Settlement Agreement

What is a settlement agreement?

A settlement agreement is an agreement between you and your employer. It is usually legally binding and will include payment or lump sum from the employer in return for an employee not to pursue any further claims through the court. If you have a settlement agreement with your employer and this would be expected to be kept confidential and may come with a termination contract.

It is advisable to get a solicitor for a settlement agreement, as it will need to be signed off by a solicitor. A solicitor will be able to advise you on the rules and regulations of a settlement agreement.

A settlement agreement used to be called a compromise agreement, this was changed in 2013.

If you do not agree or accept the settlement agreement that you have been offered your employer can not dismiss you as this could be constructive unfair dismissal.

A settlement agreement should state a full breakdown of payments that are due to you. A payment of up to £30,000 without any tax deduction.

If you are due to commission or a bonus, then those amounts should be included in the settlement agreement.

Your solicitor will be the best person to advise you on any settlement agreement issues. They can also ask for an agreed reference that is attached to the settlement agreement, an employer cannot shy away from this agreed reference.

Legal fees to hire a solicitor would usually cost between £350-500 depending on the complexity of your case. Your employer will normally be asked to contribute to these costs.