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How do I ask my employer for a settlement agreement?

A settlement agreement is a legally binding contract usually offered by an employer to an employee who is underperforming, or who is no longer a good fit for the job. It can be a simpler way to help an employee leave their job quickly, usually by offering them a fixed sum of money and an agreed reference.

In some cases, however, an employee may feel the need to ask for a settlement agreement themselves. In this article, we explain how this alternative dismissal process may work in your favour, and how to ask for it.

When should I consider asking for a settlement agreement?

Usually, your employer will be the one to offer you a settlement agreement. However, this isn’t to say that you can’t ask for one yourself. If, for example, you feel that you are being executively managed out of your job, you might consider asking for a settlement agreement.

Although in some cases, claiming for constructive dismissal may be possible, working out a settlement agreement with your employer can often make it faster for you to leave the company without missing out on any financial compensation you may be due.

What will my employer do if I ask for a settlement agreement?

If you decide to ask for a settlement agreement, it’s likely that your employer will already be aware of any issues going on.

This usually results in an amicable agreement, whereby the employer is grateful for the opportunity to help you leave the company without needing to worry about a claim being made against them.

However, important to seek legal advice before you ask for a settlement agreement, especially if you are going to leave anyway.

And, if you’re about to hand in your notice (or think you might be dismissed anyway) then it’s vital to remember that you only have ninety days counted from your last working day to claim unfair dismissal against your employer.

To avoid your employer delaying the settlement agreement process and not paying you the compensation you’re due, include the date of your last working day in your resignation letter.

What exactly is included in a settlement agreement?

Most settlement agreements include:

  • A fixed payment (either as a lump sum, or as salary and pension contributions over a number of months)
  • An agreed reference
  • The option to tell your colleagues why you’re leaving the company


How could my employer benefit from a settlement agreement?

If you’re having trouble coming up with a convincing case for a settlement agreement, it may be wise to focus on the benefits it can bring your employer.

A settlement agreement can include a number of clauses which, although they may impose restrictions on you, will benefit your employer. Confidentiality clauses are common – these stop you from speaking negatively about your employer, both to colleagues and elsewhere.

A restrictive covenant may also be agreed upon. This clause prevents you from working for a direct competitor for an agreed length of time.

How can I benefit from a settlement agreement?

Negotiating a settlement agreement will allow you to bring up past contributions to the business, personal circumstances, and any other areas of your life that have been affected/will be affected due to your time at the company.

At a tribunal claim, this would not be possible. Tribunal claims – even if won – can be limiting in terms of compensation.

With a settlement agreement, you may be able to negotiate keeping benefits like a company car or mobile phone, which under normal circumstances you would be expected to return to your employer.

Lastly, it’s important to remember that should you choose to enter into a settlement agreement, your employer will usually pay your legal costs. This is primarily to ensure that the legal advice you have sought is unbiased, but also protects your employer against any future claims made by you.

Sweeney Miller | Experts in Settlement Agreement Law

Need confidential and professional employment law advice? Call us today: Newcastle: 0345 900 5401 Sunderland: 0191 568 2050

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