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Settlement Agreements For Employers

What are settlement agreements?

They are documents which are used to set out details of agreements reached to settle potential Employment Tribunal claims or other court proceedings between employers and employees.  Settlement agreements (previously known as compromise agreements) usually provide for employees to leave their employment upon agreed terms which involve the employer paying them a compensation payment upon a 'full and final settlement' or 'clean break' basis.

When are settlement agreements used?

They are commonly used to bring an employment relationship to an end in a mutually agreed way.   Employers use settlement agreements in a number of ways:

  • To bring to an end the employment of an employee whose performance or conduct is unsatisfactory but not unsatisfactory enough to justify their dismissal.
  • As an alternative to going through a time consuing redundancy consultation process and the potential disruption of the worksofrce.
  • As a matter of course to manage risk of an unexpected employment claim from a departing employee.
  • To settle employment and other claims by employees, e.g unfair dismissal, unlawful discrimination.

How we can help

We can advise on how to commence and conduct discussions with an employee about a settlement agreement.  There are statutory rules and ACAS guidelines which relate to how settlement agreement discussions should be carried out and the obligations that need to be met to ensure that the discussions cannot be referred to in any subsequent unfair dimissal proceedings.

We can advise on an employee's contractual entitlements and the value of any potntial employment cliams that they might have, with a view to enabling you to determine the amount of compensation that you are willing to pay to the employee under the terms of a settlement agreement.

It is vital that any settlement agreement entered into is legally compliant,  so that it is enforceable and can be relied upon to prevent an employee being able to pursue claims in the future arising out of their employment and its termination.  We can ensure the settlement agreement is enforceable.

Issues relating to settlment agreements can be complex and complicated and we can provide reliabe advice on matters such as:

  • confidentiality
  • pay in lieu of notice
  • reference
  • restrictive covenants
  • return of company property
  • share options
  • tax indemnities from employees
  • the return of compensation in the event of a material breach by the employee

Why choose Sampson Coward?

Our advice will be provided personally by David Coward, a solicitor with over 25 years' experience of dealing with employment law cases.  Over the years he has advised both employers and employees upon hundreds of settlement agreements.  As someone with extensive knowledge of settlement agreements, he is able to advise on the terms of a settlement agreement and is also able to provide a full service, including advising on how to initiate and conduct discussions with an employee, draft an appropriately worded and binding settlement agreement, and , if necessary, conduct negotiations with an employee or their solicitor.

How much does advice upon settlement agreements cost?

The cost of our legal advice depends upon the complexity of the settlement agreement and the extent of our involvement.  Generally, it would be rare for our fees to make up more than a small part of the overall cost of any settlement agreement package.  However, we will provide you with an estimate of our fees at the outset and will update you upon any change to this estimate so that there are no surprises for you relating to our fees.

David Coward
David Coward

Head of Employment Law

  • dd: 01722 820935
  • m: 07588 080018

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