A settlement agreement is a legally binding document which an employee and an employer sign in order to terminate an employment contract. It’s sometimes referred to as a ‘severance agreement’ or ‘compromise agreement’.
Settlement agreements are often used when making employees redundant as they provide a confidential and legal method for an employee and employer to part ways on agreed terms. They are also sometimes used to bring a close to claims of unfair dismissal or discrimination in the workplace.
Putting a properly drafted settlement agreement in place means you won’t have to worry about your former employee making any further demands of you in the future.
Furthermore, as an employer, it’s usually more cost-effective for you to make a settlement agreement with a current or former employee than allowing the dispute to reach an employment tribunal.
Our specialist settlement agreement Solicitors can advise you on how much a tribunal might award a disgruntled employee so that you can make a judgment on what kind of lump sum to offer for a settlement.