Settlement Agreements for Employers

Employees may have claims against their employer under statute, for breach of their contract of employment, or as a result of their common law rights, such as negligence.

Employers often will want to make a payment to an employee in return for the employee agreeing to waive any claim that they have against them.

This is usually done by way of a settlement agreement. For a settlement agreement to be valid, certain statutory conditions must be met.

The agreement must be in writing. The agreement must relate to a “particular complaint” or “particular proceedings”.

The employee must have received legal advice from a relevant independent advisor on the terms and effect of the agreement and on its effect on the employee’s ability to pursue rights before an employment Tribunal. The independent advisor must have a contract of insurance or professional indemnity, covering the risk of a claim against them by the employee.

The agreement must identify the adviser, and must state that the conditions regulating settlement agreements have been satisfied.

The prospect of a settlement agreement is usually raised by way of a confidential settlement discussion.

Our employment team can advise you in relation to how to raise the prospect of a confidential settlement discussion, how to conduct such a discussion, and in relation to negotiating the terms of a settlement agreement. Our team can draft the settlement agreement for you, from basic agreements for a junior employee to complex agreements for senior executives or directors. We can assist with negotiations in relation to the contents of the settlement agreement and advise in relation to any changes sought by the employee’s representative.