What is a Settlement Agreement?


You and your employer may agree legally binding terms upon which your employment comes to an end. This agreement is called a Settlement Agreement (formerly known as a Compromise Agreement).

A Settlement Agreement may come about because:

  • your employer wishes to terminate your employment without going through a performance improvement process; or
  • your employer wishes to terminate your employment without going through an investigation and disciplinary process; or
  • your employer wished to terminate your employment without going through a formal redundancy consultation and selection process; and
  • your employer wishes to compromise an ongoing dispute with an employee.

The effect of signing a Settlement Agreement means that you are prevented from bringing any legal proceedings against your employer in relation to your employment with that employer or the termination thereof save in a couple of exceptions (see below).

A Settlement Agreement is only valid if you as the employee are given legal advice by your own Solicitor who countersigns the agreement itself. They should also meet your reasonable legal costs in having a Solicitor check out the proposed Settlement Agreement.


  • for an employer, it means the employee cannot sue them save in very limited circumstances such as a latent industrial injury claim or because the employer failed to pay under the agreement;
  • for an employee, the agreement can include certain things that they cannot obtain through the Tribunal or Court process, such as an agreed job reference to assist them securing new employment. Also, the employee receives a certain financial outcome as opposed to an uncertain outcome from costly litigation.

Contact us

We are fully able to advise you on the terms of any SettlementĀ Agreement you are presented with or we can draft such an agreement from scratch. This may include simply looking at the terms after a figure has been agreed in principle or we may seek re-negotiate the financial terms within the agreement to meet your requirements.


Call: 0121 711 1511 or complete one of our Contact Forms.