What is the Settlement Agreement?

Settlements Agreements came into being by legislation in July 2014 and they replaced a similar Agreement that was known as a Compromise Agreement.

What is the Settlement Agreement?

The Settlement Agreement is a document that is normally drafted by an employer. It sets out the terms upon which an employee may leave leaving an organisation by agreement.

Davies and Partners Solicitors Settlement Agreement team can give employees advice on whether the Agreement is appropriate for them to sign. In doing so, we will advise whether in our view the terms can be improved upon.

The rational behind Settlement Agreements is that when an employee’s working relationship with his or her employer comes to an end the employee can be put under improper pressure. A Settlement Agreement provides a mechanism for protecting against this by ensuring that an employee gets independent legal advice.

It will confirm the termination date, the payments that are to be made for any outstanding holiday pay, notice monies, outstanding bonus monies, redundancy payment if appropriate and what other payments are to be made to the employee as compensation for loss of employment. It should set out the tax treatment of different payments, it may provide for a reference to be appended to the Agreement.

The employer will normally contribute towards the cost of the employee having independent legal advice.

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