Settlement agreements are a common feature of employment law in the UK and can be an effective way to resolve workplace disputes, end an employment relationship amicably, or avoid the need for tribunal proceedings. Whether you’re an employee presented with a settlement agreement or an employer seeking to offer one, it’s essential to understand what they involve and why professional legal advice is crucial.
What Is a Settlement Agreement?
A settlement agreement (formerly known as a compromise agreement) is a legally binding document between an employer and an employee. It typically involves the employee agreeing to waive their rights to bring certain claims against the employer in exchange for a financial settlement or other benefits, such as a reference or continuation of benefits for a set period.
These agreements are often used in situations involving:
- Redundancies
- Workplace disputes
- Allegations of misconduct or poor performance
- Termination of employment by mutual consent
What Should Be Included?
A valid settlement agreement must be in writing and include:
- Clear details of the payments being made to the employee (e.g. notice pay, compensation, holiday pay)
- A list of the claims the employee agrees not to pursue
- Confirmation that the employee has received independent legal advice
- The name of the legal adviser, who must be insured to provide such advice
- A statement that the legal conditions for a valid agreement under employment law have been met
Do I Need Legal Advice?
Yes, and it’s a legal requirement. For a settlement agreement to be valid, the employee must receive advice from an independent solicitor. This ensures the employee fully understands:
- The implications of signing the agreement
- The rights they are giving up
- Whether the settlement is fair and in their best interests
At A R Brown & Co, we provide prompt and pragmatic advice to both employees and employers. We’ll guide you through the terms of the agreement, negotiate on your behalf if necessary, and ensure everything is handled correctly and in line with your objectives.
For Employers
Employers should ensure that a settlement agreement is well-drafted, fair, and complies with employment legislation. Using a settlement agreement can protect your business from future claims and offer a clean break in difficult situations, but only if handled properly. We help employers draft effective, compliant agreements and support them through the negotiation process.
For Employees
If you’ve been handed a settlement agreement, it can feel overwhelming or confusing. You may wonder whether the terms are fair or if you’re being pressured to sign too quickly. Our experienced team will help you understand what the agreement means and advise you on whether it’s in your best interest, giving you peace of mind before you commit to anything.
Get Expert Legal Advice Today
Whether you’re an employer or employee, getting the right legal support with a settlement agreement is essential. At A R Brown & Co, Deborah Francis, our Managing Director, leads our experienced employment law team and offers practical, tailored advice to help you make informed decisions.
📩 Contact Deborah Francis today at dkf@arbrown-solicitors.co.uk to arrange a consultation.