What Is A Settlement Agreement?

A settlement agreement (previously known as a compromise agreement) is a legally binding agreement between an employer and an employee following the termination of your employment. They usually provide for a severance package (also known as a compensation package or “ex gratia” payment) in return for you agreeing not to bring an Employment Tribunal claim against the company.

A compromise agreement will deal with your contractual notice pay, holiday pay and other benefits, or may provide a Payment In Lieu of Notice (PILON).

Many employers ask employees to sign compromise agreements in redundancy situations, to protect the employer from being taken to the Employment Tribunal. They are also used in circumstances where the termination/dismissal is unfair and the employer wants to “buy” certainity that you will not sue them.

Most compromise agreements our solicitors in Blaby, Leicester,  Coalville and Syston see day to day are reasonably straightforward and arise out of a correct redundancy procedure. Others arise out of more questionable circumstances.

You need to take independent legal advice from a solicitor before signing a compromise agreement because of their binding nature once signed. Our compromise agreement solicitors will consider the facts leading up to your employment being terminated in order to determine whether the  money on offer under the compromise agreement is good or whether you would get something better if you issued Employment Tribunal proceedings.

If the sums in the compromise agreement are too low, we can help you to negotiate an increase in payments to you.

Our local solicitors in Leicester, Blaby, Coalville and Syston can advise you on compromise agreements at short notice and usually at no cost to you, as your employer pays.

Please download our FREE GUIDE TO SETTLEMENT AGREEMENTS for a more detailed look at compromise agreements.