What makes a Settlement Agreement legally binding?
Statutory employment claims can only be validly settled through Acas (who do not tend to get involved until legal proceedings are issued) or by the employer and employee signing a valid Settlement Agreement.
Settlement Agreements are a special form of contract between the employer and the employee under which the employee agrees not to pursue certain employment claims against the employer, usually in return for a monetary payment.
For a settlement agreement to be legally valid (and prevent an employee from being able to bring tribunal proceedings), the following conditions must be met:
The agreement must be in writing.
The agreement must relate to a particular complaint or proceedings.
(Note: Simply saying that the agreement is in ‘full and final settlement of all claims’ will not be sufficient to contract out-of-employment tribunal claims. To be legally binding for these purposes, a settlement agreement must specifically state the claims that it is intended to cover.)
The employee must have received advice from a relevant independent adviser on the terms and effect of the proposed agreement, and its effect on the employee's ability to pursue that complaint or proceedings before an employment tribunal.
(Note: The independent adviser can be a qualified lawyer; a certified and authorised official, employee, or member of an independent trade union; or a certified and authorised advice centre worker.)
The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim by the employee in respect of loss arising from that advice.
The agreement must identify the adviser.
The agreement must state that the applicable statutory conditions regulating the settlement agreement have been satisfied.
Contact Tom to discuss this further.
