What is a settlement agreement?

A settlement agreement, formerly known as a compromise agreement, is an agreement that records the terms and the payments to be made, in return for an employee waiving the right to bring any claims arising from his employment or its’ termination.

Why ask an Employee to sign a Settlement agreement?

It is most common for an employee to be asked to sign a Settlement agreement when their employment has been terminated, or is about to be terminated.
The benefit for an Employer is that a Settlement agreement gives peace of mind. After signing a Settlement agreement an employee will not be able to bring claims in an Employment Tribunal arising from the termination of their employment.
When negotiating a settlement agreement, the draft agreement and any related correspondence should be marked “without prejudice”. This is because if a settlement is not reached the employee cannot refer to the attempted settlement in the courts or tribunals if they later bring a claim.

Is a Settlement agreement the solution to protect your business?

For a settlement agreement to be effective, the employee must have received independent legal advice. For this reason and because a Settlement agreement needs to meet certain conditions before it is legally binding you should take legal advice and ensure that the Agreement is drafted by a specialist Employment Law Solicitor.

How much will it cost?

We can advise you in relation to the terms on which the Settlement agreement should be offered, draft a legally binding Settlement agreement for you and deal with any negotiations on your behalf with the employee’s solicitor, all for a fixed fee. Please contact us for a fixed fee quotation and to discuss how we can help you.