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Settlement Agreements

What Are Settlement Agreements?

Settlement agreements, formerly known as compromise agreements, are documents which set out the terms and conditions agreed by the Employer and Employee (the two parties) when they agree to settle a potential employment tribunal claim or claims, or other court proceedings.

Who Can Enter Into Settlement Agreements?

It can be an employer and employee (or former employee) who are the contracting parties to a settlement agreement. They can also be agreed between an employer a worker who has a complaint about holiday pay, or even an unsuccessful job applicant who feels they were discriminated against at a job interview.

Key Elements of a Settlement Agreement
They are entirely voluntary – they include terms and conditions that are mutually agreed, and parties do not have to enter into them if they do not wish to do so;

They are legally binding;

They can waive an individual’s rights to bring a claim covered by the agreement – for example, the right to make a claim to an employment tribunal or court;

The employee (or former employee) usually receives some form of financial payment and will also often receive a reference as part of the agreed terms;

They are often reached through a process of discussion and negotiation. The parties do not have to accept the terms initially offered – there may be a process of negotiation during which both sides make offers and counter offers;

Negotiations about settlement agreements are usually without prejudice in the sense that, if an agreement is not reached, the negotiations may not be admissible as evidence in claims before an employment tribunal or in other court proceedings.

For Employers:

We advise Employers on the appropriate use of Without Prejudice discussions and Settlement Agreements and help negotiate with employees or their representatives and help the parties reach a successful amicable mutually agreed resolution.

For Employees:
We advise Employees who have been given a Settlement Agreement. We can advise on its legality, the effect of it if accepted on the dispute and answer any queries the Employee may have. We can handle further points of negotiation on behalf of the Employee with the Employer or their representative.