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Can an employee request a settlement agreement?

Typically, it’s the employer that makes the request for a settlement agreement. This is because it’s often used as a severance payment that serves as an alternative to the employee pursuing a claim (or claims) against the employer in a tribunal or court. In this post, we’ll cover whether an employee can ask their employer for a settlement agreement and if so, why they might want to go down this route.


Settlement agreements for employees

A settlement agreement, previously called a Compromise Agreement, is a legally binding document that’s used to reach a conclusion on a matter. This doesn’t have to be regarding termination, although it often is, it can also be used to legally resolve a dispute in the workplace. Negotiations made about settlement agreements are largely confidential to prevent them being used in a claim. Severance payments are often given as a result of settlement agreements, making them a common alternative to legal action.

As an employee, you might want to request a settlement agreement if you are unhappy in your employment and your employer agrees that the relationship isn’t working. Additionally, if you’re part of an ongoing workplace dispute that is damaging your work and enjoyment in the role. Here, a settlement agreement can be used to reach a resolution that’s agreed by all parties involved.

How does an employee request a settlement agreement?

So yes, it is possible for an employee to request a settlement agreement. Regardless of the reason, this will broadly follow this process:

  • The employee makes their grievances known to the employer and suggests that a settlement agreement might be a good option for both them and the business. Again, this will depend on individual circumstances.
  • The employer then has the option of whether or not to accept their request.
  • If the employer decides to offer the settlement, both parties will then enter negotiations to decide the terms of the agreement. This can be done either verbally or in writing, with the final terms typically being written down for clarity.
  • Once the details of a settlement agreement are set, the employee is then given time to consider the offer.
  • If either party chooses to reject the proposal of a settlement agreement, or the terms of a settlement agreement, the employee can then choose to file a claim against the employer. Note that employers who threaten dismissal after a breakdown of negotiations will open themselves to a further claim of unfair dismissal based on this behaviour.


Potential benefits of a settlement agreement

As mentioned above, it can be unusual for an employee to request a settlement agreement. However, there are a number of potentially beneficial aspects which might encourage an employee to choose to ask for a settlement agreement. To make a fully informed decision, employees should seek our specialist advice on settlement agreements. We also offer employment law help for employers, so they’re prepared when settlement agreements are brought to them.

It’s a common feature of many settlement agreements that a sum of money is paid to the employee. This can be more certain than pursuing legal action through a claim, although this will depend heavily on the circumstances surrounding the reason for the employee seeking a settlement. It’s also typically a far quicker process.

In cases where an employee can make an unfair dismissal claim, reaching a settlement agreement could be an easier way for employees to terminate their employment. This is as opposed to going through the claims process and appearing at an employment tribunal or court.

Organising a settlement agreement can be a more flexible and informal option to resolve a workplace dispute. In negotiations, employees are able to freely discuss how they would like to move forward. Both parties are aiming to reach a conclusion that results in equal benefit.

Expert legal advice for employers and employees

As an employer, professional legal advice is needed before offering a settlement agreement to avoid potential costs, both financial and to internal relationships. For employees, it’s important to know how to approach the discussion around settlement agreements to get the best outcome. Our team contains professional employment law solicitors for employers and solicitors to provide tailored legal support to employees. Contact Employment Law Services (ELS) LTD to be confident you’re making the right choices.