At some point in your career you may be faced with your employment being terminated through no fault of your own, or by mutual agreement. You may be offered a sum of money in order to facilitate an easier and swifter termination, and in those circumstances your employer will seek to protect its business by asking you to sign an agreement.
A Settlement Agreement (previously known as a Compromise Agreement) is a voluntary legally-binding written contract, where an employer and employee terminate employment on agreed terms.
Employers may wish to offer a Settlement Agreement to employees they are making redundant, or to avoid going to an Employment Tribunal, as it is much quicker and simpler procedure, which also means the employee will have a reduced time to wait for compensation payments. However, Settlement Agreements also ensure those dismissed will be unable to make a claim against their employer about any type of claim which is listed in the agreement, such as unfair dismissal. In essence it financially compensates the employee whilst limiting the employer’s liability so that a line is drawn under the end of the employment relationship with a “clean break” being achieved.
Because of this, the law states that employees should seek independent legal advice to have any Settlement Agreement offered to them reviewed and, if appropriate, negotiating the terms. This legal advice is normally paid for by the employer in terms of a financial contribution.
It is important that you understand the terms of the compromise agreement. Our wealth of experience will help you to understand the agreement and ramifications of signing it. We also offer advice on whether the settlement proposed is a reasonable one in light of the background to the termination of your employment, and will negotiate on your behalf where necessary.