Settlement Agreements

Previously known as a Compromise Agreement a Settlement Agreement is a contract between the employer and employee in which the employee waives, withdraws and/or agrees not to pursue any employment claims against his or her employer. 

In return the employer usually pays the employee a sum of money to induce him or her to enter into the contract.  In deciding the amount to offer and employee, some of the following factors could be relevant:-

  • length of service.
  • salary and benefits.
  • the circumstances in which his or her employment was terminated.
  • how long it will take to secure another job.

Settlement Agreements are often presented to an employee following a dispute.  Also employers often use Settlement Agreements when making employees redundant if they are paying the employee an enhanced redundancy payment.

You may already have a template settlement agreement, or you may wish us to draft one for you from scratch. There are various requirements that must be fulfilled in order for a settlement agreement to be legally valid, and we will ensure that your settlement agreement fulfils all of these requirements. Although it will be tailored to your own individual circumstances, there are some common features to most settlement agreements which we ensure are included to protect your position.

As Employment Tribunal litigation can be time consuming and costly, a settlement agreement can offer a commercial alternative to facing a lengthy legal dispute.

If you would like more information about settlement agreements, or have a situation with an employee where you think a settlement agreement could be beneficial, then Ashby Cohen can help you. We strongly recommend that you take legal advice before starting any settlement discussions with an employee. We specialise in employment law cases, and our years of experience as employment lawyers make us especially qualified to assist you with any settlement agreement issues you may have. Please contact us for an initial free telephone consultation.

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