Useful Information on Settlement Agreements

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Requirements of a Settlement Agreement

The law governing settlement agreements or compromise agreements is set out in section 203 of the Employment Rights Act 1996 which states that:

  1. The agreement must be in writing.
  2. The agreement must relate to the particular proceedings that are being settled.
  3. The employee must have received advice from a relevant independent adviser as to the terms and effect of the proposed agreement and in particular its effect on his/her ability to pursue his rights at an employment tribunal.
  4. The adviser must have a contract of insurance or an indemnity provided for members of a profession or professional body,covering the risk of a claim by the employee or worker in respect of loss arising in consequence of the advice.
  5. The agreement must identify the relevant independent adviser.
  6. The agreement must state that the conditions regulating settlement agreements are satisfied.

If the agreement does not comply with these minimum legal requirements, it may not be valid and an employee may still be able pursue a claim against their employer.