A settlement agreement is a legally binding contract. The purpose is primarily to protect the employer from claims by the employee, and in return for the waiving their rights to bring claims, the employer pays an agreed sum in compensation to the employee.
The settlement agreement is not binding unless the employee receives independent legal advice on the terms and effect of the agreement. There is always a term which requires the employee to confirm this has been done – usually a certificate or letter from the adviser is attached to the agreement as a schedule.
Who can be an independent adviser?
Not just anyone. There are three main categories:
1. Qualified lawyers.
Practising Barristers and Solicitors
CILEx registered Legal Executives authorised to carry out litigation or advocacy
Legal Executives who are not authorised to carry out litigation or advocacy but who are supervised when giving advice by a solicitor with a valid practising certificate.
In part, its because we know what we are talking about. As a firm of solicitors, we carry £2,000,000 of insurance to make sure you are protected.
2. Trade Union Officials
These can be officers, officials, employees or members of an independent trade union. They must also be certified by the union as competent to give advice and authorised to do so on the union’s behalf.
3. Voluntary sector workers
Advice workers are covered if they work at an advice centre and are certified as competent to give advice on the centre’s behalf. Importantly, advice workers cannot be paid for that advice.
How important is independence?
It is key – otherwise the employee protection is absent, and the advice is invalid.
What about Employers?
The statutory safeguards are there to protect the employee. The employer doe not have to get legal advice. In most cases employers consult solicitors to draft a new agreement or to advise on what terms to offer.