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      Settlement Agreements

      What is a settlement agreement? 

      Settlement agreements are legally binding contracts, which bring employment to an end under agreed terms.  Generally, these terms will include you giving up the right to claim against your employer in exchange for a sum of money. 

      In order for a settlement agreement to be binding you MUST receive independent legal advice.  Often, your employer will contribute, or cover entirely, the cost associated with consulting a solicitor to receive this advice.  This means that in most cases you will pay nothing. 


      Settlement Agreement Requirements

      • It must be in writing
      • It must relate to a specific proceeding or complaint.
      • The employee must receive independent legal advice
      • The independent legal advisor must be identified and insured
      • It must state that the regulating requirements have been satisfied
      • It must be signed by the employee


      When are settlement agreements used?

      Generally, settlement agreements are used at the end of workplace dispute negotiations.  In this instance it could be summarised as your employer paying you in exchange for your rights to make a claim against them.  Sometimes they’re also used as a form of enhanced redundancy. 


      Independent Legal Advice

      Your independent employment law solicitor should advise you on the potential claims associated with the settlement agreement.  Typically, you’ll be signing away your statutory, contractual and common law rights.  It’s important to know specifically what these are before acting. 


      Statutory Rights

      • Unfair Dismissal
      • Maternity Rights
      • Paternity Rights
      • Minimum Wage
      • Redundancy Payment
      • Unauthorised Deductions from Wages
      • Discrimination Protection


      Contractual Rights

      • Holiday Entitlement
      • Salary
      • Employment Benefits


      Common Law Rights


      These lists are not exhaustive and contain just a portion of the rights associated with most forms of employment in the UK.  When you consult with a settlement agreement specialist they’ll be able to fully analyse your case in detail to see which, if any, of your rights have been breached. 

      It’s important to have this information before signing as your situation could potentially give rise to claims that far out value the settlement agreement. 

      If you don’t have the appropriate legal advice on this, you risk signing away your rights without being aware of all your options. 


      What are the advantages of settlement agreements?

      They offer certainty and clarity and peace of mind.  What this means for an employer is security against any further claims and compensation relating to the settlement agreement.  If you’re an employee, then you have the safety of a guaranteed settlement payment, and anything else set out in the agreement such as a reference.   

      For these reasons’ settlement agreements are becoming an increasingly popular way to handle workplace disputes and termination scenarios. 


      What to do if you’re presented with a settlement agreement?

      If you’ve been presented with a settlement agreement you do not have to immediately accept.  ACAS’ code of practice recommends you be given a 10-day period to consider your options.  This period can be reduced if it’s considered reasonable.  In this 10-day period you should look to secure an appointment with an employment law specialist who can advise you in further detail on the specifics briefly touched upon in this article. 

      If you want to speak to one of our employment law specialists you can contact us via 01709 363876, or alternatively by e-mailing us at



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