Settlement agreements bring employment to an end on specific terms. They are popular with employers because they bring certainty that the employee will not launch employment-related claims. It’s why these sorts of agreements are routinely used in some types of dismissals, and why clients use us time and again to formalise watertight terms.
What to know about settlement agreements
Settlement agreements used to be called compromise agreements. A name change hasn’t affected the structure of these agreements or the strict rules that underpin them. For example, employees will only be waiving the types of employment claims that are set out in the agreement, and they must have had advice from a relevant independent advisor on the terms and effect. In return for giving up certain employment rights, the employee must be given some sort of benefit – usually a payment or a reference.
Our team regularly advises on the terms employers should be agreeing with individual employees. This will always come down to the specifics of the situation, including the employment history and any potential claims that may be lurking. In cases of senior-level employees, there are likely to be issues around restrictive covenants, tax and shares to consider, and we’ll work through these with you.
It’s our job to help you negotiate and put in place the most secure arrangements possible which minimise the risk of employment law repercussions.