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What is a settlement agreement?

What is a settlement agreement?


Expert view

Settlement agreements are used by employers to settle legal claims an employee may have against them and to prevent legal proceedings.

They are not mandatory but employers like them because they give certainty, and employees like them because they are given a financial incentive to enter into an agreement often in circumstances when the employee has no viable legal claims anyway.

Under a settlement agreement, an employee agrees to waive any legal claims they may have such as for discrimination, unfair dismissal, breach of other statutory rights or breach of contract.

In order to be binding, an employee must get legal advice on the terms and effect of the proposed settlement agreement. Employers usually make a contribution towards the employee’s costs of getting such advice but there is no obligation to do so.

We advise both employers and employees on employment law disputes and settlement agreements. If we can be of assistance please contact Linda Wylie on either 0117 923 4055 or linda.wylie@meadeking.co.uk.