Settlement Agreements

Employer

A Settlement Agreement, formerly known as a Compromise Agreement, is a legally binding document setting out the terms and conditions reached when a Contract of Employment is to be terminated or a dispute to be resolved. The aim of a Settlement Agreement is to achieve a "clean break" between an employer and employee when an Employment Contract is to be terminated or to resolve a dispute. Settlement Agreements can be used in a number of circumstances and are often used in redundancy situations where an employer makes an enhanced redundancy payment in return for a guarantee that the employee will not bring a claim against the company at any time in the future.

Settlement Agreements are designed to bring certainty and a complete ending to the employer/employee relationship - it is therefore essential that you seek proper legal representation to ensure that the Settlement Agreement you are asking your employee to sign incorporates all of the necessary clauses to prevent that employee from making a claim at a later date.

The above is for general information only and should not be construed as formal legal advice.


Employee

A Settlement Agreement, formerly known as a Compromise Agreement, is a legally binding document between an employer and employee when the parties wish to agree terms and conditions when a Contract of Employment is ending or as a means of resolving a dispute. There are a number of different circumstances when such an Agreement can be used - redundancy, mutual agreement, dismissal, or to settle an Employment Tribunal claim prior to the actual hearing taking place.

The purpose of a Settlement Agreement is to provide certainty for both employer and employee. It is a requirement of the Agreement that you, as the employee, have received independent legal advice. In most cases your employer will pay for or contribute towards the legal expenses to enable you to receive this legal advice on a cost efficient basis. The most important thing to understand about a Settlement Agreement is that it is binding on both parties and in signing the Agreement and accepting the settlement terms you will not be able to bring a claim in any Court or Tribunal.

It is therefore essential that all outstanding matters be dealt with prior to signing the Agreement, such as any unpaid wages, bonuses, accrued but untaken holiday pay and it should specifically list all of the potential claims that could otherwise be brought by an employee and which are now being compromised.

It is important to note that, although our fees will be paid (normally in full) by your employer, we represent you, and will work to ensure that your Settlement Agreement is as advantageous as it can be for you.

The above is for general information only and should not be construed as formal legal advice.

Contacting Us

Fosters Solicitors team of Business & Commercial lawyers have a wealth of experience and knowledge to assist you in relation to any legal query or matter you may have. Call us on 01603 620508 or complete our and a member of the department will be in touch very soon.