Settlement Agreements and Compromise Agreements

Settlement agreements (previously known as compromise agreements) are an incredibly useful tool which can save time, costs, and stress for any employer. However, as with any legal document they are not without their pitfalls. At SAS Daniels, we can advise you from an early stage to help secure maximum protection for your organisation. 

Benefits of Settlement Agreements

There are a number of situations where you may consider offering a settlement agreement to an employee. For example, as an alternative to a formal process such as redundancy, performance management, and disciplinary, or to settle any potential employment tribunal claims.

Settlement agreements can provide you with a clean break and are a speedy and efficient way of ending the employment relationship or the dispute that has arisen.

However, it is essential that settlement agreements are drafted in relation to the specific individual and their circumstances. Simply listing every single claim that could possibly be brought in a tribunal, without specific relevance to the situation, could lead to the agreement being unenforceable.

It’s also important to make sure that any settlement figure is fair and offers sufficient compensation otherwise the employee may refuse to sign and have strong grounds for negotiating a higher figure or exploring an alternative option, such as bringing a tribunal claim.

You should also bear in mind that the tax treatment of payments made under settlement agreements has changed. Therefore, any taxable element of a payment made under a settlement agreement needs to be carefully detailed within the agreement itself.

How can SAS Daniels Solicitors help?

Our settlement agreement solicitors can advise you on every aspect of settlement agreements. From negotiating the terms offered to drafting the final agreement. We can also provide you with advice on what alternatives options are available to you and the associated risks and benefits of each.

As experienced solicitors, our team are specialists in ensuring your settlement agreement is legally binding and protects your organisation. We will provide you with practical and robust employment law and HR support you can trust.

Contact us

For more information about settlement agreements, contact our team below and we will be happy to help. Alternatively, you may also fill out our contact form and we will get in touch as soon as possible.