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You’ve agreed the deal – what’s the next step?

To write it down! Choosing the right type of document is key. Here are our thoughts to help you get it right.

Settlement agreement

The employee settles any employment law claim listed in the agreement (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

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).

However, 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.

Our Intelligent Employment platform includes our up-to-date COT3 agreement template – for more information on accessing our documents, get in touch.

Get in touch if you need our support navigating settlement negotiations and choosing the right type of document to sign and seal the deal! 
This update is accurate on the date it was published, but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.