Settlement Agreements

A settlement agreement is a legally binding contract between an employer and an employee that resolves disputes or ends the employment on agreed terms. They notably include the employee making a binding promise not to sue the employer and a payment being made to the employee.

Settlement agreements are flexible and can be tailored to specific scenarios to resolve many types of disputes amicably. They are often used to avoid costly and time-consuming Employment Tribunal claims. They are commonly used during redundancy or restructuring processes, in disputes over performance, conduct or grievances, and to document mutual agreements to terminate employment without following a formal process.

What are the benefits of settlement agreements?

Settlement agreements are beneficial for employees as they allow a clean break and closure without the time, stress and cost of litigation in the employment tribunal. Agreed terms about financial compensation, confidentiality provisions and the provision of a reference can be documented.

For employers, settlement agreements are a useful means of avoiding the cost, time and reputational risk of Employment Tribunal claims. They provide certainty and finality in resolving disputes with employees, and they ensure confidentiality and the protection of business interests.

What are the legal requirements for a valid settlement agreement?

Settlement agreements must be in writing and specify the claims that the employee is waiving e.g. unfair dismissal, discrimination. Employers benefit from a professionally drafted settlement agreement to ensure that all relevant claims are compromised. Employees must receive legal advice on the settlement agreement from a qualified solicitor or legal advisor. The employer will normally pay a contribution towards the employee’s legal fees in securing the necessary independent legal advice on the settlement agreement.

Contact our specialist settlement agreement solicitors

The Employment Team at O’Donnell Solicitors has specialist knowledge and expertise in helping both employers and employees to navigate the legal requirements for the validity of settlement agreements to compromise employment disputes.

We provide personalised solutions and clear explanations of terms, costs and the process of negotiating and finalising a settlement agreement. Crucially, we offer rapid appointments and a quick turnaround to ensure matters are concluded as time and cost efficiently as possible for the benefit of both employers and employees.

If you would like to speak to one of our specialist solicitors about a settlement agreement, please contact the Employment Team at 01457 761 320 or e-mail enquire@odonnellsolicitors.co.uk.