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Standard settlement agreements

Many organisations have standard templates for documents. In particular any organisation doing significant employment tribunal work will almost always have a standard agreement to use for settlement.

These are often useful. Most settlements are fairly standard – the claimant will withdraw her claim, the respondent will pay her some money. There is little point in reinventing the wheel over this for every case.

Having said that, every settlement is the unique conclusion of negotiation. Do not regard your own standard template as a straightjacket. And take with a large pinch of salt any suggestion that changing a standard term is impossible.

There are three common problems you may encounter:

The big firm problem

Documents reflect the personality of the organisation that produces them. A large respondent solicitor will not have a standard compromise agreement that slants in favour of the claimant. Many of the terms – relating to things like confidentiality, tax liability, etc. – will probably be written in a way that subtly benefits the employer. Sometimes the bias is less than subtle.

This means that it is almost always a good idea, when settlement negotiations reach the final stages, to get in first with your draft agreement. There is a significant advantage to arguing about adding things to your draft, rather than trying to remove things from theirs.

If you are negotiating over their draft, it is normally sensible to focus your attentions on a few key areas. Even where there is a general pro-employer bias is likely that it only has a significant effect in a couple of areas. For example, many standard agreements contain a tax indemnity. These normally state that, although the parties do not believe that tax will be payable on the award, if it is the employee will pay it. In many, many cases this will be entirely irrelevant, since it is absolutely clear that no tax will be due. If this is the case, the provision can be safely left in, since it will never come into effect. It will often be more sensible to do so in order to focus effort on altering a particularly arduous confidentiality clause.

Of course, there is no need to immediately reveal what provisions you might be willing to let by. A sensible negotiating technique can be to object to both the tax and confidentiality clauses, with the intention of trading one for the other.

The comfort blanket problem

The second problem is that standard documents tend to be approved at a relatively high level in an organisation. If you are negotiating with a fairly junior member of a firm, he may well be reluctant to depart from what more senior lawyers have set out as the appropriate way of settling a case. Standard documents also act as a comfort blanket and an insurance policy. Nobody is going to be criticised later for using the standard document. If they change it, particularly if the change involves a concession, they run the risk of criticism later. This is a particular problem if the individual concerned does not fully understand the standard document or the changes you are proposing.

This is little that can be done about this problem except to be aware of it and to try to engage with the issues if they arise. It should also be born in mind that “I can’t change this. It’s our standard document” is a useful first line of defence even when the opposing lawyer is quite happy to make changes if necessary to get a deal.

The cross-referencing problem

This is a purely technical issue. By the time you have finished negotiation you will often have taken out some clauses, while inserting others. This can easily damage any cross-referencing. If the agreement contains language like “In accordance with section 2(3)”, make sure that 2(3) is still the relevant section or the meaning of the agreement can easily be destroyed.

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