“Making sure you leave on the best terms…”
A settlement agreement, previously known as a compromise agreement, is a written agreement between an employee and employer. The purpose of the agreement is to prevent an employee bringing a claim against the employer. In return, the employer will provide compensation to the employee which is usually financial but it can also be a reference or the provision of a benefit.
Why have I been given a settlement agreement?
There are a number of reasons but those below are the most common:
- You are in dispute with your employer
- You have been given an enhanced redundancy payment
- You have been given a payment or benefit in excess of your actual entitlement upon termination
- Your employer wants to change your terms of employment and has made a payment or provided you with a benefit for agreeing to the change
- You are medically unfit to return to work
Do I need legal advice or can I just sign the agreement?
In order for a settlement agreement to be legally binding, the employee must obtain independent legal advice from someone professionally qualified (usually a solicitor or qualified trade union adviser) to give that advice. We can assist you with this and confirm that the agreement which you have been offered complies with the strict regulations governing their use. We are also happy to enter into negotiation with your employer if necessary regarding the terms.
How much will it cost?
Employers will usually pay all of the lawyer’s fees for obtaining advice on the agreement. Usually, the sum provided for covers all legal fees but on other occasions where there is a need for negotiation, this fee will not cover all of your legal fees. When this occurs, we will try and get your employer to increase its contribution to cover your legal fees or, where this is not possible, keep our fees to a minimum.
In most cases, employees will not have to make any payment to us and in those cases where we have negotiated a better settlement, we have obtained further sums for our clients which more than cover such fees. In any event, a full discussion about fees will take place before you instruct us to advise you on your settlement agreement.
Jane Ellis, a Partner at Ellis Hass, has been advising on employment issues and in particular Settlement Agreements for Senior Employees for over 25 years and will make sure that if you are leaving your employment you ‘leave on the best terms’. See her profile at