The right job comes with such promise – an income, new and inspiring colleagues, another step on the career ladder, as well as those less quantifiable things like enhanced self-esteem and perhaps the start of future hopes and dreams.

That’s day one and, if we’re one of the lucky ones, that’s how it will continue as the months and years roll by because, in the main, we feel satisfied and rewarded by our job.

The reality is, however, that working lives don’t always follow a smooth path and sometimes bumps in the road derail our career plans and choices.

The bump might be an unexpected redundancy, which sees us having to move on without warning, or dissatisfaction with our employer due to an unforeseen turn of events. And when that happens it’s important to know what options we have.

One of the options when things don’t go smoothly is departing under the terms of a settlement agreement. Here’s some information about how they work…

What is a settlement agreement?

A settlement agreement (which used to be called a ‘compromise agreement’) is a legally binding contract that lays down the terms and conditions to end someone’s employment or resolve a dispute.

Why does an employer offer it?

An employer will propose a settlement agreement which usually includes payment to the employee of a sum of money to ‘buy off’ the possibility that the employee brings legal action against the organisation. It can also be an alternative to a lengthy HR or legal process, which will cost the organisation both time and money so they assess they are better off paying something to avoid that.

What does it mean for an employee?

When you sign you waive your rights to bring any future claim against your employer for the causes of action named within the agreement.. You will only be able to bring a very few limited claims after signing the agreement, such as in respect of your accrued pension rights and any personal injury you are not aware of at the time of signing However, it’s only legally binding if a qualified lawyer or an authorised trade union representative signs it off.

Do I need a solicitor to proceed?

In a word, yes. Settlement agreements are only legal if they have been overseen by a legal professional. The other important reason to employ a specialist settlement agreement solicitor, is that they can check that you are not ‘signing away’ anything that you shouldn’t and they can advise you on the potential value of your claim and the amount of money you should be looking to receive from the settlement.

What sort of information do I need before seeking advice?

Your solicitor will talk you through what’s required and do all the hard work for you, but before you get in touch, it’s good to have documents like contracts, a list of key dates associated with your employment and copies of any relevant communications such as letters or emails.

Are there costs involved?

Yes but you shouldn’t have to pay them. The employer meets the (fixed) costs of your getting independent legal advice on the agreement. You can’t legally sign the agreement without that advice.

Can I refuse a settlement agreement?

Yes, you can. Just make sure you keep a record and copies of any communications that you have about the issue if you are instead choosing to take your case to an employment tribunal. Sometimes, an employer might describe these communications as ‘protected conversations’ so they cannot be brought to tribunal, but this is not commonly accepted.

What happens once I sign a settlement agreement?

A settlement agreement is a legal contract between you and your employer – which means that you are both required to adhere to it. Your employer may also ask that you keep its contents confidential.

Thompsons Solicitors – experts in settlement agreements

Thompsons Solicitors has acted for thousands of workers who have signed settlement agreements and the firm’s specialist unit is known as a major player in this field.

Thompsons only ever represents employees, never employers, and their specialist employment lawyers will fight for the best possible terms for the worker.

If you need support with a settlement agreement, you can find out more about Thompsons Solicitors’ settlement agreement legal service here.

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