If you’ve fallen out with your employer, you may consider claiming compensation through an employment tribunal. However, have you thought about whether you’d be better off with a settlement agreement?
As an employee, you should consider the potential benefits of settling your dispute early and the significant risks in pursuing a tribunal claim. In many cases, a settlement agreement is the best option, even if you’ve got a good case.
1. A settlement agreement provides certainty
Although pursuing legal proceedings has the potential to lead to a significant award in your favour, there is also the risk that you could lose and end up with nothing. Unfortunately, the outcome of a tribunal claim is often difficult to forecast and depends on several factors. Some of these factors are unpredictable, such as how witnesses come across on the day and even the mood of the judge!
By signing a settlement agreement, you have the certainty of knowing how much money you’re getting and when. It may not beat the best result you could have achieved at a tribunal but are you willing to take that risk?
2. The value of your tribunal claim may reduce if you find a job
If you’re claiming compensation for lost earnings, you’re only entitled to compensation for your actual financial losses. If you find a job very soon, your compensation award will be much lower than if you’re out of work for a long time.
With a settlement agreement, you can agree on a compensation figure based on how long you’re likely to be without a job. If you find a job sooner, it’s a bonus! No need to pay back the compensation!
3. Employment tribunal claims are stressful
Pursuing an employment tribunal claim against a former employer can cause a lot of anxiety. You will need to give witness evidence about events you may have preferred to forget. Your credibility will come under attack from your former employer’s legal team. You may have to make difficult decisions about whether to involve former colleagues.
Usually, a settlement agreement is quick and easy. Often you can conclude it without having to leave your home! You have the peace of mind of agreeing on an outcome rather than the stress of resolving a dispute. You can often retain some goodwill with your employer and former colleagues.
4. Employment tribunal claims take a long time
A tribunal claim is not a fast process. According to HM Courts and Tribunals Service, the average time between starting a claim and receiving a decision is 27 weeks. Depending on the factors involved, it could be more than a year.
Meanwhile, a settlement can often be concluded within only a few days. That’s why many employees prefer that approach rather than having a tribunal claim hanging over them for months.
5. A settlement agreement may cost you nothing
When an employer and an employee agree to settle a dispute, the employer will often pay the employee’s legal costs. This contribution will often cover your costs in full, so you won’t have to pay anything.
A tribunal claim can be expensive. For example, if you use a solicitor, the cost is likely to be thousands of pounds. You can’t usually recover your legal costs in an employment tribunal, so the costs may well eat into any compensation you recover.
Even if you think you could recover more in compensation through a tribunal claim, you may find that, after payment of legal costs, the net amount is less than the amount your employer offered you in a settlement agreement.
6. A settlement agreement can include a reference
A tribunal does not have the power to order your employer to provide a reference.
However, when you negotiate a settlement agreement, you can ask your employer to include this as part of the deal.
7. Settlement agreements are confidential
A tribunal decision is published online, which means anyone can find out about your case. Often, newspaper reporters turn up at tribunal hearings looking for a story. Would you be happy about your story appearing in the local (or even national) paper?
By signing a settlement agreement, both parties agree not to talk to anyone about the settlement agreement or the circumstances surrounding it. This is usually an advantage to both the employer and the employee.
Free Consultation About Your Settlement Agreement
If your employer has offered you a settlement agreement, you will need to make sure you receive legal advice on it.
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