Settlement Agreement

A Settlement Agreement (previously known as Compromise Agreements) is essentially a contract, setting out terms of  settlement (agreement) including the crucial clause which prevents employees from pursuing claims against their employer.

Due to the serious nature of a Settlement Agreement there are conditions to be met, so to make it legally binding. These include ensuring it is specific and that employees receive advice from a named relevant independent advisor, such as an employment solicitor, who has appropriate insurance.

For businesses, ensuring any Settlement Agreement protects their business in relation to claims, confidential information, reputation and more, is key.

How do we approach an employee about a Settlement Agreement?

There are two ways to begin or continue confidential discussions. By confidential, we mean if it proceeds to a Tribunal, it will never be disclosed. These are:

  • without prejudice discussions – these can only be used if there is already a dispute.
  • ‘statutory’ pre-termination negotiations– no dispute is needed, however, these are limited almost entirely to (potential) basic unfair dismissal claims. These conversations can, for instance, be disclosed if discrimination or ‘improper behaviour’ is involved. The latter has a low threshold, therefore getting the right wording for the approach and following the correct procedure is essential. We set out below a potential useful resource for you.

What do we need to think about?

Whilst discussions are usually centred around money, we will want to make sure that your business is protected. We will talk to you about protecting your reputation, information, relationships and property.

We will also discuss how you might offset financial requests against other benefits.

What next? How can we help you?

Whatever the reason, we can help you approach, frame or respond to any exit discussion or negotiations. We can then draft any necessary letters and the Settlement Agreement itself.

You might find this ACAS Code on Settlement Agreements a useful resource.

To provide some useful information, whilst online, we have employment law checklists available. You can also sign up for regular updates.

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If you are an employee being asked to sign a Settlement Agreement, please see here.

We regularly work with clients from London, Guildford & the surrounding area. Much of our Settlement Agreement work is now undertaken via Skype, phone and email.