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Settlement Agreements

A Settlement agreement (formerly known as a “Compromise Agreement”) is a means by which employees and employers can reach a legally binding settlement of a dispute which arises under a contract of employment.

We can advise you on the terms and effect of a Settlement Agreement , and it will not cost you anything because your employer will pay our fees.

A Settlement Agreement is the only way in which employers in England and Wales can prevent an employee from enforcing their legal rights in relation to their employment.

You may have been offered a Settlement Agreement as a means of terminating your employment. You may also have been offered a Settlement Agreement as a means of settling any legal proceedings you have issued, or are anticipating issuing, against your existing or former employer.

There is no incentive for an employee to sign a Settlement Agreement unless it settles claims that the employer might otherwise have against the employee, or the employer is offering a sum of money which is more generous than your minimum legal entitlement in the circumstances. A Settlement Agreement will only prevent an employee from enforcing their legal rights in relation to a particular matter if:-

  1. The agreement is in writing;
  2. The agreement specifically refers to the type of claim the employer is seeking to avoid;
  3. The employee has received advice from a “relevant independent adviser” (that is, a solicitor, or a trade union Representative who is certified to advise in relation to Settlement Agreements) about the terms and effect of the proposed Agreement;
  4. The adviser is insured against a claim by the employee in respect of any loss arising as a result of the advice given by them;
  5. The Agreement identifies the adviser; and
  6. The Agreement states that the above conditions have been satisfied

Tax Implications

It is important to get advice on whether or not any funds payable to you under a Settlement Agreement are taxable. This is a complex area, and whether or not a payment is taxable depends on the specific circumstances of the case but the general rule is that payments are taxable unless certain statutory exclusions apply.

We can advise you on the terms and effect of a Settlement Agreement , and it will not cost you anything because your employer will pay our fees.

Slough

3rd Floor Churchill House Chalvey Road East Slough Berkshire SL1 2LS                United Kingdom

T: 020 7379 7277
F: 020 7240 1577

OH Parsons LLP

OHP is a trading name of OH PARSONS LLP, a limited liability partnership registered in England and Wales with Registered Number oc385704. OH PARSONS LLP is authorised and regulated by the Solicitors Regulation Authority | 606560. VAT Number: 239 026 763. Any reference to a partner in relation to OH PARSONS LLP is to a member of OH PARSONS LLP.

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