A settlement agreement is a legally binding document normally agreed between an employer and an employee or ex-employee.
The agreement can be used to end the employment relationship between an employer and employee on mutually agreed terms: to end a workplace dispute, or resolve another issue ( for example, in a situation in which someone has raised a grievance hat they were discriminated against and is no longer happy working in that environment or the employer does not believe that making reasonable adjustments would resolve the issue). It usually involves the employee receiving some form of compensation in return for waiving their employment rights.
Points to be aware of:
- Settlement agreements are legally binding between the parties
- They can involve waiving an employee’s rights to take further action, such as making a claim through a tribunal
- The employee normally receives a payment or compensation and may be given a reference
- Settlement agreements are voluntary
- They are agreed through negotiation.
- The discussions are confidential and the items that are discussed are not admissible in a tribunal
- The agreement can also cover what other employees will be told about any termination.
We are expert at drafting settlement agreements and giving accurate, up-to-date advice on all aspects of employment law.