Settlement agreements

Settlement agreements are legally binding agreements which can be used to end an employment relationship on agreed terms. They can also be used to avoid ongoing discussions regarding an employee’s performance or consultations around proposed redundancies. These agreements can be proposed by either an employer or an employee, although it will normally be the employer. Discussions are held on a without prejudice basis.

Once a without prejudice settlement agreement has been signed, the employee will be unable to make an employment tribunal claim about any type of claim which is listed on the agreement, for example unfair dismissal or discrimination on grounds of any protected characteristic.

  • Employees must not be put under pressure to sign a settlement agreement
  • Employers should make a contribution towards fees for the employee to take independent legal advice prior to signing a settlement agreement and the agreement must be countersigned by a legal advisor
  • The Settlement agreement must be in writing and will usually include some compensation for the employee
  • They also often include an agreed reference and an announcement to the organisation regarding the employee’s departure.

Where the employer and employee are unable to reach an agreement, the without prejudice discussions cannot be referred to as evidence in any subsequent unfair dismissal claim.

Your HR Partner will draft bespoke Settlement agreements. For more information and to discuss your specific situation please contact Susie Kaye via Susie@yourhrpartner.co.uk

If you need a Legal Advisor to advise and sign a settlement agreement call 020 8346 8686 or email help@yourhrpartner.co.uk

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