Settlement Agreements - Everything You Need To Know

Settlement agreements are generally used to solve disagreements of problems between the member of staff and employer, they are normally used to avoid the stress and hassle of a tribunal or court. To find out everything you need to know about settlement agreements carry on reading.   

What is a settlement agreement?

A settlement agreement is a legally required contract among an employer and member of staff which settles claims that the employee may have against their employer. 

A settlement agreement is normally linked with the ending of employment but doesn’t always have to be. A settlement agreement can also be used where the employment is ongoing, however, both parties want to settle the dispute that has come between them. 

When will a settlement agreement be used?

A settlement agreement would be used in the situation where a member of staff is not working well and neither party wants to go through a long procedure and both company and member of staff are prepared to bring the employment to a faster ending on agreed terms and the right financial terms. 

How are the terms decided?

The terms of the settlement agreement will be mutually agreed between the employer and member of staff, those agreed terms will be written out as a settlement agreement document. The terms that are written will be used will identify the claims which the member of staff agrees with. All settlement agreements should be personalised to each individual. 

What about discrimination? 

Employers should always consider everything before they start the protected conversation with the member of staff in circumstances that could be seen as discrimination or like they are victimising the member of staff because of certain characteristics. 

More flexible than a tribunal claim 

Whether the discussions have come to a surprise to you or you were expecting it there are advantages to a settlement agreement, they are a lot more flexible than a tribunal claim. For instance, you may get an agreed reference or an apology from your employer which you wouldn’t get with a tribunal order.

What is a dismissal 

Redundancies are a kind of dismissal and can take place when a worker's job no longer exists. This might be due to a company needing to reduce their number of staff or the business is closing. Sometimes members of staff will be able to apply for voluntary redundancy if the company needs to decrease the number of staff. 

Can my company threaten to dismiss me if I don’t except the settlement agreement?

Threating to dismiss a member of staff before any form of the disciplinary method has begun if the settlement agreement is turned down, also represents improper behaviour and will be disclosable to a tribunal. 

We hope that our blog has been informative and helped you understand more about settlement agreements. If you have any questions, please don’t hesitate to give us a call on 01865 487 136 or alternatively head over to our contact page to fill in the online enquiry form.