A Settlement Agreement (once known as a Compromise Agreement) is a legally binding contract made between an employer and an employee. It is designed to bring the employment relationship to an end on an amicable basis.

The employer offers to pay a lump sum to the employee and also perhaps might agree to provide a reference and in return the employee agrees not to bring any legal claims against the employer to a Court.

Basically, it is an agreed, amicable deal. The employer is able to draw a line under the matter knowing that the employee has legally agreed he / she will not bring any claims against the employer. So, the employer saves the costs, effort and management time of defending a court or employment tribunal claim and on the other hand the employee is able to walk away from the contract of employment with a pay off (part of which is tax free) and might even negotiate a reference.


The employee will therefore have some money at a time when he or she is out of work and does not need to worry about whether or not to make a claim against the employer. Instead the employee can spend his / her time looking for new employment.

It is a legal condition that the employee must obtain independent legal advice from a solicitor and the employee usually pays the employee’s legal fees direct to his / her solicitor.

Therefore, if you are an employer and would like to resolve amicably an employment dispute this way we will be pleased to help you .

If you are an employee and you have been offered a Settlement Agreement you must obtain independent legal advice and your employer should pay our legal fee.

Therefore please feel free to contact us for a free consultation.

Contact us today for a free no obligation chat

0161 443 4141

Byrne Campbell Moloi Law LLP is registered in England and Wales with Company Number OC424295.

Byrne Campbell Moloi Law LLP is the first law firm to be authorised and regulated by CILEx Regulation offering specialist employment and criminal law advice.

Authorised by CILEx Regulation for Civil and Criminal Litigation and Advocacy Authorisation No: 2182916

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0161 443 4141