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Settlement agreements are voluntary, legally binding contracts which are usually proposed by an employer to end an employee’s contract in a mutually beneficial way where the alternative would involve redundancy or taking the matter to an employment tribunal. However it is also possible for you as an employee to ask your employer for a settlement agreement to end your employment contract. This will usually be in circumstances where your working relationship has broken down irretrievably due to an unresolved dispute.

If it has become clear to you that a work-related issue is only resolvable through you leaving your current employment, then before you take any action, it’s important to speak to a specialist employment solicitor to find out what your options are and to ensure you don’t walk away without the compensation you are legally entitled to. Indeed no settlement agreement is valid unless you have taken independent legal advice before entering into it. Also, whether you are the proposer or the recipient of a settlement agreement, it is important to remember that when you agree to it, you waive any future right to take legal action against your employer.

What are settlement agreements for?

Whether you or your employer instigates a settlement agreement, the proposed outcome will be the same; that both sides end the contract of employment under a negotiated agreement that both parties are happy with. Reasons your employer may agree to a settlement agreement proposed by you include:

  • They are also keen to end your contract.
  • They wish to avoid the potential stress, expense and publicity of an employment tribunal.
  • They are keen to find a quick and relatively easy way to bring your contract to an end.
  • Although you have raised a dispute with them, they are willing to pay you the amount you request.

Why is a settlement agreement a good idea for me?

As an employee, a settlement agreement can be the best possible option in difficult circumstances for the following reasons:

  • You wish to get out of an unsatisfactory situation with the compensation you think you are entitled to but would rather avoid the ordeal of an employment tribunal.
  • You would prefer the details of your departure from your job to remain private – most settlement agreements have confidentiality clauses, as opposed to employment tribunal decisions which are available to view at gov.uk.
  • You will usually be awarded a pre-agreed lump sum to walk away from your job under the terms of a settlement agreement.
  • Often, you can also negotiate other benefits such as a pre-agreed standard reference as part of your settlement agreement, so your current issues don’t affect your chances of finding employment in the future.

What situations do settlement agreements cover?

There are many scenarios in which you can ask your employer for a settlement agreement including the following:

  • You have a dispute over a certain issue, such as holiday or sick pay. In this instance, it’s possible for a settlement agreement to resolve the issue without you having to leave your job.
  • You have been moved to a new role due to structural changes in the business, and despite your previous good record, you are not performing well in your new role due to its unsuitability for your skill set.
  • You feel forced into leaving your job in a case of constructive dismissal. This means your employer has left you no option but to leave due to a serious breach of your contract of employment such as health and safety, pay, job status or discrimination.

Can I ask for a settlement agreement to resolve a personality clash at work?

Yes you can. Settlement agreements are sometimes used for a clean break in cases of unresolvable situations where your and a colleague’s inability to work together means there is a negative impact on the entire team. However, if your employer doesn’t suggest a settlement agreement as a way to resolve an issue like this, you may find it is a harder area for you to negotiate. This is because most employers are conscious that settlement agreements should not be used as a substitute for bad management. Equally, if you suggest a settlement agreement to resolve an issue like this, it’s important that you can demonstrate that your behaviour has been consistently professional and appropriate in connection with the colleague in question.

How should I approach my boss to ask for a settlement agreement?

First of all, make sure you have taken specialist legal advice to ensure you have a valid claim for a settlement agreement. The expert employment solicitors at Bray & Bray can advise you about this. It’s impossible to overestimate the importance of this initial step as if you approach your employer to ask for a settlement agreement where it’s not appropriate, you can lay yourself open to negative consequences at work. Obviously this is something you will wish to avoid at all costs if you are already unhappy in your job.

Specialist settlement agreement solicitors

If you are considering asking for a settlement agreement at work, please get in touch on one of the following numbers to speak to one of our experienced and supportive employment law solicitors: