What is a Settlement Agreement?

A Settlement Agreement (formerly known as a Compromise Agreement) is a specific type of contract between an employer and employee under which the employee receives a financial payment in exchange for agreeing that he or she will not pursue any legal claims against the employer.

Settlement agreements are commonly used as a means of resolving disputes between an employer and employee and as a means of mutually terminating the employment relationship.

The payment made to the employee may consist of salary, contractual notice pay and a compensation payment for the termination of employment. A compensation payment is generally tax free if it is £30,000 or less.

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If you have received a settlement agreement from your employer we will advise you as to whether we consider the offer made is fair in all the circumstances and on the terms of the agreement. Our role as your legal advisers is to advise you on your employment rights before you sign them away.

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