A settlement agreement (previously known as a compromise agreement) is a legally binding contract between an employee and an employer which once signed, revokes the employee’s rights to make a claim against the employer – in a court or tribunal. In exchange, the employer promises various payments, usually beyond what the employee is legally entitled to. Settlement agreements can be used to end an employment relationship; settle disputes whilst still employed or to settle claims already issued at the Employment Tribunal.
In order for a settlement agreement to be binding, the terms of the agreement must be in writing, it must relate to a particular complaint/dispute and you must receive advice from a suitably qualified (and insured) Trade Union Official or an otherwise qualified Employment (who is then named within the settlement agreement itself),
We provide a free service to members and non-members in relation to compromise agreements. The service is free to the individual because compromise agreements generally include an employer contribution to the employee’s legal fees. This payment enables the employee to have the settlement agreement reviewed and agreed with a Trade Union Official or Employment Specialist.
If you would like assistance with a settlement agreement, contact out head office on 0844 800 4421 or request a call back (settlement agreement form needed)
Settlement Agreements FAQ’s
Every settlement agreement is different but it is common that employers will want to keep the terms and sums of money paid to remain confidential between you and them.
The primary function of a settlement agreement is usually to settle a specific issue (e.g. redundancy, grievance or a dispute resulting in your leaving employment). In order to protect themselves, an employer may take the agreement a stage further as a full and final settlement, in order to prevent future claims against them (e.g. for workplace injury, or a matter unrelated to your settlement agreement), especially if your employment with them is terminating. However, there are some claims which cannot be waived through a settlement agreement such as accrued pension rights and unknown personal injury claims.
If the purpose of the settlement agreement is to terminate your employment, then it is usual to agree a reference. We have a good success rate in securing suitable references when negotiating a settlement agreement.
In short, it depends on the amount of the payment. Compensation sums up to £30,000 can usually be paid tax free. However, there are some exceptions to this, such as if the payment constitutes pay or wages, holiday pay, or contractual pay in lieu of notice. Taxable payment can sometimes be diverted to a pension fund, free of tax.
We aim to agree terms of a settlement agreement as quickly as possible. Every settlement agreement is different but it may be possible to advise you and confirm our advice by signing the settlement agreement the same working that you instruct us.
Yes! Both the settlement amount and the terms of the settlement agreement are negotiable. If you are unhappy with the terms offered in the settlement agreement, we would endeavor to negotiate an improved offer.
Yes, there are. However, the fees are never paid by the employee, and are always paid by the employer. Our fee structure starts at £350.00 but can vary depending on the nature and complexity of the case.
Yes. If you are an employer and require a settlement agreement to be drafted and/or advice on whether to offer a settlement agreement and/or how to conduct a s. 111A Employment Rights Act 1996 meeting, please do not hesitate to contact us.