Settlement Agreements


A Settlement Agreement is commonly used when an employment contract is terminated.  It is a legally binding agreement between an employer and an employee in which the employee agrees not to pursue a claim against an employer in return for financial compensation which is paid by the employer.

A Settlement Agreement will only be legally binding if the employee has taken legal advice from a ‘relevant legal adviser’ (see below) and it is normal practice for the employer to make a contribution towards the cost of taking legal advice.

A Settlement Agreement will only be legally binding if the following requirements are satisfied:

  • The Settlement Agreement must be in writing
  • It must relate to a specific complaint or dispute which could give rise to a legal claim in an employment tribunal or county court.
  • The employee must receive legal advice from a ‘relevant independent adviser’.
  • The Agreement must identify the adviser
  • The relevant independent adviser must be covered by a current professional indemnity insurance policy or an indemnity for a particular body or profession.
  • The Agreement must specifically state that all the requirements regulating Settlement Agreements under the Act or Acts relating to the particular complaint have been satisfied.

A ‘relevant legal adviser’ can be either a qualified lawyer, a member of a trade union who has been certified in writing as being competent to give advice or a worker at an advice center who has been certified in writing to give advice.

Emplex lawyers are experienced in both the drafting of Settlement Agreements and advising private clients on the terms and implications of an Agreement.



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