What makes a settlement agreement binding on an employee?
An employer can settle potential claims with an employee through a settlement agreement, but only if the agreement meets the conditions in section 203 of the Employment Rights Act 1996. Otherwise, section 203(1) makes void any provision that tries to stop the employee bringing proceedings under the Act before an employment tribunal.
The conditions
Section 203(3) sets out the conditions. The agreement must be in writing and relate to the particular proceedings. The employee must have received advice from a relevant independent adviser on the terms and effect of the proposed agreement, and in particular its effect on their ability to pursue their rights before an employment tribunal. There must be insurance, or a professional indemnity, in force covering the risk of a claim arising from that advice. The agreement must identify the adviser, and it must state that the conditions regulating settlement agreements under the Act are satisfied.
Who can advise the employee
Section 203(3A) lists who may act as a relevant independent adviser, including a qualified lawyer and certain certified trade union officials and advice centre workers. Under section 203(3B), a person is not independent if they act for the employer or an associated employer in the matter.
What this means for the employer
The employer prepares the agreement and offers it. The employee must take their own independent advice, from an adviser who is not acting for the employer.
Our settlement agreement, employer side, is drafted for the employer to offer and checked by a solicitor of England and Wales. We act for the employer only and do not advise the employee. The price is £395, with no VAT charged, and it comes back within 24 hours of us having everything.
Order the settlement agreement, employer sideThis guide is general information about the law of England and Wales. It is not advice on your situation.