Settlement / Compromise Agreements

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Blacks Solicitors have one of the largest employment law teams in Leeds, and can advise you in relation to any aspect of a Settlement/Compromise Agreement.

A Settlement Agreement (known as a Compromise Agreement until 29 July 2013) is often used to record the terms of an employee’s departure from their employment. Typically, the employee will receive a termination payment (up to £30,000 of which may be tax-free) in return for giving up current, and potential, statutory (and, usually, common law) claims against their employer. This extends to abandoning current and future claims in the Employment Tribunal.

The use of a Settlement Agreement can effectively and efficiently bring an end to an employment relationship and, through successful negotiation between advisers, can usually achieve a mutually beneficial and amicable solution.

For a Settlement Agreement to successfully waive an employee’s rights, certain statutory conditions must be met:

  • The Agreement must be in writing
  • The Agreement must relate to a “particular complaint” or “particular proceedings”
  • The employee must have received independent legal advice on the Agreement and, in particular, its effect on their ability to pursue the statutory rights/claims that are intended to be waived
  • The Adviser must be identified in the Agreement
  • The Adviser must have insurance in relation to the advice
  • The Agreement must state that the legislative conditions regulating Settlement Agreements have been met

Whilst the Settlement Agreement is a very useful tool, it can’t be used to compromise an employee’s claim for accrued pension rights, claims for latent/future personal injury, or claims to enforce a Settlement Agreement which has been breached.

Protected Conversations

Since July 2013, employers have also been allowed to have what are commonly described as Protected Conversations with employees.

This allows you to discuss with the employee the possible termination of their employment (under the terms of a Settlement Agreement) without fear that the conversation will be referred to in an Employment Tribunal. This is a useful tool for the employer to use if they need to deal with an under-performing employee, but it is not without risk if the conversation is not dealt with properly.

It is worth noting that the legislation describes these conversations as “Pre-Termination Negotiations” and this point is not always fully understood by employers. Unless termination lies at the heart of the conversation it will not be “protected” and may later be referred to in an Employment Tribunal. The regime of Protected Conversations is never available in cases involving alleged discrimination.


If you require assistance with a Settlement/Compromise Agreement, or would like to find out more about Blacks’ services, please email or call our Employment Law team today on 0113 207 0000 for a free no obligation discussion.