Settlement Agreements

George Heron

George Heron

Email Click to email
Phone 01952 566918

16 November 2016

Every dismissal has the potential to result in a tribunal claim. Obviously the risk will vary depending on the circumstances, but even if you act entirely by the book you may still find yourself receiving a phone from ACAS informing you that your ex-employee intends to bring a claim. Their claim might be unmeritorious and/or contrived, but it will still have financial implications as well as taking up your valuable time and causing undue stress.

This is where Settlement Agreements (known before July 2013 as Compromise Agreements) can be worth their weight in gold. In return for a termination payment, which may include a payment in lieu of notice or a redundancy payment, employees can agree to waive claims against the employer to the fullest extent permissible by law. This includes the vast majority of claims that an employee may consider bringing, including in relation to statutory employment rights or discrimination claims. Certain claims in these categories can only be waived by way of a Settlement Agreement of with Acas conciliation.

There are various statutory requirements for a Settlement Agreement to be valid. For instance, the agreement must be in writing, the claims that are being waived must be particularised and the employee must seek independent legal advice on the consequences of signing the agreement. Failure to abide by these conditions will result in the agreement not being worth the paper it is written on.  

As such, it is essential that you obtain specialist legal advice if you wish to benefit from the protection a Settlement Agreement can give you. The incentives to sign do not have to be monetary – an agreed reference can work wonders – and the peace of mind offered by the waiver means you can draw a line under what may have been a tricky situation.

At Alpha, we have a vast experience in providing bespoke, practical advice on HR and employment law issues. This includes providing bespoke employment documents, including Settlement Agreements to our Alpha members at no extra cost. We are proud of our commercial outlook and do not sit on the fence. If you would like to have Alpha on your side, please feel free to contact us.

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