A Settlement Agreement might be offered to you by your employer to settle a dispute you have with them to stop you making a claim or taking an existing claim further or so that the employment relationship can be terminated in an amicable and confidential way.
A settlement agreement usually ensures that you receive a sum of money in exchange for your agreement not to pursue any employment tribunal claims in respect of treatment that may have been afforded to you or the termination of your employment.
A settlement agreement is a legally binding agreement between you and your employer, which both of you need to abide by. The agreement will contain mutually applicable confidentiality and non- bad-mouthing clauses for the benefit of both parties. Namely to avoid reputational damage on the part of the employer and speculation by colleagues as to the nature of your departure.
A settlement agreement cannot be legally binding unless you take independent legal advice as to the terms and effect of the agreement. It is common practice for the employer to contribute towards your legal fees for taking this advice. Your adviser will then have to provide confirmation that the advice has been given.
If you are offered a settlement agreement but decide not to sign you are free to pursue any potential claims through an employment tribunal. The benefit of a settlement agreement can be that it concludes matters quickly, efficiently and on a cost-effective basis, alleviating litigation risk for both parties.
Settlement agreements are commonplace and our employment team has extensive experience in providing independent legal advice to ensure you are securing an effective outcome and that you fully understand the document you are being asked to sign and its implications on your legal rights.
For more advice on a settlement agreement, please contact our employment law team.