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Settlement Agreement – Independent legal advice

January 20, 2023

Settlement Agreements are legally binding agreements made between employers and employees which seek to bring an end to the employment relationship. In consideration of their employment coming to an end, employees are offered a sum of compensation on the basis that they will not bring a further legal claim against their employer.

However, before signing a Settlement Agreement, employees must receive independent legal advice. According to section 203 of the Employment Rights Act 1996, “employee[s] or worker[s] must have received advice from a relevant independent adviser as to the terms and effect of the proposed agreement and, in particular, its effect on his ability to pursue his rights before an employment tribunal.”[1]

Therefore, an independent legal advisor has an obligation to explain to an employee the terms they are agreeing to be bound by, as well as the consequences of signing the Settlement Agreement.

While there is no legal obligation for employers to pay for their employees to receive independent legal advice, it is common practice for employers to do so to ensure that the Settlement Agreement is legally binding.

Once an employee has received legal advice and they are happy with the contents of their Settlement Agreement, they can sign and return this to their employer for full execution.

Our team of Employment Lawyers would be happy to assist further and advise you further regarding the terms and effect of your Settlement Agreement. Wallace Robinson & Morgan Limited are based in Solihull & Dorridge and serve clients across Birmingham and the West Midlands, Warwickshire, Worcestershire and further afield. If you would like to discuss your matter, please call 0121 705 7571 and ask to speak to a member of the Employment team or email us at Employment@wallacerobinson.co.uk

[1] https://www.legislation.gov.uk/ukpga/1996/18/section/203

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