Settlement and Compromise Agreements

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Sometimes employers offer employees settlement agreements (formerly known as compromise agreements) to bring their contract of employment to an end, often as a more favourable alternative to redundancy procedure or a disciplinary procedure resulting in dismissal for poor conduct or lack of capability. The certainty and privacy of a settlement agreement often suits both parties.

The advantage of a settlement agreement for the employer is that it can insulate them from any claims from the employee except for latent personal injury claims and accrued pension rights. This is particularly important because generally, employers cannot recover their legal costs incurred through a tribunal claim, even if the claim fails. It is important for employers to realise that the settlement agreement will not protect them unless the employee gets the advice of an independent legal adviser before signing the agreements. Doing it yourself and missing this step is a complete waste of money as you will have paid the employee off with an unenforceable agreement and they can still bring a claim – even if they signed an agreement. Unless the employee has had independent legal advice and a signed certificate from that adviser the employee’s signature on an agreement with the employer has no effect.

The advantage for the employee is that they should receive more than their strict contractual and/or statutory rights compared to a redundancy package or notice following a decision to dismiss. However, the employee may get less than the sum they may be entitled to after bringing a successful claim. Nevertheless, the employee will avoid the stress, risk and legal expense of bringing a claim and will be able to move on swiftly.

Helix Law can draft settlement agreements for employer clients. We also act for employees as their independent legal adviser to ensure that they get the best possible deal. There are clear commercial advantages for both parties in a well-balanced settlement agreement – we can help either side to understand these advantages and allow them to reach a satisfactory conclusion.

Our employment lawyers can help to write or advise on agreements that suit and legally protect either party. Get in touch with us today for more information.

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A settlement agreement (formerly known as a compromise agreement) is something offered by an employer to an employee when terminating their employment. They’re mainly used to legally signify that the employee agrees with the terms of which their employment ended, and to protect the company from future Employment Tribunal claims being brought against it. They are often accompanied by compensation or a termination payment to the employee.

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Fiona Wheeler
Solicitor
0345 314 2044
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Sam Packwood
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0345 314 2044
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Outstanding Reviews from Real Business People

Absolutely delighted with the detailed response given to a simple question. Based on that alone, I feel that Fiona has my back and I am in safe hands.
Google Review
Great prompt service with fantastic advice from Fiona. Would highly recommend.
Google Review
I spoke to Fiona Wheeler about my difficult situation. She gave me clear, concise and professional advice and was even kind enough to send me some useful literature. Thank you for help and services today.
Google Review
Great company. Fiona was such a helpful lady and helped to understand my query and followed up with an email without having mentioned any fees at that point! Very grateful for the advice and will use again should the need arise. Thank you!
Google Review

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They also tell us most solicitors are hard to get hold of whereas we’re happy to listen. The reason for this is that we value long term relationships and we’re happy to speak with business people, to invest our time in understanding your business and whatever your concerns are. Only at that point can we understand whether we’re the right people to help you.