What is a settlement agreement?
A settlement agreement, also known as a ‘compromise agreement’ in the UK, is a legally binding document which sets out the terms of an agreed settlement between an employer and employee. The agreement usually relates to issues such as termination of employment or disputes about pay and working conditions. It is designed to provide a legal framework for employers and employees to resolve any differences without having to go down the route of expensive and time-consuming court proceedings.
The agreement must be signed by both parties in order to be valid, with each party getting independent advice from a qualified lawyer before signing. Once signed, it will bring to an end any existing rights that either party might have had against the other under uk employment law.