Do you ever feel you want to quit your job but want to make sure you have enough money until you find another one?
If so, a settlement agreement may be the best option. It enables you to leave your current role, whilst ensuring a termination payment from your employer.
But how do you go about asking for a settlement agreement? And how can you ensure you get the best deal?
Ask for a protected conversation
The law allows an employee to ask their employer for an ‘off the record’ chat, known as a protected conversation.
Anything that is said in that conversation is confidential and can’t be used in evidence if you were ever to bring an employment tribunal claim.
Protected conversations were introduced in July 2013 to enable employers and employees to talk freely without worrying that their words could be used against them.
The ACAS Code of Practice on Settlement Agreements includes details of how a protected conversation is supposed to work. You can read that here.
In summary, offers to end the employment relationship under a settlement agreement can usually be made confidentially.
Your staff handbook may contain more information about how your employer handles protected conversations but if it doesn’t, you could just send an email along the following lines:
I would like to have a meeting about the possibility of bringing my employment to and end by way of a settlement agreement.
I understand that, under section 111A of the Employment Rights Act 1996, this meeting should be conducted by way of a protected conversation.
Please could you let me know a convenient time.
When is the best time to ask for a protected conversation?
The timing of your request for a protected conversation may make a big difference to your chances of getting a decent settlement.
Put yourself in your employer’s shoes. They don’t want the hassle of going through a disciplinary or grievance procedure. If you ask for a protected conversation at an early stage in the procedure, your employer may be more inclined to agree a settlement.
Prepare in advance
After you’ve agreed a time and place for the meeting, set aside some time to think through what you want to say. Here are some questions to consider:
Is your employer likely to be surprised by your request?
If you haven’t fallen out with your employer and they are generally happy with your work, it may come as a surprise that you want to leave.
Be prepared to explain the reasons.
Is there an ongoing dispute?
If you’re being subject to disciplinary proceedings or if you’ve raised a grievance, you should explain why you’re unhappy with how that’s being dealt with.
How long are you likely to be out of work?
This is an important question because it affects how much money you should be asking for in the settlement agreement.
It’s impossible to predict the future but you should consider what is the longest time you’re likely to be unemployed. You can then estimate your lost earnings.
There are three approaches to negotiating a settlement agreement (and we usually recommend the third wherever possible):
1. Good will
If you have a good relationship with your employer, you may be able to negotiate a better settlement, simply by being nice.
Explain to your employer how grateful you are for your job, how difficult you will find it to leave and the financial difficulties you may experience as a result.
Ask your employer if they’d be willing to offer you a higher payment in recognition of your contribution to the business over the time you’ve been there.
2. Threaten legal proceedings
Sometimes, you have to spell out to your employer the fact that you could take them to an employment tribunal.
If you were to do so, you may be able to claim significant compensation from them. It’s in their interests to settle the dispute in order to avoid:
- the legal costs of defending a claim
- the potential for a judge to order them to pay a much higher award if the dispute goes to a hearing
- bad publicity
This approach is more aggressive but, with some employers, it’s necessary.
Although you may not want to bring employment tribunal proceedings, it’s important that you consider what a claim would be worth because it affects the amount of compensation you should expect.
To find out why a settlement agreement is usually preferable to a tribunal claim, click here.
3. A mixture of good will and threatening legal proceedings
If you plan the negotiation carefully, you may be able to have the benefit of both approaches.
The trick is to make your lawyer out to be the bad guy. Get some legal advice on how much a potential claim is worth and then say something like this:
“My solicitor advises me that I could take you to an Employment Tribunal. I would prefer to avoid that if possible but I think the amount you offer me should reflect the fact that I could claim significant compensation”
This kind of approach may enable you both to maintain good will at the same time as making your employer aware of the risk of legal proceedings.
For more tips on how to negotiate a settlement agreement, click here.
Take time to think about any offer
Your employer should give you 10 calendar days in which to consider any offer of a settlement agreement and to get legal advice on it.
It should not usually take 10 days but be aware that can ask for time to consider your employer’s proposals. Don’t be pushed into agreeing anything straight away.
If you were to agree something in principle, it won’t be legally binding and you can change your mind if you want to. However, it may make subsequent negotiations more difficult if your employer thought you’d agreed a deal.
Get Legal Advice on Your Settlement Agreement
If you are offered a settlement agreement, you will need to make sure you receive legal advice on it. Otherwise, it’s not legally binding.
We advise clients throughout the UK. Call us now for a free consultation.
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