With an increase in dismissals, many employees may receive a settlement agreement, therefore it is important to understand what this is. If they have not, it may be worth considering.
A Settlement Agreement is a legally binding agreement negotiated between an employee and employer to bring their relationship to an amicable solution and avoid employment tribunal proceedings. It is sometimes referred to as a “golden handshake”.
If you are an employee who has been unfairly dismissed or treated by your employer, you can consider entering a settlement agreement with your employer. You would be required to obtain independent legal advice on the terms of a settlement agreement and the implications of entering into such an agreement.
With a settlement agreement, you and your employer can part ways amicably. A Settlement Agreement includes an agreed settlement sum which you will receive from your employer. In return, you must usually agree not to pursue any employment tribunal proceedings against your employer.
A UK-based employer might propose a settlement agreement to formally and legally cover the terms of the termination of your contract. The settlement agreement will ensure you are unable to bring employment claims against your employer in respect to the termination and would make clear the payments you will receive and other benefits.
It’s best to resolve all lingering issues in your settlement or compromise agreement. If you have been given a settlement agreement, you don’t have to accept it. If you have received a settlement agreement from your employer, seek legal advice for guidance on the best offer. If you’re unsure of what to do, it’s strongly advised that you seek legal advice to ensure you get the best deal.