What Options Does An Employee Have When Presented With A Settlement Agreement?

What exactly is a Settlement Agreement?

settlement agreement advice


A Settlement Agreement used to be known as a Compromise agreement and is a legally binding contract between an employer and an employee. Settlement Agreements are usually drawn up when the employee wants to terminate the employment contract with their employee.  This can be for many reasons such as redundancy, a conduct issue, the employee being unable to complete their work to the required standard, or simply the relationship not working out.

To end the employment contract, the employee will usually offer a sum of money in exchange for waiving any rights to take legal action against the employer.  Employees may also include clauses. They could relate to share options, your pension, they may prevent you from taking employment with a competitor or talking about why your employment contract was terminated.


What should the Employee do?

It can be tempting to see the pay-off figure and decide just to sign the Settlement Agreement so that you can get away from whatever situation you find yourself in.  However, the employment solicitors at ELP Arbuthnott McClanachan will recommend that you get an experienced employment law solicitor to review the Settlement Agreement before signing.

A good solicitor will ask the employee for as much information as possible about their employment situation and termination.  They will then review the Settlement Agreement to ensure the employee is getting appropriate financial compensation. They will be able to explain the pros and cons of signing the settlement agreement or taking other action. Other actions that may be considered are:

  • Requesting your solicitor to negotiate the terms of the Settlement Agreement
  • Start an Employment Tribunal claim
  • Start a grievance process with the employer because you wish to stand up for yourself and continue in your current role.

The Employment Law Solicitors at ELP Arbuthnott McClanachan in Edinburgh are experienced in dealing with Settlement Agreements. They can provide you with the best advice quickly and sensitively. They understand it can be a very stressful time for their clients so will ensure you feel as comfortable as possible when speaking about your situation.



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