What is a Settlement Agreement?

A Settlement Agreement (previously known as a “Compromise Agreement”) is a legally binding agreement following the termination of your employment.

Settlement agreements are often given to employees when they are being made redundant.  However, they can also be offered to employees if an employer thinks they are performing badly in their job or are guilty of misconduct. In some cases, an employee will be aware that their boss is unhappy, while for others, being offered a settlement agreement can come as a shock.

Essentially, an employee is given money or severance pay in return for not bringing a claim against their employer.  Each settlement agreement will vary but usually the documents will include clauses that deal with: the claims to be settled; the payments you will receive and the relevant tax issues; a confidentially/gagging clause (so you can’t bad mouth your employer) and any agreed reference from your employer.  Once signed by both the employer and the employee and certified by an independent solicitor, a settlement agreement becomes legally binding.

How we can help

When you’re pulled into a meeting and asked to leave your job, it can be a shock. Later on, it can be hard to recall exactly what was said.  The best advice is therefore to make a note about what happened and what was said as soon as possible.  The next thing to do is get some decent advice.  An employer will usually pay the legal costs for you to see a solicitor or qualified adviser independent of the employer as it is a legal requirement for the settlement agreement to be contractually binding on the employee.

An employment solicitor can help you consider whether you’re getting a good deal and whether you have any grounds for a claim against your employer – such as discrimination or unfair dismissal.  If you’re facing a period of unemployment, you need to be able to meet your household living expenses until you get another job. One of the considerations you need to make is whether the money that is being offered is enough.

You need to consider why you are being offered the agreement and what rights you are being asked to waive as a result of you signing.  Armed with this knowledge, you can often save legal costs by negotiating yourself directly with your employer and in our experience, you often end up with a better deal, which may include a bigger payment.

The employer will often insist that the settlement agreement be signed by a particular date, but you are not legally obliged to sign a settlement agreement and if you don’t sign the agreement, then your full employment rights are reserved for you to make a claim against your employer.

To see some typical terms of a settlement agreement and our advice on them, please click here.

Get in touch

For further information contact Justin Sadler by email at [email protected]. Or contact us by telephone on 0118  958 9711.

Justin deals with all aspects of Dispute Resolution for both businesses and individuals, including Contentious Probate, Employment Law (for both businesses and individuals) and Commercial Litigation. This means that he is familiar with the many different courts and tribunal, as well as the many different methods for resolving disputes, including alternative dispute resolution such as adjudication and mediation.

  • 5 star review  I reached out to Barrett and Co to guide me through my settlement agreement . I was assigned Justin Sadler who did an amazing job. Very professionals and very straight forward. Was happy to answer any questions and responded quickly. Would Highly recommend!

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    20th May 2022
  • 5 star review  After needing some advice regarding an employment tribunal we had a zoom meeting with Justin Sadler He made us feel tremendous relaxed, explained everything we had asked in easy to understand terms, offered further guidance and we felt completely confident to move forward within the tribunal process. We would have no doubts in recommending him and will definately be keeping his contact details should we need any help in the future

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    17th May 2022
  • 5 star review  Dealing with Barrett&Co was excellent from the start. They were very swift in providing initial information and booking an initial zoom meeting. I dealt with Justin Sadler who took time to understand my situation and was clearly both knowledgeable re the situation and also honest about what I could expect. Will use again and thoroughly recommend.

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    11th January 2022
  • 5 star review  I've dealt with many solicitors in the past 10 years in various areas of law and I must say Barrett come 1st place for me. Great care and attention. **Meant to have mentioned Charlotte Fox was the lady that took care of my affairs.

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    7th January 2022
  • 5 star review  We came across Barrett and Co Solicitors via a free Will writing scheme. Mrs Ruparel was very professional yet friendly; the whole process was very straightforward as she explained all the steps and areas for consideration clearly. The legal support team were also very helpful in answering any queries we had.

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    27th October 2021
  • 5 star review  Emma is great! She is patient and responsive. I really feel like she had been on my side fighting for our benefits and giving us comfort and encouragement when issues arose. She has been doing a very good job! Barrette and Co is professional and well-established! Thumbs up!

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    19th October 2021
  • 5 star review  When informed by your employer that your employment contract is to be terminated because of a restructuring and not through any fault of one’s own – and probably not knowing what to do or who to turn to - it’s a lonely, disorientating, and unsettling place to be - as anyone in a similar position reading this will fully understand. When this happened to me, I didn’t know who to turn to. But a colleague recommended Barrett and Co, and so I checked out the website and was impressed with what I read about Justin Sadler and his experience. Justin and his assistant were quick to respond to my inquiry, and a consultation call was set up which was extremely useful. Justin quickly grasped my situation and was able to provide me with sensible and pragmatic legal advice as well as a tactical approach on how to proceed, and very importantly - advice on how to best channel my feelings. I had a legal stalwart in my corner. In short, we achieved as good an outcome as was possible in the circumstances and I am very grateful to Justin for all his help and advice. If you need employment related legal advice - look no further than contacting Justin Sadler at Barrett and Co.

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    4th October 2021
  • 5 star review  In the run up to completion, Emma and her colleagues were taking very good care of us. Despite many challenges throughout the day, including a tricky chain + backlog in banking transactions, Emma was always on hand with a friendly word and answering our queries quickly and professionally etc.

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    1st October 2021