Settlement agreements – what are the pros and cons?

Settlement agreements are a common method used to terminate an employment relationship.  They enable employers to pay an employee a termination payment in exchange for waiving their rights to bring a claim against them.

If you’ve been offered a settlement agreement, you may be wondering what the advantages and disadvantages to signing may be.

Advantages of a settlement agreement

  • They can avoid the stress, cost and time of bringing tribunal claim by resolving disputes at an early stage
  • They can provide a clean break from the employment relationship
  • Terms are agreed by both parties
  • The employee is provided with compensation for the termination of their employment

Disadvantages of a settlement agreement

  • If an agreement cannot be reached it may jeopardise the employment relationship moving forward
  • It may allow your employer to avoid dealing with any issues or grievances
  • You are waiving your rights to bring a claim a claim against your employer

Things to consider

  • Do you have any potential claims against your employer?  This may include things like discrimination, whistleblowing or unfair dismissal.
  • Would the value of bringing a claim outweigh what is being offered under the settlement agreement?
  • How long will it take you to find new employment?

If you’ve been offered a settlement agreement, our Check My Settlement service provides a quick and easy way to get expert advice on your agreement.