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Is £500 Enough To Take Advice On a Settlement Agreement?

Julie Duane, Legal Counsel at CG Professional.

In Solomon v University of Hertfordshire [2019] UKEAT 0258_18_2910, the EAT made an obiter comment in its Judgment on whether the sum of £500+VAT would be sufficient for an employee to take full advice in respect of settling their claims.

Employment Appeal Tribunal

In considering the grounds of Appeal, (the majority of which are not related to this article), the EAT made an obiter comment at Paragraph 110 of the Judgment regarding the Respondent’s offer of £500+VAT for the Claimant to obtain legal advice on the settlement offer of £50,000. HHJ Richardson held:

“We wish to say a word about the offer of £500 to the Claimant to obtain legal advice. We think it clear that the advice which the Claimant could expect to receive for this sum (or any sum remotely like it) would only relate to the terms and effect of the proposed settlement and its effect on her ability to pursue her rights thereafter (see section 203(3) of the Employment Rights Act 1996). Any advice as to the merits of the Claimant’s claim and the likely award of compensation would require reading and consideration on a quite different scale. So even if the Claimant had sought advice, she would still have had to make her own lay assessment as to the merits of her claim and the likely award of compensation. The ET said, in paragraph 10 of its reasons, that the offer of £500 plus VAT was for a solicitor “to advise on the merits of a settlement”. If so, the offer was wholly unrealistic.

The EAT held that where the professional adviser was required to give an indication as to the likely compensation on the merits of those claims, essential reading and consideration on a different scale would be needed and it is very unlikely that this would be covered by the cost of £500 plus VAT.  Even if the Claimant had sought advice it is highly likely that she would have to make her own assessment as to the amount and likely award of compensation. Respondents should, therefore, be mindful of making such proposals in their offers of settlement in the future.

If you have any questions regarding this article, please do not hesitate to contact a member of the CG team who will be more than happy to assist.