A settlement agreement (previously known as a compromise agreement) is a contract where an employee agrees to give up claims against their employer, usually in exchange for compensation.
Usually, a settlement agreement is used in connection with ending the employment on agreed terms. However, it could also be used when the employment is going on, but where both parties need to settle a dispute that has arisen between them.
If the settlement agreement is regarding you leaving the business, the company will usually stipulate terms about your exit from the company, for example, confidentiality clauses and restrictions on compensation.
Making use of a settlement agreement can often avoid formal disciplinary action, or even redundancy in some instances. This can save employers time and money, and can also remove the risk of unfair dismissal claims.
To prevent employment law claims, the settlement agreement has to meet certain requirements. It must be in writing, and the employee must get independent legal advice on what the agreement means, from a qualifying legal adviser, such as a settlement agreement solicitors. A properly drafted settlement agreement is legally binding, and is only valid if you have taken independent legal advice, so we recommend you speak to our settlement agreement solicitors. In some cases, your employer will contribute toward your costs.
Your employer will offer to draft the settlement agreement, our settlement agreement solicitors, in Datchet, will help you negotiate the terms, to ensure they are fair. These terms could include:
- Compensation or redundancy payments
- Confidentiality agreements
- An obligation not to make negative comments about you
- An agreed reference
If you have any questions, give us a call, or visit our settlement agreement solicitors in Datchet, to talk your case through.