Call us: 02380 218000

Back to Employment Law Solicitors Home

Settlement (Compromise) Agreements

A settlement agreement (previously known as a compromise 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 in a court or employment tribunal. Both the employer and the employee can suggest a settlement agreement to settle a dispute.

Settlement agreements are used in a variety of circumstances when an employer and an employee agree for employment to be terminated by agreement in return for a severance package. They are particularly common in voluntary redundancy. A settlement agreement can also 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. 

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. Once the employee has received legal advice and both parties have signed the agreement, it then becomes a fully binding contract between the parties. 

Eric Robinson Solicitors can advise on settlement agreements from the standpoint of the employer and employee.  Contact us today.

Meet Your Team