Settlement Agreements for Sales, Management, Director and Administrative Staff

Settlement agreements (previously called compromise agreements) are legally binding documents that set out the terms and conditions agreed by the employer and the employee to settle a potential employment tribunal claim or other court proceedings, such as claims of unfair dismissal, discrimination or harassment. In essence, the employee agrees not to pursue claims against the employer in return for a financial settlement.

This month, the Settlement Agreement templates have been revised and updated. There are three settlement agreements available, covering different levels of seniority: a Standard Settlement Agreement for Administrative/clerical Staff (where post-termination restrictions are not needed); a Settlement Agreement for Sales and Management Staff (where clauses relating to restrictive covenants are required); and a Settlement Agreement for Senior/director level staff. 

In order for settlement agreements to be legally binding, employers must follow the correct procedure. New Settlement Agreement Guidance Notes have been produced, explaining how to use these settlement agreements and the different matters to be taken into account.