Our solicitors explain what a compromise (or settlement) agreement is, in what circumstances you can get one and how our specialist compromise agreement solicitors can help
Our Ealing employment solicitor’s guide to compromise agreements and what you may be entitled to following an issue in your employment
If you have faced discrimination or unfair treatment by your employer, you may feel confused about whether or not to make a claim. Taking them to court can be costly, time-consuming and daunting – but you can still win financial recognition of your employer’s mistreatment by making a settlement agreement with them instead.
At Starck Uberoi, our employment solicitors understand the anger you are feeling as a result of your workplace’s unfair treatment of you. Everyone deserves to be treated with respect in the workplace and you are right to seek compensation for your mistreatment. That is why our solicitors look at every case differently and will always go the extra mile to get the best outcome for you.
What is a Settlement agreement?
A settlement agreement (also known as a compensation agreement) is a legally binding agreement between you and your employer that sets out the terms and conditions under which your employer is terminating you. In most cases, the terms will include that you cannot make any claims against them, while you will get something in return, usually a financial sum or a good reference.
In basic terms, it is a way for an employer to make a deal with the employee they are terminating which means the employee will leave quietly in exchange for something which benefits them. This may be done as a way to settle a claim an employee raises against their employer before it goes to court.
Why would my employer offer a settlement agreement?
There are a multitude of reasons why your employer may offer you a settlement agreement rather than simply fighting your claim in court. Such reasons include:
- You have made a discrimination claim against them which could damage their reputation and be expensive to fight in court
- You have made a claim of constructive/unfair dismissal
- Your post is redundant and offering a settlement means they won’t have to go through a consultation process
- Your employer wants to terminate you for inadequate performance or gross misconduct but wants to offer you a settlement so that you will leave quietly
- You are struggling to work due to health problems so a settlement agreement allows them to terminate your employment while preventing you making a claim of discrimination
- They may want you to keep certain information confidential after you leave their employment
Settlement agreements do not cover personal injury claims you may make against your employer. To find out how to make a personal injury claim following a workplace accident, please see our blog on Workplace Wellbeing.
What will a settlement agreement contain?
It differs from case to case, but in most settlements agreements you may expect:
- Any outstanding payments owed by your employer
– This includes any outstanding wages, bonuses, commissions and holiday pay. - A termination payment made by your employer to you
– The value of this termination payment may depend on the level of performance you gave while working for your employer. You will receive more in your termination if you gave a satisfactory performance than you would if you were considered a “bad” employee. Most settlements under £30,000 will be tax-free. - A clause stating the employee will not make any further claims
– Most agreements will have a clause in them which means you cannot make any further claims against them, such as discrimination. It is important to note that the agreement is legally binding, so you cannot accept the agreement and then attempt to claim anyway. - A confidentiality/non-disclosure clause
– This will usually be on behalf of both the employee and employer and will state that neither may share confidential information about each other. - A non-derogatory clause
– Like the confidentiality clause, this confirms neither party will be able to make negative comments about each other. This may include an agreement between you and your employer as to what you will tell your friends and family if they ask why you left your employment. - A contribution to your legal fees
– If you have made a claim against your employer, they may offer some contribution to your legal fees in the agreement. - Promise of a good reference
– In cases where the employee provided a sufficient service, the employer may promise to provide a good reference for the employee. They may not offer this if your performance was inadequate.
Do I have to agree to a settlement agreement?
You do not have to accept a settlement agreement for any reason, and you also may negotiate its terms. For example, if you believe you may win more if you make a claim against your employer and are willing to do so, you may choose not to accept the agreement, as doing so prevents you from being able to.
However, consider your decision carefully. While it is true that many employers will offer a settlement agreement to save them money and protect their reputation in the long run, they also may have valid grounds to sack you with no agreement and you could therefore miss out on getting a deal altogether. Take this into account when considering rejecting an agreement.
Do I need a solicitor?
A solicitor will be able to go through the settlement agreement with you and determine whether or not it is fair. They can help you negotiate a better deal if necessary or advise that you make a claim against your employer instead if that would be better for you. Plus, there may be parts of the agreement which you do not fully understand, and by agreeing to them anyway you may miss out on a better deal or agree to something which is unfair to you.
For this reason, it is best to instruct one of our employment solicitors. They can help you understand the terms of the agreement in its entirety as well as provide advice which is best for you.
How Starck Uberoi can help
Our experienced employment solicitors are dedicated to providing our clients the best legal advice on a case-by-case basis. We specialise in an array of different employment matters and will always go above and beyond to offer you the best advice specific to your case.
To find out more, please see the Employment Law page on our website. To book an appointment please call 020 8840 6640. Our offices are based in Brentford, Ealing, Chiswick, Canterbury and London Victoria. For an appointment at any of our offices, email us at solicitor@starckuberoi.co.uk or call 0208 840 6640.
Further Reading
- Workplace Wellbeing
