The deal is struck, now what? Capturing it in the right document is crucial! Choosing the right type of agreement can make all the difference.
Check out Halborns‘ thoughts on navigating this critical step.
Settlement agreement
The employee settles any employment law claim that is listed (whether contractual or statutory – save for a handful of exceptions).
To be legally binding, the employee must take independent advice from a lawyer (which can lengthen negotiations) on the terms and effect of the agreement. You’ll need to contribute towards the employee’s legal fees
Contractual termination letter
Use with caution! The letter confirms that in return for a payment, the employee waives any contractual claims against you. But, this letter doesn’t (and can’t) prevent the exiting employee from bringing a statutory claim against you so be sure to take advice before suggesting this type of agreement.
This letter is great for low-risk scenarios or scenarios where you’re not offering the exiting employee much of an incentive financially (or otherwise) to exit.
COT3 agreement
This is a great option if ACAS early conciliation has been triggered (if it hasn’t then you don’t have the opportunity to use this agreement).
These agreements are usually fairly brief (typically two pages) making them ideal for more straightforward situations.
There’s no requirement for the exiting employee to take legal advice on the terms of the agreement (although ACAS’ involvement often proves a reassurance).
Bear in mind though that ACAS may not be willing to support this type of agreement if you’ve asked for ACAS’ support at a very late stage. Equally ACAS may resist anything more than their ‘standard terms’ for this type of agreement.
Get in touch for our support on deciding the best approach to a possible exit.
