employment law

What is a Compromise or Settlement Agreement?

In testing economic times it is more common that businesses are looking to reduce costs by making employees redundant.

A Compromise Agreement is an agreement between a business and the employee being made redundant. From 29th July 2013 Compromise Agreements have been renamed "Settlement Agreements".

The employee accepts a payment in settlement of any claims (such as for redundancy or unfair dismissal) they might have against their employer.

Do you need independent advice?

As part of the Agreement, you are required to take independent legal advice regarding the terms of the agreement before signing it.

How much will it cost?

In the majority of cases, the Agreement will state that your legal advice is paid for by the employer.

We may be able to provide you with the advice you need for free.

Why the change of name to settlement agreeement?

The Enterprise and Regulatory Reform Act 2013 (ERRA 2013) has made some significant changes to employment law and practice, some of which came into force on 25 June 2013. The new rules on settlement agreements came became effective from 29th July 2013.

Compromise Agreements that were correctly made before the 29th July 2013 remain legally binding.

So what has changed?

“Settlement agreements” are a renamed version of "compromise agreements" which have been in use for many years.

Despite the name change, a settlement or compromise agreement, is still a legally binding document which contains the full terms of a deal agreed between an employer and an employee. Once it is signed, the employee cannot bring any claim against the employer.

The main difference of a settlement agreement is that the offers and discussions of a proposed settlement which occurs before termination or dispute, cannot be used or referred to in unfair dismissal claims at an employment tribunal.

We can help you

Our Employment solicitors will provide specialist advice on the terms of your Settlement Agreement (Compromise Agreement).

We will provide you with practical advice to make sure the terms of the Agreement are tailored to suit your particular circumstances. We will also endeavour to deal with any concerns you have at an understandably difficult time.

Talk to Daniel

Daniel Zakis, employment law solicitor

Contact Daniel Zakis Employment solicitor at Wallace Robinson & Morgan on 0121 705 7571 or email at danielzakis@wallacerobinson.co.uk.

This article is for general information purposes only. It does not constitute technical, financial, legal advice or any other type of professional advice and is no substitute for specific advice based on your individual circumstances. We do not accept responsibility or liability for any actions taken based on the information in this article. For more information, please click here.