It is sometimes the case that an employer would prefer to agree settlement terms with an employee, rather than risk the employee issuing Court or tribunal proceedings, either following the employee’s dismissal or in other circumstances. If so, it is likely that the employer will want the employee to enter into a formal Settlement Agreement, previously known as a ‘Compromise Agreement’.
A Settlement Agreement is the only method by which an employee can validly give up their statutory employment rights. In order for the agreement to be valid, the employee must take legal advice on the terms and effect of the proposed agreement. Normally, therefore, the employer will agree to pay a contribution towards the employee’s legal costs for this advice.
Many settlement discussions will take place on a “without prejudice” basis. However, this rule only applies where there is an existing dispute to be resolved. To enable employers to discuss settlement with employees even where there is no existing dispute, from 29 July 2013, settlement discussions are inadmissible in proceedings for ordinary unfair dismissal except at the employment tribunal’s discretion where there has been improper behaviour.
If you have been given a Settlement Agreement to sign and would like advice on this, please telephone our specialist employment solicitor, Albert Bargery on 01296 318508 to make an appointment.