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When Might a Settlement Agreement be Used?

Settlement Agreements, formerly known as compromise agreements, are often used by employers as a way of terminating the employer employee relationship on the best possible terms after a difficult period. For the employer, they give peace of mind that the employee will not bring an employment tribunal claim, while for the employee they give them security until they find another position and avoid the stress of an employment tribunal. Not every breakdown in an employer/employee relationship will merit a settlement agreement. Indeed, in certain circumstances it is not the best course of action. A specialist employment lawyer can advise you on all your options and suggest which route may be best based on your individual circumstances.

Some scenarios which may be suited to a settlement agreement include:

Confidentiality: Where an employee wishes to leave and has knowledge of bad practice you would prefer remain confidential.

There are circumstances where the employer/employee relationship has been difficult and the employee may look to leave their employment but expose bad working practices of the employer in the process. The reputational damage this could cause could be highly detrimental to the employer and in some circumstances lead to the end of a business. To avoid this, an employer could use a settlement agreement with one of the conditions being that they are not allowed to discuss working practices or make derogatory comments to the press or other business contacts.

Risk of unfair dismissal claim: Where an employer has treated an employee unfairly.

An employer may have dismissed an employee or caused them to leave their job by the way they have treated them. This could be incredibly damaging for the employer who could find a claim for unfair dismissal or wrongful dismissal brought against them in the employment tribunal. To avoid this and to acknowledge the poor way they treated an employee, they could offer them a settlement agreement. If accepted this would prevent any action being raised in an employment tribunal and leave the reputation of the employer generally intact.

Underperformance: Where an employee is not up to scratch.

In some circumstances, a settlement agreement can be used to get rid of an employee who is not performing to the standards expected or is not up to the job. To get rid of the employee by simply firing them could lead to accusations of unfair dismissal which could in turn lead to a claim in the employment tribunal whether or not it has any merit. By using a settlement agreement, the employer can terminate the employment without the need to go through a lengthy process and thereby save cost and prevent a claim being raised at the tribunal.

Contact our specialist employment law solicitors in London today

If you have concerns about your employer/employee relationship and do not know how to proceed then Partners Employment Lawyers are here to help. Our team have years of experience in advising both employees and employers in relation to a number of employment issues.  Our team are ready to help today. Contact us today.


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excello law partners employment lawyers londonPartners Employment Lawyers is not a firm of solicitors. Members of Partners Employment Lawyers are consultants at Excello Law Limited and legal services are provided by Excello Law Limited which is authorised and regulated by the Solicitors Regulation Authority under SRA number 652733.
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