Settlement Agreements – Sadly becoming more common at present, but what are they?

You may have found yourself in a situation since these troubling times that your current employment will not be able to continue and a dispute has ensued. You may find that there have been some errors in the way in which your employer has conducted itself or are wondering why you have not been simply made redundant and sent on your way but instead have had a settlement agreement waved in your face.

The usual reason for an employer asking you to enter into a settlement agreement, which was previous known (and sometimes still is) as a compromise agreement and the contents to consider, is the focus of this note. Firstly, it is very important to explain that a settlement agreement is legally binding, and the core purpose is to effectively end the employment contract and more importantly end the terms that are contained within.

It is more desirable for an employer to push a settlement agreement because one of its other main purposes is to stop the employee being able to enforce its rights to making a claim after the contract has ended. Usually this would be the case if an employment contract would end and the employee wished to take a dispute further then there is the employment tribunal that can be used. It is also usual for a payment of settlement and maybe even a reference to be included in the agreement.

There are various points to be mindful of for a settlement agreement to be legally binding or valid in the circumstances. It is easier if I list them:

  1. In writing
  2. Must related to some form of complaint
  3. An independent adviser must have provided advice
  4. Adviser must have valid and up to date insurance and professional indemnity
  5. The identity of the adviser which has advised on the content must be clear
  6. It must also be evident that the applicable statutory conditions regulating the settlement were satisfied.

The above are merely some of the points to ensure are included but usually an agreement of this type will have a number of clauses that will not be clearly understood. Ensure you do not sign anything without taking advice. You may also find that the settlement agreement is not fair to both parties initially so will need a legal representative to work through the terms before signing and suggest amendments to make it more proportionate and balanced.

There is no legally valid settlement agreement which has been forced so it must have been accepted voluntarily so never feel pressured and always take advice.

For further information on these agreements which seem to be more and more common since the coronavirus outbreak please contact us for free advice and an outline of the fixed fees we charge for working on these matters.

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