Public Sector Settlement Agreements

26 July 2018

Settlement Agreements can be used in both the private and the public sector, although not all public sector organisations permit confidentiality clauses, which can be used to prevent former employees from blowing the whistle on poor performance.

Settlement Agreements

Settlement Agreements in the public sector work in exactly the same way as they do in the private sector. Essentially, an employer and an employee enter into a legally binding contract which promises an employee a compensation package, in exchange for which the employee gives up their right to make a legal claim regarding the matter.

There are a number of scenarios in which Settlement Agreements can be useful. Most commonly, they will arise when an employer wishes to let an employee go without going through the formal redundancy or grievance procedures. This can be quicker, easier, and limit the feeling of ill will between the employer and the employee.

Settlement Agreements can also be used when an employer or employee are locked in a dispute (or a dispute is anticipated) and there is a desire to resolve the issue outside of Court. Often this occurs when an employer wishes to break the terms of the employer's contract, and the employee is open to the idea of receiving compensation in lieu of this breach.

Settlement Agreements in the Public Sector

Lots of public sector organisations use Settlement Agreements, including local councils, local authorities and the NHS. Regardless of whether you work in the public sector or not, if you are offered a Settlement Agreement, then the advice remains the same – speak to an Employment Solicitor as soon as possible.

The reason for this is twofold.

Firstly, you need to understand exactly what it would mean for you, if you were to sign the agreement. You will be giving up your statutory right to make a claim at an Employment Tribunal, in which you could receive a better compensation payout than the one you are being offered. Therefore you need to be sure that the proposed Settlement Agreement is fair and reasonable. If not, you (or your Employment Solicitor) should negotiate a better deal.

Secondly, you actually have to seek independent legal advice if you are planning on entering into a Settlement Agreement. If you fail to do so, the agreement could be deemed legally invalid. This need not necessarily be a Solicitor, but it must be a qualified legal advisor, such as a Lawyer or a trade union representative.

Confidentiality Clauses in Settlement Agreements

While you may be offered an amount of compensation as part of the Settlement Agreement (along with other benefits, such as a good reference) your employer may make their own demands. One common request is that the Settlement Agreement contains a confidentiality clause, otherwise known as a 'gagging clause'.

Typically, this will prevent you from disclosing any information about the company or organisation, and will prohibit you from bad-mouthing them in any way. It may also prevent you from telling anyone about the fact you have entered into a Settlement Agreement or the details surrounding your exit from your job.

However, confidentiality clauses in the public sector are controversial, as there are times when it is in the public interest for a former employee to speak up about poor conduct or wrongdoing. This is called Whistleblowing. In light of this, some public sector organisations have banned gagging clauses which specifically prevent whistleblowers from raising concerns.

Legal Advice for Settlement Agreements

Settlement Agreements can be complex, particularly for those who may wish to blow the whistle on bad practice, and yet are compromised by the terms of their employment contract. To find out more about your legal rights and the options available to you, you should speak to an Employment Solicitor without delay.

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