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It is sometimes the case that an employer would prefer to agree settlement terms with an employee, rather than risk the employee issuing Court or tribunal proceedings, either following the employee’s dismissal or in other circumstances. If so, it is likely that the employer will want the employee to enter into a formal Settlement Agreement, previously known as a ‘Compromise Agreement’.
A Settlement Agreement is the only method by which an employee can validly give up their statutory employment rights. In order for the agreement to be valid, the employee must take legal advice on the terms and effect of the proposed agreement. Normally, therefore, the employer will agree to pay a contribution towards the employee’s legal costs for this advice.