A settlement agreement (which used to be known as a compromise agreement) is a legally binding contract between an employee and an employer which can be used to settle issues between them.
A settlement agreement often involves a financial payment to the employee to resolve the dispute and (usually) ensure confidentiality on the matter from all parties involved.
The parties can agree the terms of any reference and the employee is contractually prevented from proceeding to a Tribunal. This usually happens at the end of someone’s employment, although it doesn’t have to be at the end and can be during employment or during an active Tribunal claim.
Usually the employer will contribute towards legal fees (but, often, they won’t pay them all so this should be checked if you have an agreement).
We draft bespoke Settlement Agreement for employers and can offer full advice and negotiation, and this can be added as part of our Outsourced HR Support content.
For employees, we would suggest you contact us in the following situations:
- If your employment is ongoing but you have a dispute to resolve, for example, a discrimination claim, disability discrimination, harassment or bullying, grievance or capability procedures or long-term sick. We can set out your options and try to negotiate you out of your employment using a settlement agreement.
- If you have brought a claim against your previous employer in the Employment Tribunal and there is an offer of settlement, we can help define the terms of the settlement agreement and advice you on this before you agree to it.
- If you have a long-term mental health or physical illness and are unable to continue working, your employer may wish for you to sign a settlement agreement to prevent a disability discrimination claim against them and to provide a clean break for both parties.
Settlement agreements are not legally binding the employees seeks legal advice.
Settlement agreements are not legally binding unless you, as an employee, seek legal advice. For assistance with a settlement agreement you should contact Thrive so that you have support on negotiating and can settle with your employer in a professional and fair manner.