Settlement Agreements

Formerly known as a 'compromise agreement', settlement agreements are contracts that normally involve receiving a financial settlement in return for signing away employment rights. They are offered, predominantly, in the event of redundancy or dismissal.

Employment Law Solicitors - Legal Advice - Settlement Agreements

In order for your Settlement Agreement to be binding and enforceable (in terms of waiving Employment Tribunal claims) you must take independent legal advice prior to signing. This is so you're fully aware of the terms and conditions of the Settlement Agreement, and the rights you are agreeing to sign away.

Your Employer will pay a contribution towards your legal fees and you have the right to choose your own Solicitor.

Simpson Millar has the expertise to redraft and negotiate settlement agreements on your behalf, providing expert and impartial advice, tailored to guarantee the best outcome.

Why Choose Simpson Millar For Independent Legal Advice?

If you are an employee seeking independent legal guidance regarding a Settlement Agreement, our Employment Law department offers the following:

  • A wealth of experience across the team, allowing us to handle your situation quickly and efficiently
  • High level expertise - that enables us to draft Settlement Agreements, not just advise upon them
  • The understanding that allows us to spot loopholes disadvantageous to your position. By acting for both Employers and Employees we know the "tricks of the trade"
  • A determination to achieve the best outcome for your individual situation
  • A proven track record and highly regarded reputation, making us the first choice among employees for specialist and informed advice.

We always aim for this to be cost neutral for you, so that the legal fee contribution made by your Employer is the only payment made to us, should you sign the Settlement Agreement.

What is a settlement agreement?

A settlement agreement is a legally binding contract drawn up to prevent the employee from bringing a claim against their employer in exchange for a sum of money.

Understanding A Settlement Agreement

Below are the key factors you should be aware of regarding such a contract.

Waiving Your Employment Rights

The key aim of a settlement agreement is to prevent you from bringing a legal claim against your employer. It is therefore important that you consider the following before agreeing to surrender your employment rights:

  • The conditions in which the agreement is offered
  • Your salary level
  • Your expectations for securing a comparably paid job
  • How strong your case is if you were to make a compensation claim through the courts
  • The time, effort and potential costs that would arise from pursuing a claim.

Simpson Millar will explain the options available to you, guiding you through the process by helping you to reach a decision suited to your individual circumstances.

When might I be given a settlement agreement?

A settlement agreement can be issued if you are being made redundant; a dispute has arisen between yourself and your employer that could result in Employment Tribunal proceedings; or if both parties have agreed to a mutually acceptable severance.

Do I need to sign the agreement?

No. You do not have sign a settlement agreement unless you are happy with the terms. We will explain to you how reasonable your Settlement Agreement is. In the event you cannot agree satisfactory Settlement Agreement terms with your employer, you are entitled to take your case to an Employment Tribunal.

What happens after I sign the agreement?

In the majority of cases, you will be bound by a confidentiality clause barring you from discussing both the details and the existence of the agreement with anybody other than those categorised therein.

There will also be a clause preventing you from discussing your former employer in any negative terms. Failing to abide by either of these conditions could result in a breach of contract claim from your employer.

Is a settlement agreement legally binding?

A Settlement Agreement's legality cannot be disputed if:

  • Your Settlement Agreement is in writing;
  • It relates to a particular grievance or proceedings;
  • It has a clause stating that all the legislative requirements have been met regarding its realisation; and, finally,
  • You have received independent legal advice from an insured advisor regarding the contract and the rights you are agreeing to waive.

This means that you, your legal advisor and your employer must abide by the terms within, with the possibility of court action against any party failing to do so.

What Do I Do Next?

If you have been offered a Settlement Agreement and are unsure of its terms - our Employment Law team can give you a comprehensive and clear understanding of what is being offered to you.

All you need to do now is contact one of our Employment Law team today, and we can advise you of your next steps.

Any employee who thinks their employer has breached their rights please contact our Employment Law Team now. You can use our free, no obligation, online enquiry form and we will call you back or you can call us directly on freephone: 0808 129 3320.


Get In Touch

Aneil Balgobin | Partner, Head of Employment Law | Simpson Millar LLP - London & Wimbledon

Aneil Balgobin
Partner, Head of Employment Law

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