Settlement or Compromise Agreements

Advice for Employees

What is a settlement or Compromise Agreement?

A Settlement Agreement (formerly referred to as a Compromise Agreement) is a contract where you, the employee, agree to compromise your legal claims against your employer on agreed financial and other terms such as an agreed reference.

Without Prejudice negotiations

You may have been offered a Settlement Agreement during a ‘Without Prejudice’ discussion with your employer. This sometimes takes place when your employer is proposing to dismiss you whether for redundancy or some other reason, or if you have brought an employment tribunal claim or filed an internal grievance against your employer.

Negotiating a settlement Agreement

If you have been offered a Settlement Agreement, your employer is likely to ask you to take  legal advice from a solicitor, for which the employer will make a contribution towards your legal expenses. This is because in order for you validly to waive your claims in the employment tribunal against your employer, the agreement has to fulfil certain conditions, which bestow protection on the employee. One of the conditions is that you have taken legal advice from a ‘Relevant Independent Adviser’ on the terms and effects of the agreement. ‘Relevant Independent Advisers’ include solicitors and qualified trade union advisers. By taking legal advice, you should be appraised of your employment rights before you waive these through a Settlement Agreement.

Standard terms in a settlement Agreement

The agreement will set of the settlement sum and the date of termination of employment. It should also  entitle you to a payment for any outstanding holiday. As an employee, you may wish to ensure that the agreement says that your employer will provide an agreed reference in response to any request for an reference from a potential employer. Settlement agreements usually contain terms preventing one or both parties from making disparaging statements about the other, confidentiality obligations and the return of property. Often, the employee is required to provide an indemnity against any tax payable on the compensation sum.

Who pays for the advice on the settlement Agreement?

Usually, your employer will contribute a sum towards your legal costs. In many cases we handle, this will cover your legal costs in full.

What if I decide to bring a claim in the Employment Tribunal?

If you decide not to enter into a Settlement Agreement, we can act for you in pursuing a claim in the Employment Tribunal. Employees are now required to file an early conciliation notice with ACAS to try to settle the dispute before filing a claim. We have substantial experience in acting for clients in their Employment Tribunal claims on a range of matters including unfair dismissal, complex discrimination claims, whistle blowing claims, redundancy pay, breach of contract and unlawful deduction of wages.

How do I contact Knight-Webb Solicitors?

If you are currently employed and are worried about an employment-related issue which may lead to a Settlement Agreement advice, or you otherwise require employment law advice, please do not hesitate in contacting us today. We have many years experience in dealing with employment-related concerns.

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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