Guest Blog from Mark Ferron, Castle Associates: Top 3 tips when negotiating settlement agreements…


There are times when relationships within the workplace can go wrong and may not break down completely; however, they do begin to have damaging consequences within the workplace especially on with other colleagues and their performance.

There are also times when individuals, especially senior managers and directors, are forced out of the business they have been totally loyal and committed to, without any warning at all. This could be via a settlement agreement, an unfair disciplinary process or just being performance managed out.

Trying to resolve such matters amicably can be difficult, especially when the individual has to come to grips with the fact that they are going to have to start looking for another job and the whole process is stressful with emotions on all sides often running high.

In these circumstances a settlement agreement can often be the best way to avoid acrimonious fallout or a costly and drawn out legal battle at an employment tribunal. Settlement agreements are legally binding and can be used by an employer, of any size, to reach an amenable end to the working relationship when there is an irretrievable dispute or just to terminate someone’s employment.

It is not unusual for an employee to propose a settlement, although it will normally be done by the employer and can be used to resolve serious employee grievances such as claims of unfair and constructive dismissal or discrimination claims.

In most cases the employee feels that they have no options available to them and they feel they are in the weaker and more vulnerable position. Also the employer often wants to conclude such matters quickly, by rushing and putting additional pressure on the individual to sign the agreement without delay.

So what can employees do when faced with such a situation and what tactics could be used?

1. Understand your legal position

Most senior managers and directors tend not to be a member of a trade union, which will mean that they are on their own and in situations like these understand the legal position will often involve them undertaking some legal research or sourcing advice from an employment law expert.

Determining your legal position as an employee is key to the whole process and will certainly help with the settlement agreement negotiations and may put everyone in a better position overall.

This is really about understanding and knowing whether there could be possibly other legal claims, such as discrimination, victimisation, and whistleblowing. In addition, if an individual has been employed for less than 2 years and as such will not have an ordinary unfair dismissal claim, knowing whether there are any automatic unfair dismissal claims that they could log at an employment tribunal is vital.

The individual will need to assess whether the offer being made by their employer is reasonable in the circumstances: for example, if they are being made redundant then they will need to check (among other things) whether their entitled to bring an ordinary unfair dismissal claim, whether they’re entitled to a statutory redundancy payment (and, if so, how much), whether they’re entitled to a contractual redundancy payment (and, if so, how much), what period of notice they are entitled to, and what other benefits they will receive or are entitled to.

Also, the normal practise for most employers is to contribute towards the employee’s costs for legal advice in relation to the settlement agreement, which will be needed to ensure that the agreement is legally binding. Typically, the amount of the costs contribution is anything between £250 and £500 and in most cases, this will cover the cost of the solicitor, unless they undertake additional work.

This will mean that the employee will have to instruct a solicitor and the timing of that will depend on whether they want the solicitor to undertake the negotiations, employment law advice at the start of the process or just to advise them at the point the settlement agreement is ready to be signed.

Another vital point to consider during these situations is having trade union representation as they will be able to accompany the individual to meetings with management and provide that vital and essential support and they are on your side.

2. Consider raising a grievance

This may not be appropriate in all circumstances and will depend on the situation but, in certain circumstances, collating and sending your employer a grievance will put some additional pressure on the employer and could provide a powerful bargaining tool.

The nature of the grievance will rest upon the possible legal claims and the more claims the individual may have the more difficult it will be for the employer and a better negotiating tool in regards to the settlement agreement.

As part of the grievance it is important to collect and collate evidence in preparation for any meetings this could include emails, appraisals, one to one notes, policies and any information that would support your position and grievance. It is also a good idea to put together a timeline of any event or actions by the employer including names of any witnesses that could be used as part of the grievance process.

The law allows individuals to be accompanied during the grievance process and this is also set out in the ACAS code of practice. This is where having trade union representation is so important and they can make a real difference to the outcome, not only during the grievance process but more importantly with the settlement agreement discussions.

3. A short period of sickness

In our experience, most employees will find this type of situation very stressful and will often need to seek some support and advice from their doctor and a short period of time off work with work-related stress will allow the individual some time to consider their future as well as allowing them to build their case.

It is important to understand whether they will receive company sick pay or just Statutory sick pay because the lack of income could add additional stress and pressure. The individual will be able to discover this via their employment contract and/or company policy.

Being forced out of a job and company in which the individual has worked hard is a difficult situation that can have significant effects on that person and when they are put in this position there is no going back. The important issue, however, is to ensure that they are treated fairly during the settlement agreement negotiations and that they receive the right compensation to allow time and breathing space to get another job.

Guest blog from Mark Ferron at Castle Associates