Settlement agreements are an effective way of reaching a binding agreement to end an individual’s employment. They are one of the few ways in which an employer and an employee can agree to waive claims that an employee may or does have.

A settlement agreement can be used at a point in which an employer and an employee are already in dispute, but are also used where the parties have agreed on severance terms as an alternative to embarking on a process that could lead to a dismissal e.g. where there are performance or disciplinary issues, long term sickness issues, or redundancies are contemplated.

Ashtons are engaged by a wide range of businesses to prepare settlement agreements so that they meet the legal requirements to be a valid agreement and to ensure that the terms on offer reflect a sensible commercial arrangement. It is important that the agreement accurately records the settlement terms on offer to avoid delays in completion.

An employee will be required to seek independent advice on the terms and effect of the agreement. An employer is normally expected to contribute to the employee’s legal fees for this.

Ashtons are also engaged by businesses who have retained lawyers but who seek to find a law firm who can offer independent advisers to send employees to in bulk settlement agreement arrangements. For example, in large-scale restructures and redundancies. We are known for being efficient and thorough in handling bulk settlement exercises and usually advise at the employer’s premises, at one of our offices or over the phone/video call.

If the chosen Termination Date is several months away, it may be sensible for an employee to use a two-stage agreement so that the employee is signed up early to the agreement and then asked to repeat key assurances around the Termination Date.

If the arrangement is affected by a business transfer or more than one business is involved, a more detailed agreement is likely to be needed to ensure all parties and claims are dealt with correctly.


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