Settlement agreements provide a clean, clear and amicable end to a dispute

What is a settlement agreement?

A settlement agreement (formerly known as a compromise agreement) is a legally binding voluntary document, which once signed on behalf of both parties is an open and binding contract which sets out the terms and conditions agreed by the parties involved which they agree to, to settle any potential claims they have against each other. The agreement is usually reached through a process of confidential discussion and negotiation which is usually carried out on a without prejudice basis and subject to contract.

Essentially a settlement agreement waives an individual’s right to bring a claim covered by the agreement to a court or tribunal. There are two common uses. In business or in employment circumstances.

• In business this may relate to a situation where a supplier has delivered unsatisfactory (faulty or unsuitable) goods or services and has agreed with the customer to either remove the goods and services and for the customer to pay nothing, or for there to be a settlement for a specified and reduced payment, rather than the agreed amount in full. Either way, there is flexibility for both parties and the compromise agreement will effectively overwrite any previous agreement between the parties – whether written or verbal.
• In employment, they can be used to bring an employment relationship to an end in a mutually agreed way, usually with some sort of financial payment involved. For example, when both employer and employee feel that their employment relationship has stopped functioning and they want to agree the basis for bringing the employment to an end, the employer might promise to pay a sum of money, so the employee agrees not to bring an employment claim – unfair dismissal, discrimination etc, against their employer

Cost and time saving solution

Whether you are acting as an individual or on behalf of a business, navigating settlement agreements can be complex. But it doesn’t have to be if you seek the services of an experienced Solicitor.

Parveen Sidhu, Alsters Kelley’s Head of Dispute Resolution Department agrees. ‘Settlement agreements can provide a swift and dignified end to an employment or business relationship that is no longer working. They can avoid the time, cost and stress involved for both parties in a court or tribunal claim and provide compensation when required.’

Parveen continues. ‘Because settlement agreements are legally binding documents, it’s important to take legal advice before you draw one up and also before you sign one. Our Solicitors can advise you on any appropriate legal provisions, the terms of settlement, appropriate timings and of course talk you through what the agreement means, how it will work and any future implications.’

Clean, clear and amicable end to disputes

Parveen concludes. ‘Settlement agreements are proving popular at the moment, that’s probably because they have plenty of advantages. They are very flexible, designed to suit the requirements of either or both parties, can protect both sides and provide a clean, clear and amicable end to a disputed situation, which otherwise might drag on for months and where neither side may benefit substantially in the end.’

Support and advice

If you want help and advice with a settlement agreement then please contact Parveen and the team who will be able to advise on costs and provide you with a convenient appointment time at any one of our network of offices covering Coventry, Leamington Spa, Nuneaton, Stratford-upon-Avon and Southam. For timely and quality advice, please contact Parveen Sidhu, Head of Dispute Resolution at Alsters Kelley on 01926 356000 or email parveen.sidhu@alsterskelley.com.