Can documents such as Settlement Agreements be dealt with virtually and signed electronically?

Given the current uncertainty regarding how long the lockdown and social distancing measures will remain in place, many of our clients have been asking us how this affects the completion of Settlement Agreements.

The good news is that as far as Settlement Agreements are concerned, it has been common for many years now for the parties not to sign a hard copy of the document, and instead to complete the agreement by email using scanned copies. We have been doing this for a long time and it generally goes very smoothly.

We deal with Settlement Agreement matters for both employers and employees, and advising remotely is no problem at all – we can assist by telephone, email, as well as other methods such as Zoom, Teams and Skype.

How does it work?

As solicitors who deal with hundreds of Settlement Agreements every year (for employers and employees), the main methods that we recommend are as follows:

• Our client provides us with a signed signature page in advance, and then once terms have been agreed between the parties (and our client has confirmed they are happy with the final version), the signature page for both parties is included within the full Agreement; or

• Once a final version has been agreed, our client confirms their acceptance by signing and returning either a signature page or the full signed agreement to us. If they send us a signature page, we incorporate that into the full agreement before it is sent on to the other party.

From a legal point of view it is potentially possible for a binding agreement to be reached by the parties just exchanging signed pages. However, we do not recommend this approach, because Settlement Agreements often involve changes being made to the wording, and if only the signature page was attached, it could lead to dispute over which version of the Settlement Agreement the employee was accepting. By sending the full agreement it prevents doubt as to which version applies.

Therefore, there is usually little problem with documents being executed using scanned copies, provided that both of the parties agree to it. The next issue to consider, is whether documents can be electronically signed, either for general convenience or to combat the specific problem of not being able to print, sign and scan documents.

Use of electronic signatures

Electronic signatures can take a number of different forms, including:

• a person typing their name into a contract or into an email containing the terms of a contract;
• a person electronically pasting their signature (e.g. in the form of an image) into an electronic version of the contract in the appropriate place;
• a person accessing a contract through a web-based e-signature platform (such as DocuSign) clicking to have their name in a typed or handwriting font automatically inserted into the contract in the appropriate place; and
• a person using a finger, light pen or stylus and a touchscreen to sign their name electronically in the appropriate place.

There is relatively little legal guidance at this stage as to when it is appropriate to use an electronic signature in employment documents. Our view is that in most cases it will be fine. The main thing from an employer’s point of view is that you have evidence of the employee’s agreement to the terms (with Settlement Agreements you would also want confirmation from the employee’s legal adviser that they have taken independent legal advice). From an employee’s point of view, if you are happy to agree to the terms then the main thing you will want is for the document to be agreed as quickly and simply as possible. However, it is always best to take advice if you have a document where you want to be able to specifically enforce it.

Documents that are to be executed as a deed will usually need to witnessed by somebody who is physically present at the point that they are signed.  It isn’t normally the case, but a small number of Settlement Agreements that we see are required to be executed as a deed. In such situations, an employee who wishes to execute the deed via electronic signatures should seek consent from the employer that this is acceptable. For example, an employee who is shielding and living on their own would need their employer’s consent to not only sign the agreement electronically themselves, but also for this to be witnessed remotely (e.g. via a video call) before their witness added their own electronic signature.

Conclusion

During lockdown we have dealt with an increasing number of documents being signed electronically, including Settlement Agreements and we would expect this to continue even after things revert to something approaching normality. There are some excellent applications available for signing documents electronically that provide convenience, digital security and clarity on exactly when the document was received, signed and sent. That said, there may still be scenarios where a wet-ink signature is required, or where it is not possible for someone to sign a document electronically, perhaps because they do not have the technology required. If the parties are happy to deal with things digitally then this should generally not cause any issues, but it is always best to seek legal advice if you are unsure as to whether a document can be executed virtually and signed electronically.