SETTLEMENT AGREEMENTS ON TERMINATION OF EMPLOYMENT (COMPROMISE AGREEMENTS)
An employer and employee may often wish to agree to reach a binding agreement as to the terms upon which a contract of employment is terminated. Save in three circumstances such agreements are not enforceable. The exceptional circumstances are:-
- Where an ACAS officer settles a dispute through early conciliation
- Where a compromise agreement is achieved by an ACAS Officer within tribunal proceedings.
- Where there is a compromise agreement which satisfies various criteria - known as "a Section 203 Agreement". These used to be called compromise agreements but are now known as settlement agreements.
To be valid a Section 203 Agreement must:-
(a) Be in writing.
(b) Relate to the particular dispute/issue between the parties.
(c) Be entered into after the employee has received independent legal advice from a solicitor or a specially trained Trade Union Official. The lawyer or adviser must have a professional indemnity insurance in place. It is not usually possible for thEse agreements to contract out of liability for possible claims for personal injury that an Employee may have, other than those of which the employee is already aware.
Lawson Lewis Blakers are available to provide specialist advice to employers and employees in relation to the preparation and implementation of compromise agreements. This can be no more than a brief summary of complex regulations. You should take advice specific to your situation.