Richard Grogan on employment law: Settlement agreements
Employment law solicitor Richard Grogan of Richard Grogan & Associates writes on settlement agreements.
We are coming across cases where employees have been asked to sign full and final settlement agreements without the benefit of legal advice. In many cases, they are not even offered or advised of the importance of obtaining legal advice. This was covered in recent decisions in the EAT.
In one case, the document stated:
“I acknowledge that I understand the effect and implication of this agreement and confirm and agree that I have been afforded the opportunity of obtaining independent legal advice regarding the contents and effect of this agreement.”
In that case the EAT held obtaining informed consent is not a matter of rushing through a number of cursory steps, but a matter of making a genuine effort to enable the employee to take the necessary steps to realise what she or he is being asked to do when he or she signs the document containing a full and final settlement clause. In a relevant case before the EAT, compensation was awarded and the severance clauses were not held to be full and final.
There are some minimum steps that should be done.
- An employee’s signature should always be witnessed to any agreement.
- Any settlement agreement should set out all statutes which the employee is waving claims in respect of.
- The employee should be allowed a reasonable period of time to consider the agreement in advance of signing. What is reasonable will depend on the circumstances however; at a very minimum they need to be given a few days.
- At any meeting relating to any settlement agreement the employee should be allowed bring a competent representative to the relevant meeting.
- The employee should be advised to obtain independent legal advice in advance of signing. The best practice is the advice from the employer is often supported by a contribution towards the cost of obtaining such legal advice. A figure of €300-€500 inclusive of VAT tends to be the normal at the present time. Normally it would provide that the fee would be discharged on receipt of an invoice from the Solicitor addressed to the employee but marked payable by the employer. Generally it is best practice to not to accept or enter into an agreement until that is addressed.
- Where employers do not do this there is a significant risk that a Tribunal may well not accept any signed document as being in full and final settlement. It must also be remembered that there must be consideration for this. Therefore if an employee is being made redundant getting them to sign a full and final settlement agreement whereby they simply receive their redundancy and minimum notice will rarely be sufficient as there will not have been consideration granted. If you are looking to get a full and final settlement agreement signed up that will stand up then there will need to be an ex gratia element at least as this will act as a form of what is termed consideration for waving any rights.
It would be our view that if getting a full and final settlement agreement signed up it is important to get, from the employer’s side, legal advice as to how to deal with meeting with the employee and what form of agreement should be put in place.
- Richard Grogan is the principal solicitor at Richard Grogan & Associates Solicitors. You can subscribe to the firm’s monthly newsletter at grogansolicitors.ie.