David Chambers: How to make certain that a settlement agreement doesn’t leave you unsettled in future

There could be fireworks for you in 2017 if loose talk at a social gathering breached a confidentiality agreement.
There could be fireworks for you in 2017 if loose talk at a social gathering breached a confidentiality agreement.
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Read the small print to avoid landing in hot water, says David Chalmers

The festive season is a time to meet up with family, friends and perhaps old colleagues. It is an opportunity to catch up on events in the past year and look forward to what the New Year may bring.

2016 may have seen significant career change, perhaps leaving one employment and moving onto something new. Your departure from your last employment may not have been of your choice or making.

You may have found yourself on the wrong side of the “cut” during a redundancy or reorganisation exercise. However, your employer may have offered you an ex gratia payment in addition to your contractual and statutory entitlements.

If so, it is likely to have been subject to you entering into a “settlement agreement” whereby you discharged your rights to raise claims against your employer.

When accepting such a package, you will have understood that if you accepted the additional money, you could not raise Employment Tribunal or Court proceedings.

However, very often the settlement agreement goes beyond the discharge of such rights of action. It introduces new contractual obligations which you understand and accept at the time of signature, but the terms and potential consequences of which may fade over the months that follow.

Have you forgotten the terms of the settlement agreement must remain confidential? You may have been tight-lipped when you left your employment back in April, but after a few Christmas drinks in the local pub, prompted by a former colleague with their own personal agenda, did you let slip how generous or otherwise your former employer had been?

Do you recall the non-derogatory statement “bad mouthing” provision, which prevents you from saying anything negative or adverse about your former employer and/or your former colleagues?

Such provisions usually apply to any statements made in any media, including blogs, and are usually without limit of time.

In addition to these continuing obligations not to do something, what about other, freshly created obligations to do something?

Do you remember the “assistance in legal proceedings” provision? It may have seemed reasonable at the time of signing to agree that if you had knowledge of relevant facts you would assist your employer's case preparations and, if required, attend and give evidence at Court or Tribunal.

This obligation may be more onerous than you anticipated if a letter arrives early in the New Year requesting you meet with your former employer's solicitors to provide information on a suspected breach of the Bribery Act.

You might find the process unsettling. Should you have known about something untoward that was going on? Why didn’t you report it? Who is under investigation here?

Giving evidence in court might involve travel overseas to a jurisdiction you would prefer not to visit. The employer agreed to reimburse your out of pocket expenses, but what about your loss of earnings during the week you are attending at court?

What if you don’t want to cooperate – do you remember the provision about repaying the ex gratia if you are in breach or your contractual obligations?

2016 may have been a settled year at work for you. 2017 might turn out to be a year of career change.

If you leave your current employment for whatever reason and are offered a settlement agreement, you may wish to pause to consider the potential implications of all the obligations in the settlement agreement, not just the discharge of your rights.

Does your employer require them all and/or in the terms requested? In your particular circumstances, should you be granting them all in those terms?

David Chalmers is a partner with Stronachs in Aberdeen, a member of the United Employment Lawyers network of independent UK legal firms.