A settlement agreement is a special agreement under which an employee can settle statutory employment claims (and others) against an employer. These agreements are common where an employee is leaving a business or where an employment tribunal or other claim has been started or is threatened. Settlement agreements used to be called  compromise agreements.

There are certain statutory employment rights which an employee cannot agree to give up, unless this is done under valid settlement agreement or through a COT3 agreement overseen by ACAS.

In order to be a valid settlement agreement an employee must receive legal advice from a suitably qualified independent legal adviser before the agreement is signed.

As long as the legal requirement for a valid settlement agreement are complied with, the parties can include whatever they want in a settlement agreement as regards the terms negotiated between them. For example, it is common for the wording of any reference to be included but this is not always the case and will not affect the validity of the settlement agreement if not included.

To find out more information about settlement agreements follow this link.

If you would like to find out more about the settlement agreement services we can offer, click here.

Published in…

Updates: For employers: Redundancies | Settlement agreements | For employees: Redundancy |

Share this definition on

Other employment law terms

  1. ACAS Early Conciliation
  2. Adoption appointments
  3. Adoption leave
  4. Alternative dispute resolution
  5. Ante-natal care
  6. Apprenticeship
  7. Basic award
  8. Collective consultation
  9. Compensatory award
  10. Compromise agreement
  11. Constructive dismissal
  12. Contract of employment
  13. Disciplinary hearing
  14. Discrimination
  15. Employee shareholder
  16. Employment tribunal
  17. ETO reason
  18. Flexible working requests
  19. Grievance
  20. Gross misconduct
  21. Harassment
  22. Industrial action
  23. Injury to feelings
  24. Maternity and parental rights
  25. Maternity leave
  26. Maternity pay
  27. Mediation
  28. Parental leave
  29. Paternity leave and pay
  30. Polkey deduction
  31. Pre-termination negotiations
  32. Protected characteristics
  33. Redundancy
  34. Restrictive covenants
  35. Shared parental leave
  36. Staff handbook
  37. Statutory annual leave
  38. Strikes
  39. Study and training rights
  40. Summary dismissal
  41. Sunday working
  42. Trade union
  43. TUPE
  44. Unfair dismissal
  45. Unlawful deductions
  46. Victimisation
  47. Whistle-blowing
  48. Without prejudice
  49. Working Time Regulations
  50. Written particulars
  51. Wrongful dismissal
  52. Zero hours contracts