Settlement Agreements for Employers

When may a settlement Agreement be Used?

If you are finding yourself in one of the following situations, the best solution may be to consider a ‘clean break’ and offer the employee a settlement agreement (formerly known as a ‘compromise agreement’).

  • You are making an employee redundant.
  • You are otherwise contemplating dismissing the employee.
  • There is, or there will potentially be a dispute between you and the employee, whether in the form of an internal grievance or a Court or Tribunal case.

What are the standard terms in a settlement Agreement?

In addition to clauses about payment terms and references, settlement agreements usually contain terms preventing one or both parties from making disparaging statements about the other. Settlement agreements also often require the employee to keep the compromise agreement confidential and to return company property. Often, employers will ask that the employee provide an indemnity against any tax payable on the compensation sum.

Who pays for the advice on the settlement Agreement?

Usually, the employer offers to contribute a sum towards your employee’s legal costs but we can discuss this further with you and explore all options available. The employee must be required to take legal advice prior to signing the agreement.

Are you an Employer? Contact us about settlement Agreements

If you are an employer and thinking about offering a Settlement Agreement, or have any other employment-related legal concern please do not hesitate in contacting us today. We have many years of experience in advising large and small employers. We offer a first-rate, personal and cost-effective service.

I Live Outside of London, Can I Still Speak to You?

Even though we are based in London, we have many clients further afield. If you are based outside of London please contact us today and we can arrange a telephone conference.

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