Settlement Agreements for Employers (formerly Compromise Agreements)

Do you have an employee who is being made redundant or who has agreed to leave your employment in exchange for a lump sum payment? How can you achieve peace of mind and protection from Tribunal claims after they leave?

In these circumstances you can ask your employee to sign a Settlement Agreement.  You may also hear the term “Compromise Agreement” – Settlement Agreements were known as Compromise Agreements under the previous rules.

A Settlement Agreement is a contract that employer and employee sign laying out the terms of the employee leaving their job.  Your employee signs away their right to bring an employment tribunal claim against you and often several other rights (such as the ability to sue for breach of contract) in exchange for an agreed payment from you.  You can also agree other things, such as the content of any job reference you will give to potential future employers.

For a Settlement Agreement to be valid it will need to contain certain terms, and the employee must take legal advice to ensure that they they understand what they are signing.  You would normally contribute towards the legal fees for this advice, however the size of the contribution is up to you.  You are also expected to give the employee a minimum of 10 days to consider the terms of the agreement.

At Backhouse Solicitors we are experts in preparing Settlement Agreements.  One of our solicitors will meet with you, discuss your needs and prepare a Settlement Agreement tailored especially to your business.

The benefits for your business:

  • The employee agrees not to bring a tribunal claim against you after leaving
  • You agree exactly what you will pay them and when
  • You agree an employer’s reference with them in advance
  • They agree anything else important to you – return of company car, laptop, credit cards, keys etc.

For more information please contact us on 01245 893400 or email [email protected] to speak to one of our expert employment law solicitors.