Are settlement agreements confidential?

It is normal practice for an employer to send a letter to the employee detailing the terms being offered prior to sending the actual agreement. At this stage, the employer will normally inform the employee that the discussions are to be kept confidential. This is usually to prevent the employee from spreading word to colleagues that a settlement agreement has been offered.

The agreement itself will most likely include a confidentiality clause to ensure both employer and employee keep the agreement confidential. The clause will usually be worded to include the terms of the agreement, its existence and the discussions leading up to the agreement being offered (the negotiation phase).

Following the confidentiality clause, there is normally an authorised disclosures clause to set out who the parties can disclose the agreement to. An employee is normally entitled to disclose the agreement to the following:-

1. Legal advisers;
2. Medical advisers (or anyone who owes the employee a duty of confidentiality); and
3. The employee’s spouse, partner or civil partner or immediate family members.

If you have been offered a settlement agreement, this does not preclude you from discussing this with your spouse, civil partner, partner or immediate family and your solicitor or legal representative. However, you should avoid discussions with work colleagues and friends.

It is normal for a settlement agreement to include a clause which confirms an employee’s right to disclose the agreement and its terms if required by law or regulation or, for the purposes of reporting a criminal offence or, to make a protected disclosure about a specific type of wrongdoing (whistleblowing). By law, these types of disclosures cannot be prevented by way of a settlement agreement.

It is also important to note that a settlement agreement is offered on a without prejudice basis, which means that it is off the record. This is until it is signed by both parties. Once it has been signed, the agreement is treated as a normal binding agreement between the parties which can be relied upon by either party. The idea is that if an employee was to issue a claim which has been waived under the agreement, the settlement agreement can be used as evidence by the employer. Similarly, if the employer fails to make a payment under the agreement, the employee can enforce the terms of the agreement.

How can we help?

At Ellis Jones, we guarantee to cap our fees for advising you on the agreement at the contribution offered by the employer. Should you require assistance with negotiating on the terms, we will discuss this with you and may provide you with a separate fee estimate for this work.

If you have been offered a settlement agreement, please get in touch with our Employment Solicitor, Rebecca Goudy (nee Bennett) at rebecca.goudy@ellisjones.co.uk or telephone 01202 525333.