What are Settlement Agreements?

A Settlement Agreement (formerly known as a Compromise Agreement) is a form of contract you might enter into if you are an employee and you are leaving the employment of your current employer.

Employment legislation has made provision for this type of agreement.

It has to cover certain matters if it is to be effective.

Also, the agreement can only be entered into if you as the employee have been advised by a specialist employment law adviser – such as an employment law solicitor.

When is a Settlement Agreement used?

There are a variety of situations in which Settlement Agreements are used.

Most commonly, it is where you and your employer have agreed that your employment is to come to an end.

This could be due to a redundancy situation or simply by mutual agreement.  Either way a severance package will have been proposed and will be set out in the Settlement Agreement under which you will receive a number of benefits on termination of your employment.

The benefits can include a payment of compensation for loss of your employment, holiday pay, notice pay, pension arrangements and future employment references.

A Settlement Agreement can also be used to settle matters if you have some sort of dispute with your employer.

The sort of potential grievance you may have could include a claim for unfair dismissal or unfair selection for redundancy or discrimination.  If there has been a breakdown in the employer / employee relationship, the best way to bring things to a mutually acceptable conclusion may be by way of a Settlement Agreement.

Whether your employment is still in place or has already ended, you can enter into a Settlement Agreement with your employer and Employment legislation provides that this type of agreement is the only way potential or actual claims against the employer of the sort detailed above can be validly settled.

In some cases, a Settlement Agreement will be the way that proceedings raised in the Employment Tribunal will be resolved.

How much will a Settlement Agreement cost?

If you have been given a Settlement Agreement by your employer, you should contact us for a free, no-obligation chat about your options.

We will aim to protect your best interests and, in most cases, you will be kept entirely free of cost because your employer will pay our fees as part of the agreement.  There is usually a clause in the agreement stating the level of fees that the employer agrees to pay.

We can help you if you need advice in relation to a Settlement Agreement

It is important to get proper legal advice because, whilst there may well be benefits to you in the terms of the agreement, there can also be pitfalls such as restrictive covenants (clauses which restrict the employee’s ability to work in particular areas – in terms of job description and / or geographical location – for a stated period of time after their employment ends) which might need careful consideration before you agree to accept them.

If you have any queries about Compromise / Settlement Agreements in particular or an employment law issue in general, do not hesitate to call on of our employment team on 01343 544077. All initial enquiries are free of charge and without obligation.

Alternatively, if you prefer to make a free enquiry in writing, you can complete and send an Online Enquiry – without obligation.

Get in touch with us to have a chat about your options.