Settlement Agreements

Employment Law – Settlement Agreements

A Settlement Agreement (sometimes referred to as a Compromise Agreement) is a legally binding agreement that is used to end an employment contract, whereby the employee, usually upon payment of an agreed sum, waives his/her rights to bring a claim against the employer, for example, to make a claim to an Employment Tribunal or to the Court.

Such an Agreement is voluntary and includes terms and conditions that are mutually agreed upon. The Agreement sets out the terms of financial payment and often includes a reference as part of the agreed terms.

The contents of the Agreement are confidential and, with the exception of a limited number of people, must not be disclosed.

The Terms Of a Settlement Agreement

For the settlement agreement to be legally binding a number of conditions must be met, and we will ensure they are.

• The agreement must be in writing.
• The agreement must relate to a particular complaint or proceedings.
• The employee must have received advice from a relevant independent adviser, such as a lawyer or a certified and authorised member of a trade union.
• The independent adviser must have a current contract of insurance or professional indemnity covering the risk of a claim by the employee in respect of loss arising from the advice.
• The agreement must identify the adviser.
• The agreement must state that the applicable statutory conditions regulating the settlement agreement have been met.

We know during these challenging times businesses may have to make difficult decisions. If you are an employee who has been offered a settlement agreement or if you are an employer who needs to provide your employees with settlement agreements we are here to help. Our team can advise you on the terms of the agreement or draft bespoke agreements to meet your needs.