Settlement agreements, formerly known as compromise agreements, are legally binding contracts which can be used to end an employment relationship on agreed terms. They can also be used to resolve an ongoing workplace dispute.
Although they can be instigated by an employee, they are more usually proposed by the employer.
For a settlement agreement to be legally binding it must meet strict criteria:
- It must be in writing
- It must relate to a particular complaint or proceedings
- The employee must have received advice from a relevant independent advisor (e.g. a solicitor).
- It must identify the adviser
- It must state that the applicable statutory conditions regulating the settlement agreement have been met
If your employer has raised the subject of a settlement agreement with you there are some key aspects you should consider.
- Commonly settlement agreements are offered as part of a protected conversation process. Employees usually have 10 days to decide whether to accept the settlement agreement.
- Often the employer will cover your cost of seeking professional advice. Ensure you ask your employer about this early on in the discussions
- There is no statutory right for you be accompanied at any meetings to discuss the agreement, however if you would feel more comfortable, you can ask for a work colleague or trade union representative to be involved
- If an agreement includes the end of the employment, then notice periods, timings and payments in lieu of notice and restrictive covenants should all be considered
GA Solicitors has a great deal of experience in assisting and advising clients in respect of settlement agreements. If you need legal advice on a settlement agreement then please call 01752 203500 to speak to our experienced employment team. Alternatively fill in our online form or email enquiries@GAsolicitors.com and someone will be in touch as soon as possible.