The stress of being discriminated against is an ordeal in its own right. However, being made to deal with a settlement agreement from your employer is a very intimidating proposition. Settlement agreements tend to be quite complex, and accepting the terms of these documents means giving up your rights that you didn’t even know you had.
So, it pays to know exactly what you’re signing for before you put your signature on the page. Settlement agreements are quite different from ordinary business contracts and carry much greater risks. This guide covers the important details of settlement agreements, what they are, what they must include, and red flags to never ignore.
So, What is a Discrimination Settlement Agreement?
A discrimination settlement agreement is a written contract between you and your employer that allows you to waive your right to bring a claim or not proceed with your already filed claim in exchange for money.
These cover claims for breach of the Equality Act 2010, which covers claims regarding a range of characteristics, including race, sex, age, disability, religion, and sexual orientation.
Three things anyone presented with an agreement needs to know from the outset:
Written Agreements
They must be in writing. Any verbal agreements are of no result. All the details, payment terms, and conditions must be in writing.
Giving Up Rights
You are waving very real legal rights. After signing, you will not be allowed to bring a tribunal or civil court case over any claims stated within the settlement agreement, for the final time.
Legal Advice
There must be independent settlement agreement advice obtained on the contract itself before signing, and it will not be valid if you have not. It is crucial that your consultant is well qualified and has no connection with your employer.
Things a Properly Drafted Agreement Usually Covers
The fact that a settlement agreement does not have precise language or wording should serve as a red flag. A properly drafted agreement should clearly state:
- Name of all of the specific claims that were settled (not generic “all claims”). Confused wording means all the claims are not covered.
- Complete financial terms, including total amount, date of payment, and tax implications (typically the first $30,000 is non-taxable from contractual earnings).
- The employer must share an agreed-upon reference. Often, people don’t think about this until they are actually signing, and it’s too late to negotiate.
- Confidentiality terms that you can live with. These are usually standard, but have different levels of specificity on what you are allowed and not allowed to discuss.
Why is independent Legal Advice Crucial?
Many people do not realise how important the requirement for independent legal advice really is. The agreement would not amount to a waiver of the individual’s statutory rights in the absence of independent legal advice.
Free from Employer Influence
Your advisor should not have any connections to your employer whatsoever. Someone acting for both parties or who has a stake in the claim is of no use.
Legal Fees
Part of your advisor’s fees will usually be covered. Usually, the majority of it, but maybe not all, and depend on the complexity of the case.
No Rush Signing
Do not be rushed into signing an agreement. If you need some time to mull things over, it is entirely within your rights. A good advisor will also recognise if the terms offered are worth negotiating on.
Pitfalls That Trap Many People
Knowing what to look for makes all the difference, even if you have secured independent legal advice.
The Waiver Clause
Some agreements use broad waiver clauses that try to cover every possible future claim. However, vague wording may not legally prevent certain claims from being raised later
Protected Disclosures and Whistleblowing
You can never waive the right to make a protected disclosure. Wording that purports to prevent you from doing so will be void and of no effect.
Insufficient Compensation
Compensation for discrimination claims can reach several thousands of pounds. Your settlement should reflect the injury to feelings, lost earnings, and future financial loss.
Downplaying the Long-term Impact
Long-term suffering may impact your health and ability to work, and may not be covered adequately in a poorly worded agreement.
When a Settlement is Not the Answer?
Some of the reasons why you should consider taking your case to a tribunal rather than settling with an agreement include:
- The compensation being offered is not sufficient, claims for injury to feelings can be worth a significantly higher sum at a tribunal.
- You want an official ruling on discrimination. With a settlement, you essentially accept and forget any wrongdoing, so tribunal action is usually preferred if you wish for it to be publicly recognised.
- The act of discrimination has wider implications. In certain instances, the type of claim involved can help to make a legal precedent for future events which could benefit other people in the workplace.
Conclusion
No matter what you decide to do, take time to understand the terms, identify your rights and their influence in the future. Low compensation, unfair clauses, and expensive errors can be avoided by seeking proper legal advice before signing any documentation.
