What is a settlement agreement and when are they used? Employment Contracts

Settlement agreements are legal contracts used by employers to settle disputes or avoid lengthy contractual processes.

Settlement agreements often involve an employer promising to pay an agreed amount of money to an employee. Usually, upon signing the agreement, the claimant’s employment is terminated. However, settlement agreements can also be used to end a dispute without termination of employment.

Once a settlement agreement is completed, the employee involved waives all rights to make an employment tribunal claim on matters covered in the agreement.

When are settlement agreements used?

Settlement agreements might be used to avoid lengthy capability, disciplinary or redundancy processes. They are usually offered to prevent an employee making a claim against an employer in Court or an Employment Tribunal. Once the terms of a settlement agreement are accepted, the employee waives the right to make a claim against the employer.

Help and support from Beswicks Legal

If you wish to seek professional advice on settlement agreements, either as an employer or an employee, please contact us. Our employment law specialists are on hand to clarify your position and outline your options to help you make an informed decision.

For more frequently asked questions regarding settlement agreements and redundancy, take a look at our dedicated Legal Hub or get in touch with our team.