Settlement (Compromise) Agreements Solicitors

At Eric Robinson Solicitors, we can advise on settlement agreements for both employer and employee.

What is a settlement agreement? 

A settlement agreement is a contract between an employee and employer, typically used to resolve employment disputes on specific agreed terms. Usually, under the agreement, the employer will agree to pay the employee a sum of money (a compensation payment) for the employee waiving their rights to bring certain employment tribunal claims against the employer.  

Settlement agreements can also be used to settle ongoing claims you are bringing to a court or employment tribunal. Both the employer and the employee can suggest a settlement agreement to settle a dispute.

The terms of the agreement will need to be mutually agreed upon by both parties, and these terms are often reached via a period of discussion and negotiation. This is due to the fact that settlement agreements are entirely voluntary, so both employer and employee need to be happy with the details before it can be made legally binding. 

What are the benefits? 

A settlement agreement can be a clean break between an employee and employer, and with prohibitive costs of bringing or defending an employment tribunal claim, it is often a cost effective, sensible and amicable solution to resolving sometimes difficult situations at work. 

In addition, they often provide a swift resolution, sparing all parties the time, expense, and emotional toll of prolonged litigation. By reaching an agreement, parties maintain control over the outcome, crafting terms that suit their needs and interests rather than relying on a judge’s decision. Settlements also offer confidentiality, shielding sensitive information from public scrutiny.

When are settlement agreements used? 

Settlement agreements are used in a variety of circumstances when an employer and an employee agree for employment to be terminated in return for a severance package. They are particularly common in voluntary redundancy, but may also be used to resolve specific employment disputes. They can be suggested either by employer or employee and are entirely voluntary. 

How does a settlement agreement work? 

Settlement agreements work by providing financial compensation to an individual. This then waives their right to make a claim against their employer related to anything included within the agreement. They are facilitated through negotiations based on the issues that have been identified. Once both parties are in agreement, it is formalised by a legal representative, and signed. Upon execution, the settlement agreement effectively terminates the underlying dispute, becomes legally binding, and parties must adhere to the agreed-upon terms. 

It is important to note that for the agreement to become legally binding, the employee must receive independent legal advice on its terms and effect and on their ability to pursue their rights before an employment tribunal. 

Typical elements of a settlement agreement 

Below we have highlighted some of the elements you may expect to find within a settlement agreement, although these will be tailored to an individual’s circumstances: 

• Your personal details and your employer’s details
• The specifics of the terms, including your termination date and notice, payment details and any relevant tax liabilities, notice pay, holiday bonus, shares and any other benefits included within your employment period. 
• Confirmation that the specified issue would not be brought to an employee tribunal and is hereby ‘settled’. 
• Details surrounding any company or personal property.
• Confidentiality clauses. 

How Eric Robinson Solicitors can help 

Our expert Solicitors at Eric Robinson are fully qualified to support clients with settlement agreements. We are here to help you navigate the complexities of your agreement, ensure that you are happy to proceed with the details, and that you understand each stage of the process fully. 

Our experienced Solicitors offer insights and strategies to help you achieve favourable outcomes and protect your interests throughout the settlement process.

To speak to us and find out more, get in touch with one of our local branches at the following locations: Southampton, Hedge End, Chandlers Ford, Winchester, Lymington & Richmond Upon Thames.