The simple answer is YES!
A settlement agreement is only legally binding once it has been signed by both parties. Therefore, as it isn’t binding until it is signed by both parties an employer could withdraw, rescind or cancel the settlement agreement right at the very last minute.
Likewise, an employee can also change their mind about entering into a settlement agreement if they haven’t yet signed it.
The fact that a settlement agreement isn’t binding until it is signed by both parties is an important point for both employers and employees to remember when negotiating settlement agreement terms and sums.
Once the settlement agreement has been signed it cannot be unilaterally withdrawn by a party, however, it can be varied/amended with the agreement of both parties with the variation being recorded in writing.
Whilst not a withdrawal, if the employee commits a fundamental breach of the binding settlement agreement the employer may decline to make the payments under the settlement agreement if they have not yet been paid or they may seek to recover them (should an indemnity clause exists) if the sums have already been paid. Or they could pursue a claim against the employee for breach of contract.
If you have been offered a settlement agreement it is important that you take time to consider whether it is suitable for you in the circumstances. That said, employers often set deadlines (around 7-10 days is common) to decide whether the employee would like to explore this option.
We can often negotiate with employers to increase the deadline but if one is set it would be prudent to bear that timescale in mind and instruct a solicitor sooner rather than later because the employer could withdraw the offer.
If you need advice on a settlement agreement with a quick turnaround please contact us on 01483 303636 or via our contact us page.
