Navigating settlement agreements this festive season

Every year as the festive season rolls in, so do the enquires about settlement agreements. Financial pressures, year-end reorganisations, and planning for the new year often lead to what can be challenging conversations in the workplace. Whether you are an employer looking to resolve a workplace issue or an employee faced with an unexpected offer, understanding how to approach settlement agreements is key to achieving a fair and smooth resolution.

Handled well, settlement agreements can benefit both parties. Mishandled, they can lead to misunderstandings, delays, or even legal disputes.

At Tees Law, my colleagues and I in the employment team, advise both employers and employees, helping them navigate the process with confidence. We have set out some key hints and tips below for how both sides can approach settlement agreements effectively and try to avoid unnecessary stress during this bustling time of year.

Why settlement agreements spike in winter

For many employees, being presented with a settlement agreement just before the holidays can feel overwhelming. For employers, it can be a practical way to resolve disputes, end employment relationships amicably, and avoid the uncertainty of future claims. However, the key to success lies in handling these agreements thoughtfully and strategically.

Tips for employers: getting it right

If you are offering a settlement agreement to an employee, consider the following tips to set the process on the right track:

1. Give them time: Employees are entitled to take time to consider the agreement. While there is no hard-and-fast legal rule, ACAS guidance suggests giving them at least 10 calendar days. A rushed process can feel heavy-handed and is unlikely to foster cooperation and if approached in the wrong way could mean that otherwise protected conversations may be admissible in contested proceedings.
2. Recommend trusted advisors: Many employees will not know where to start when seeking legal advice. While they have the right to choose their own solicitor, offering a list of reputable employment lawyers, like Tees, can save them time and stress. Many of the employees we assist have spent days calling around before finding the right support.
3. Offer a reasonable contribution to legal fees: Covering legal fees is not mandatory, but a contribution shows goodwill and makes it easier for employees to seek advice. Without it, employees may hesitate to proceed, delaying resolution.
4. Show empathy: Imagine being handed a settlement agreement in the run-up to Christmas. It is a challenging time, and empathy can go a long way. Consider flexible arrangements, like offering garden leave or discussing whether they would prefer to work (or not) while deciding. Demonstrate understanding—it will make a significant difference in tone and outcomes.
5. Be clear and fair: If your offer is non-negotiable, set this out plainly. Make it reasonable, explain how it is calculated, and detail the benefits in specific monetary terms. Employees are more likely to agree when they—and their solicitor—see that the offer is thoughtful and fair and understand the employer’s perspective.
6. Draft with precision: Poorly drafted agreements create delays and increase costs. Ensure all terms are clear. If you are unsure, consulting an employment law solicitor early can save time, costs and effort later.
7. Consider flexibility on non-competes and notice periods: Non-compete clauses or decisions on payment in lieu of notice can be restrictive. Offering garden leave or taking a more flexible approach can set a cooperative tone and make the agreement more appealing. For employees on visas or those utilising benefits, garden leave can be especially valuable.
8. Communicate departure sensitively: Leaving a role is a significant moment, and most employees want to depart with their reputation intact. Work with them to agree on how and when the departure is communicated. This collaboration can help preserve goodwill on both sides.

Tips for employees: getting it right

If you have been offered a settlement agreement, do not panic—it is an opportunity to clarify your position and negotiate terms that work for you. Here is how I suggest you approach it:

1. Do not feel pressured: You are entitled to time to review the agreement and seek legal advice. If the deadline feels tight, ask for an extension—most employers will understand the need for time to consider an offer, within reason.
2. Seek legal advice: Settlement agreements are complex, and independent legal advice is essential. A solicitor can help you understand your rights, assess the terms, and negotiate on your behalf if needed.
3. Understand what is being offered: Ensure you understand all aspects of the offer, from financial compensation to restrictive clauses like non-competes. A solicitor can clarify how these might affect your future.
4. Consider negotiation: If the offer seems unfair, do not be afraid to negotiate though your bargaining position and whether it would be worth seeking more will depend on the circumstances. Take advice on what is viable
5. Plan your next steps: Whether you agree to the terms or not, think about how the situation aligns with your career goals and objectives. Focus on end aims rather than the emotion of facing these changes. Consider discussing how your departure will be communicated to protect your reputation.

Key considerations for both parties

• Clarity is crucial: Whether drafting or reviewing a settlement agreement, ensure the terms are precise and leave no room for misinterpretation.
• Flexibility helps: Employers and employees who approach the process with flexibility are more likely to reach a mutually beneficial outcome.
• Professional advice is essential: Settlement agreements are legal documents—not only is advice necessary to make the agreements binding, seeking expert advice can prevent costly mistakes.

The festive season may bring challenges, but with the right approach, you can ensure that everyone enters the new year on solid ground. Reach out to our employment law team today for tailored advice that works for you.

Let us help you navigate these seasonal spikes with confidence—because everyone deserves a fair resolution, no matter the time of year.