Settlement agreement

A Settlement agreement – formerly called a Compromise Agreement – is a legally binding contract which can be used to end an employment relationship on agreed terms.

The main feature of a Settlement Agreement is that it waives an employee’s right to make a claim to a court or Employment Tribunal.

A Settlement Agreement may be proposed prior to undertaking any other formal process and they usually include some form of payment to the employee and often include a reference.

For a Settlement Agreement to be legally binding, the employee must have received advice from an Employment Law solicitor as to the terms and effect of the agreement and its effect on the employee’s ability to pursue a claim at an Employment Tribunal.

A Settlement Agreements is a voluntary arrangement and so you are not obliged to agree them or enter into discussions about them if you don’t want to.

If you do wish to consider a Settlement Agreement you do not have to accept the first offer. We will assess whether the amount being offered is reasonable and discuss this with you. If you wish we can negotiate an increase to the amount that you have been offered. In addition we shall insist that your employer agrees to pay for the costs associated with obtaining advice on the Settlement Agreement.

If you have been offered a Settlement Agreement – or are involved in settlement negotiations – please contact one of our employment solicitors today for guidance and support.


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