Settlement agreements are commonly used in employment law to bring an employment relationship to a formal and legally binding end. While they can provide certainty and protection for both employer and employee, they also involve specific legal requirements. One of the most important of these is that the employee must receive independent legal advice. This is where a settlement agreement solicitor is required.
Understanding Settlement Agreements
A settlement agreement is a legally binding contract between an employer and an employee, typically used to record the terms on which employment will end or a dispute will be resolved. In most cases, the employee agrees to waive certain statutory and contractual claims, often in return for a financial payment and other agreed benefits, such as a reference or confidentiality provisions.
Because the employee is giving up valuable legal rights, the law requires that they receive advice from an independent, qualified adviser before the agreement can take effect. Without this advice, the settlement agreement will not be legally valid.
The Role of a Settlement Agreement Solicitor
A settlement agreement solicitor acts solely in the interests of the employee. Their primary function is to ensure that the employee understands the agreement they are being asked to sign and the legal consequences of doing so.
The solicitor will review the terms of the agreement in detail, explaining what rights the employee is waiving and whether the agreement meets the statutory requirements. This includes confirming that the agreement properly identifies the claims being settled.
Beyond explaining the document, a solicitor will assess whether the terms are reasonable in the circumstances. This may involve considering the compensation being offered, the employee’s potential claims, notice entitlements, and any restrictive or confidentiality clauses. Where appropriate, the solicitor may advise that the terms could be improved and may assist with negotiating changes through the employer or their representatives.
Once the employee is satisfied and decides to proceed, the solicitor will sign the adviser’s certificate. This certificate confirms that independent legal advice has been given and is essential to making the agreement legally binding.
Why Independent Legal Advice Is Mandatory
The requirement for independent legal advice is not a formality. It is a statutory safeguard designed to protect employees from unknowingly signing away their rights. Settlement agreements often involve complex legal language and significant consequences, including the loss of the right to bring claims in the employment tribunal or courts.
The solicitor’s role is therefore both protective and explanatory. They ensure that the employee’s consent is informed and that the agreement complies with legal requirements. Without this step, the employer cannot rely on the agreement to prevent future claims.
Who Pays the Settlement Agreement Legal Fees?
In most cases, the employer pays the employee’s legal fees for advice on the settlement agreement. This is standard practice and reflects the fact that the employer benefits from the certainty and finality that the agreement provides.
Employers will usually offer a fixed contribution towards legal costs, which is stated in the settlement agreement itself. This contribution is often sufficient to cover the cost of reviewing the agreement and providing the required advice, particularly where the terms are straightforward.
The employer’s contribution is typically limited to advice on the settlement agreement only. It does not usually extend to broader employment advice or extensive negotiations unless expressly agreed.
Can an Employee Choose Their Own Solicitor?
Yes. The employee has the right to choose their own independent adviser, provided that the adviser meets the statutory requirements. The solicitor must be qualified, insured, and independent of the employer.
Employers may recommend firms or have preferred providers, but the choice ultimately rests with the employee. It is important that the adviser is genuinely independent and able to act solely in the employee’s interests.
For more information, please contact us on 01524 907100, info@pre-law.co.uk or through our online enquiry form
