Who can enter into a settlement agreement?

A settlement agreement is a legally binding contract that sets out the terms of any settlements that arise out of an employee’s termination of employment. These terms will usually state that an employee accepts a sum of money and a reference in exchange for agreeing not to make a legal claim against their employer.

A settlement agreement is entered into by an employer and their employee (or former employee). A settlement agreement can also be entered into by someone other than an employee or former employee. For example this could be a worker who has a complaint about their holiday pay or an unsuccessful job applicant who feels that they were discriminated against at the interview stage.

An individual settlement agreement can only be signed by two parties and cannot be signed by groups of individuals.

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Seeking legal advice

Whether or not there is a prior dispute, a settlement agreement cannot legally be entered into until the employee has sought independent legal advice on the matter. This is to ensure the employee specifically understands any and all rights they are signing away. 

If you have been asked to sign a settlement agreement it’s vital you seek legal advice as soon as possible. A settlement agreement can only be reached when it has been viewed and signed off by a solicitor as this protects your rights. Your employer will usually cover the cost of these settlement agreements including any legal advice that you seek regarding the settlement agreement itself. So don’t delay, ensure your rights are protected and get the best possible outcome.

For more information contact the expert solicitors at Stephensons today on 0203 816 9302 or complete our online enquiry form

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