had
Instruct an Independent Solicitor
You must take advice from an independent solicitor (or other qualified adviser) who will advise you on the terms of the agreement in relation to the claims you are waiving. The solicitor must be independent of your employer. Many employment solicitors offer fixed-fee advice for reviewing settlement agreements, usually covered by the employer's contribution. The solicitor will sign a certificate confirming they have given the required advice.
- Bring all relevant documents: your employment contract, any correspondence about the dispute, payslips, and the draft agreement
- Be honest with the solicitor about the full circumstances — they need this to advise you properly
- The employer's contribution is usually £300–£500 plus VAT; check whether this covers your solicitor's fee or whether you will need to top up
- A solicitor can only certify advice on claims specifically mentioned in the agreement — vague drafting benefits the employer
Negotiate the Terms
Settlement agreements are negotiable. Common areas for negotiation include: the financial payment (particularly the tax-free termination payment), the agreed reference wording, confidentiality obligations (which bind both parties), post-termination restrictions (non-compete, non-solicitation), and the return of company property. Your solicitor can negotiate on your behalf or advise you how to negotiate directly.
- The first £30,000 of a genuine ex-gratia termination payment is free of income tax and NICs — amounts above this are taxable
- Payments in lieu of notice (PILONs) are taxable from day one regardless of the £30,000 threshold
- Agreed references are valuable — consider attaching the exact wording as a schedule to the agreement
- Non-compete clauses in settlement agreements are enforceable but must be reasonable in scope and duration — challenge overly broad restrictions
- Garden leave counts as part of any notice period and affects when restrictive covenants begin to run
Independent Adviser Signs the Certificate
Once you are satisfied with the terms, your solicitor (or other independent adviser) will sign the adviser's certificate within the agreement. This certificate confirms that they have advised you on the terms and effect of the agreement, specifically in relation to the claims listed. Without a signed certificate from a qualifying independent adviser, the agreement is not valid under section 203 ERA 1996 and cannot settle statutory employment claims.
- Check that the adviser's name, firm, and the date of the certificate are correctly stated in the agreement
- The certificate must confirm advice on 'the terms and effect of the agreement'
- Some agreements list multiple potential advisers — only one needs to sign
Sign the Agreement and Receive Payment
Once both parties have signed and the adviser's certificate is completed, the agreement is binding. Payment is usually made by the employer within 28 days of the termination date (or as specified in the agreement). Confidentiality clauses typically come into force immediately on signing — do not discuss the terms or the circumstances of your departure with colleagues or on social media.
- Keep a signed copy of the full agreement in a safe place
- Confirm in writing when you expect to receive payment and chase promptly if it is delayed
- If the agreement requires you to do anything before payment (e.g., return company property), do so promptly to avoid any pretext for withholding payment
- Check whether the agreement contains a tax indemnity — if HMRC later determines more tax is due on the payment, this clause determines who bears the liability
ਖਰਚੇ
ਮਹੱਤਵਪੂਰਨ ਚੇਤਾਵਨੀਆਂ
Once signed, a settlement agreement is binding — you cannot bring the claims you have waived at a later date. Seek full legal advice before signing.
Do not rely on verbal assurances from your employer. Everything of value — the reference wording, payment terms, confidentiality obligations — must be in the written agreement.
The adviser's certificate is a formal legal requirement. An agreement without it cannot validly settle statutory claims under the Employment Rights Act 1996 or Equality Act 2010.
The £30,000 tax-free threshold applies only to a genuine ex gratia element. PILONs, holiday pay, and notice pay are fully taxable regardless of how they are labelled.