Settlement Agreements (formerly called Compromise Agreements)

This legally binding document is used to record the settlement of a dispute between an employer and employee.

It can be used as a means of bringing an employee’s employment to an end without the need for businesses to go through time-consuming procedures. The essence of the agreement is that in return for a financial settlement, and other agreed terms such as a reference and/or leaving announcement, the employee agrees to waive away their rights to sue their employer, both now and in the future (excluding certain provisions regarding enforcing the agreement, personal injury and accrued pension rights). This provides a “full and final” settlement, removing the cost, time, and disruption businesses face when having to defend such claims. 

To be legally binding, there are a number of important legal formalities which need to be contained within the agreement and we can ensure that such requirements are satisfied. Care also needs to be taken that the correct tax deductions are made, as these documents are a key area HM Revenue and Customs can look at – another area where we can help with. 

To conclude the agreement, the employee must have received independent legal advice from a relevant adviser, typically a solicitor. Their involvement can lead to further negotiations and amendments and we can remove this burden from you and conclude the deal on your behalf.