We review a decision which highlights the importance of obtaining the best possible legal advice before signing a Settlement Agreement.
For a Settlement Agreement to be binding, there are a number of legal formalities that must be followed. These formalities include a requirement that the employee obtains independent, professional advice as to the ‘terms and effect’ of the proposed Settlement Agreement from a specialist with adequate professional indemnity insurance.
The conditions are strictly applied, so if any one of the formalities is not satisfied the agreement is not binding. It was this strict application that the claimants in McWilliams v Glasgow relied on in an attempt to have their Settlement Agreements set aside.
The case involved a group settlement of equal pay claims in Glasgow. Legal advice was provided in group sessions with PowerPoint presentations. Details of the Settlement Agreement were contained in an information pack. Solicitors explained what each clause of the agreement meant, but the Claimants were not told whether the deal on offer was a good one for them personally. They subsequently argued that they had not been advised on the ‘terms and effect’ of the Settlement Agreement and that the agreements were not binding.
The EAT disagreed with the claimants. It was satisfied that the procedures had been complied with and that the Settlement Agreements were therefore binding. Advice on the ‘terms and effect’ of the proposed Settlement Agreement does not require the independent adviser offer an opinion on whether the deal is a good one. The construction of the legislation should facilitate the practical operation of Settlement Agreements, bearing in mind the public policy requirement that the settlement of employment disputes was to be encouraged.
The case confirms that only a basic level of legal advice needs to be given by the independent legal adviser for a Settlement Agreement to be binding. The advisor does not have to consider whether the agreement is a good deal for the employee or whether the employee has a claim worth pursuing. So, if you are invited to enter into a Settlement Agreement it is important that you consult a specialist legal advisor who is able to offer guidance on whether the deal is right for you before signing on the dotted line. If you don’t do so, it will be too late.
For legal advice before signing a Settlement Agreement email solicitor Emma Napper at [email protected]
