At Greenways Law we try to keep things simple.
Here we provide a brief definition of what a settlement agreement is and what we can do for both employers and employees when requiring legal representation.
What is a Settlement agreement?
A settlement agreement is a document that records an agreement between an employer and an employee. It is a legally binding settlement. The employee normally agrees not to pursue future employment claims against the employer (such as unfair dismissal, discrimination claims, redundancy claims), and the employer normally agrees to pay the employee a certain amount of money in return. In this way the employees’ rights are said to be “compromised”.
Settlement agreements are seen as a good way to make a ‘clean break’ by employers. They offer peace of mind that an employee leaving the business will not be pursuing claims against them later on.
Settlement agreements are also of benefit to employees as the termination payment is usually paid tax free up to the first £30,000.