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Settlement Agreements

Settlement agreements or compromise agreements, as they used to be called, have become more prevalent as companies have to make some difficult decisions regarding their workforce.

Here’s our Top Five Tips to understanding Settlement Agreements:

1 – Simply put, they are a legal contract between an employee and employer which settles claims or potential claims against the employer, usually in return for money.

2 – To be legally binding, certain conditions must be met, including that the employee must take independent legal advice.

3 – They are voluntary, therefore an individual employee does not have to sign one.

4 – They often cover standard issues, such as references, confidentiality and arrangements for the return of company property;

5 – In some cases, the money offered to the employee is conditional upon the employee doing or not doing something (eg not to discuss the circumstances of their departure or compete with their ex-employer).  Any failure on the employee’s part can lead to them having to repay any money received.

Employees often approach us saying they have “just been asked to sign and return this document” which has been presented as a “fait accompli”.  Likewise, some employers will adopt a “one size fits all” standard template Settlement agreement which doesn’t always meet their needs in certain circumstances.

Every employment scenario is different and it is in the interests of both employer and employer for each Settlement Agreement to be tailored to the circumstances and fully understood by all.

For more information call our Employment Law team on 0345 20 73 72 8 or email info@thursfields.co.uk

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