04 May 2020

What is a settlement agreement and do I need to sign it?

What is a settlement agreement and do I need to sign it?

You have been offered a settlement agreement by your employer... but what does it mean? How will it affect you? And what do you need to know?

What is a settlement agreement

A settlement agreement is essentially a way for you and your employer to ‘part company’ on certain agreed terms.

Under the terms, you will waive (or give up) your right to bring any claims against your employer. Settlement agreements can also be used to terminate your employment and can settle an ongoing claim you are bringing in a court or employment tribunal.

Usually it contains some additional obligations, conditions for payment of termination payments and other termination arrangements.

What does it mean if I sign it?

It is a binding agreement, you won’t be able to bring any claims against your employer and you will normally have undertaken some post termination obligations (such as confidentiality).

Do I need to sign it?

You don’t have to sign it unless you agree, there is often scope for negotiating terms and ultimately you can refuse to sign and bring a claim instead.

Depending on the circumstances, your employer might be able to sack you fairly anyway. If you turn down the offer, you might not get a better one.

If you feel you’ve been treated badly, you could still bring a claim after turning down a settlement, but you might not be awarded as much money as you were offered initially.

Remember, the terms of a settlement must be agreed by both parties and a solicitor will be able to advise you about what would be reasonable in your circumstances.

Do I need to take legal advice?

Yes, a settlement agreement is only valid if you have taken independent legal advice as to its terms.

Who pays for the legal advice?

Although you are responsible for your solicitor’s fees, employers normally agree to make a contribution.

Depending on how much they offer to contribute and the complexity of advice you need, that may or may not be sufficient to cover all of your fees.

Speak to our employment law experts

Aberdein Considine is a specialist in all aspects of Employment Law. We have offices in Aberdeen, Aberdeenshire, Dundee, Perth, Stirling and Glasgow.

If you wish to speak to us about your circumstances, call 0333 0164 315 or click here.

Click here if you would like to read more about your rights during a redundancy consultation.

Please correct the errors below before submitting your request:

Get in touch

Our dedicated client contact team prefer to receive enquiries through our contact form. We'll endeavour to get back to you within 24 hours or during the course of the next working day.

Tick this box if you wish to receive news and offers from Aberdein Considine. By doing, you indicate your consent to receiving targeted email marketing messages from us. On each occasion that we contact you in the future, you will be given the option to opt-out from receiving such messages. You may also email marketing@acandco.com at any time to opt-out.

The personal information that you provide to us in this form will only ever be used by Aberdein Considine (as the Data Controller) for the following specifically defined purposes:

  • email you content that you have requested from us
  • with your consent, occasionally email you with targeted information regarding our service offerings
  • continually honour any opt-out request you submit in the future
  • comply with any of our legal and/or regulatory obligations