Are Settlement Agreements the same as Compromise Agreements?

Posted by : | 11th Sep 2013 | Employment law for HR Directors

The answer is “Yes”.

Settlement Agreements are designed to achieve the same objective as Compromise Agreements. The Government (Department of Business, Innovation and Skills) has renamed Compromise Agreements as Settlement Agreements so identify more clearly what is happening.

Settlement Agreements are needed for an employee to waive all their employment rights (eg discrimination and unfair dismissal) in return for a payment from the employer.

ACAS has issued its New Acas Code of Practice. The Code became law on 29 July 2013. It explains how negotiations using a Settlement Agreement can be as simpler and cost-effective way to bring an employment relationship to an end.

For a settlement agreement to be legally valid the following conditions must be met:

(a) The agreement must be in writing;

(b) The agreement must relate to a particular complaint or proceedings ie it must state what rights the employee is waiving;

(c) The employee must have received advice from a relevant independent adviser on the terms and effect of the proposed agreement and its effect on the employee’s ability to pursue that complaint or proceedings before an Employment Tribunal;

(d) The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim by the employee in respect of loss arising from that advice;

(e) The agreement must identify the adviser;

(f) The agreement must state that the applicable statutory conditions regulating the settlement agreement have been satisfied.

The Legal Partners provide this service and have negotiated 100s of these agreements for employees and employers.

Settlement agreements are voluntary. The employee and employer do not have to agree them or enter into discussions about them if they do not wish to do so. Equally

the parties do not have to accept the terms initially proposed to them.

There can be a process of negotiation during which both sides make proposals and counter proposals until an agreement is reached, or both parties recognise that no agreement is possible.

More information

This Checklist is designed to help you focus on the main issues to deal with

Please contact us if you need further help:

Richard Mullett – 0208 334 8049 / Richard.Mullett@TheLegalPartners.com

Abigail OpreyAbigail.Oprey@TheLegalPartners.com

This document is not specific legal advice. If you can share your employment situation we can advise you on correct approach to take to obtain the right settlement.

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