Receiving a settlement agreement from your employer can be a stressful time, but it's important to remember that this document is designed to settle a dispute and can't be legally binding without your independent legal advice. While it's standard practice for employers to contribute to your legal fees, what happens if they refuse? This refusal isn't just an inconvenience; it can have significant legal implications for both you and your employer.

Why your employer must contribute to a settlement agreement

For a settlement agreement to be legally enforceable, you must have received independent legal advice from a qualified adviser, such as a solicitor, on the terms and effect of the agreement. This is a statutory requirement under UK employment law. Without this advice, you can still bring a claim against your employer. Therefore, it's in your employer's best interest to ensure you get this advice, which is why they almost always offer to pay a contribution towards your legal fees.

A typical contribution ranges from £500 to £750, though it can be higher for more complex cases. Your legal advisor will explain the agreement's terms, ensuring you understand what you're waiving—your right to bring specific legal claims against the company.

What legal steps you can take

If your employer refuses to contribute to your legal fees, it's a huge red flag. You have a few options:

Refuse to Sign: The most immediate and straightforward step is to refuse to sign the settlement agreement. Since the agreement isn't legally binding without the legal advice provision, your employer's offer is essentially invalid. This puts pressure on them to reconsider, as they haven't achieved their goal of preventing a future claim.

Negotiate: Don't be afraid to push back. Your legal adviser can directly negotiate with your employer on your behalf, explaining that the agreement won't be valid without the financial contribution for legal advice. They can highlight the legal risk the employer is taking by not adhering to the process.

Raise a Grievance: If the refusal is part of a wider pattern of unreasonable behaviour, you can raise a formal grievance against your employer. This creates a clear paper trail of their conduct and can strengthen any future claim you might make.

Detriment and constructive dismissal claims

An employer's refusal to contribute to your legal fees could form the basis of a legal claim, particularly if it's part of a broader pattern of misconduct. This is where the concepts of detriment and constructive dismissal come into play.

A detriment is when an employee is subjected to a disadvantageous act because they have asserted a legal right. By offering a settlement agreement, your employer is attempting to settle a potential claim. If you refuse to sign because they won't pay for the required legal advice, and they then treat you unfavorably—for example, by threatening disciplinary action or making your working life unbearable—this could constitute a detriment. You could potentially bring a claim to an employment tribunal on this basis.

Even more serious is the potential for a constructive dismissal claim. This occurs when an employer's conduct is so severe that it fundamentally breaches the employment contract, leaving you with no option but to resign. Refusing to pay for the legal fees required for a valid settlement agreement, especially in an already hostile environment, could be seen as a serious breach of the implied term of trust and confidence between you and your employer. This is an implied term in every employment contract.

If you can prove that this refusal, along with other unreasonable actions, has made your position untenable, you could resign and claim constructive dismissal. While these claims can be challenging to prove, an employer's refusal to follow the proper procedure for a settlement agreement can be a key piece of evidence in your favour. It demonstrates a lack of good faith and a failure to meet their legal obligations.

I founded Settlement Agreement Expert with the purpose and objective of providing employees with quick, simple and no-cost independent legal review and advisory services. For advice on your situation, including any settlement agreements get in touch today, call 0330 043 8845, email clive@solicitor.help, or request a call back.