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What are Settlement Agreements?

Settlement Agreements (formerly known as Compromise Agreements) are legally binding contracts which can be used to end the employment relationship between an employee and an employer. The purpose of a Settlement Agreement is to set out what will happen once employment ends. Normally, a standard waiver will be contained within the Agreement stating that the employee will not bring any claim against the employer once the agreement has been signed and in exchange the employer may offer the employee compensation for “loss of employment”.

The main features of a Settlement Agreement: -

  • End date of employment.
  • How much notice the employee will be entitled to and how much notice pay they will receive.
  • How much holidays they have left and how these will be paid upon termination
  • What tax will be due on these payments
  • Any bonuses or commissions due
  • What will happen to any pension payments
  • The return of any company property the employee has in their possession
  • A waiver made by the employee stating they will not bring any employment tribunal claims or grievances against their employer once the agreement has been signed

Why do I need a solicitor?

An agreement whereby you waive your rights to bring an employment claim can only be recognised in law if a solicitor or certified trade union or adviser signs it off. At McEwan Fraser Legal, our team of specialist employment law solicitors would be delighted to assist you with providing advice on the merits of any potential legal claim you may have against your employer and the amount of money you would be likely to receive at an Employment Tribunal by way of compensation.

Usually, your employer will make a monetary contribution towards the employee’s legal fees for signing the Agreement. In a straightforward situation, the average legal fees incurred for this type of work is around £500 plus VAT however, as experienced employment law solicitors, we would be more than happy to discuss these fees with you on an individual basis prior to carrying out the work.

Need advice on a settlement agreement?

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