Settlement agreements

Settlement Agreements (previously known as Compromise Agreements) can be used by employers to record the terms upon which an employee’s employment terminates.  They operate to “settle” all employment related claims that the exiting employee has against its employer and in return the employee is paid a sum of money often called a Termination Payment.

As an employer, you may require advice on events leading up to the offering of a Settlement Agreement, including assistance in preparing a script for a meeting where the agreement is offered.  Such conversations are often held on a “without prejudice” basis (which means that the conversation cannot later be referred to in an Employment Tribunal hearing) and they are also often called “protected conversations”.  In order to be legally binding, the employee will need to receive independent legal advice on the terms of it.

When drafting Settlement Agreements, you will need to consider:

  • whether the employee has any restrictive covenants in his or her contract that you would wish to continue post termination
  • whether you would wish to offer a Reference as part of the agreement
  • the length of time that the employee has to accept the agreement being offered
  • the tax treatment of the sums being paid under the Settlement Agreement.

The Employment Law team at Ashtons HR Consulting can assist you with Settlements Agreements as follows:

  • advice on specific cases which may lead to a ‘without prejudice’ discussion
  • drafting the settlement agreement itself
  • chairing a ‘without prejudice’ meeting on the employer’s behalf
  • providing training for managers on this and other employment law topics.

To discuss any requirements for drafting Settlement Agreement(s) or surrounding documents as well as any training needs in this regard, please contact Ashtons on 0333 222 0989, complete our online enquiry form or email

How can we help?

If you have an enquiry or you would like to find out more about our services, why not contact us?

0333 222 0989

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