October 11, 2013 9.39 am This story is over 97 months old

Time to say goodbye to your job?

Settlement agreements: Sally Hubbard explains the process when employers and employees decide to go their separate ways.

There can sometimes come a point when employers and employees decide to go their separate ways. This could be as a result of a dispute, redundancy process or just a decision to part company.

Often the employee will be required to sign a Settlement Agreement (formally known as a Compromise Agreement) when leaving their employer’s business. For most, these agreements are straightforward.

However, there are times when employees are not being offered sufficient compensation for their claims, or occasionally they have been misled about the agreement. In those circumstances, further help is needed.

What is a Settlement Agreement?

This is a binding contract between you and your employer whereby you agree not to bring a claim against them, usually in exchange for a compensation payment. There are a number of formalities for such an agreement, for example, you must receive independent legal advice before signing.

What rights am I giving away?

The employer will include within the agreement any claims they consider you may have against them. Usually, claims such as unfair dismissal, redundancy payments etc are specifically mentioned. When you have signed the Settlement Agreement you have agreed not to pursue those claims.

Is my compensation enough?

Only you can decide whether you are satisfied with the amount of compensation you will receive. However, before signing, it is important that you tell your solicitor about any problems you have had at work. You should then receive advice about the claims you may have and the potential value of those claims. Only then can you make an informed decision about whether to sign.

Do I have to sign a Settlement Agreement to receive statutory redundancy pay and notice?

Absolutely not! If you have been made redundant by your employer there are minimum rights and entitlements. You do not have to agree no to purse a claim against your employer just to access those rights.

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Sally Hubbard is the Head of the Employment Law Team at Ringrose Law. The team is made up of dedicated and experienced specialists, helping both employees and employers with their work related issues. Sally has specialised in Employment Law for her entire career, and has represented countless clients at the Employment Tribunal.