A settlement agreement (or compromise agreement in Northern Ireland) waives your right to make a claim against your employer at an employment tribunal or court, usually in return for a payment.
But do you need to take legal advice before you accept (or reject) it?
The short answer is yes. You do need to take independent legal advice, otherwise the settlement agreement isn’t legally binding.
Conditions that make a settlement agreement legally binding
- It must be made in writing
- It must relate to a particular complaint or proceedings
- You must have taken advice from an independent adviser, such as lawyer or certified and authorised member of a trade union
- The independent adviser must be covered by a current insurance policy or professional indemnity
- The independent adviser must be named in the agreement
- The agreement must state that the applicable statutory conditions regulating it have been met
As employment lawyers who only act on behalf of employees, obviously, we can help!
Back to basics
Settlement agreements are used to resolve a workplace dispute, or to end the employment relationship. Usually, it’s the employer who offers the settlement to the employee, although it can happen the other way around.
If your employment is ending, here are some things that the settlement agreement might include:
- Period of notice that you have to work
- Amount and timing of payment
- A reference that you can use when applying for future work
Do I have to accept it?
It’s important to note that settlement agreements are voluntary.
If you’re offered a settlement agreement, you don’t have to agree to it. You don’t even have to enter into a discussion about it if you don’t want to.
Either way, you must be given a reasonable amount of time to consider the proposed conditions. For this, Acas recommends at least 10 calendar days, unless you and your employer agree otherwise.
You can enter into negotiations in an attempt to reach agreement. If you don’t reach agreement, you could:
- Go through a performance management, disciplinary or grievance process
- Try mediation
What happens?
Your employer must follow a fair process along the Acas guidelines. Otherwise, if they dismiss you, you may be able to make a claim for unfair dismissal.
For example, they should invite you to a meeting to discuss the agreement. They might allow you to bring a work colleague or trade union representative to help you at the meeting, but this is not your statutory right.
If you and your employer can’t reach agreement, and you go on to make a claim for unfair dismissal or about any other dispute, discussions that happened around the settlement can’t be used as evidence.
Need help?
For a FREE assessment of your claim, call 0808 168 7288 or fill in the contact form on the top right of this page.
We have already helped thousands of people to win millions of pounds in compensation.
You have a choice of ways to pay, including ‘no win, no fee’.
We will also discuss the best methods of funding your case and seek to reach a solution that best suits your needs. This can involve a “no-win, no-fee” agreement if appropriate.