Settlement agreement
Plain-English definitions for England and Wales. General information, not legal advice. Laws and figures change - always check the current position on GOV.UK.
Settlement agreement A legally binding agreement in which an employee waives certain employment claims, usually in return for a payment. To be valid it must meet statutory conditions, including that the employee received independent legal advice on its terms.
Also known as: compromise agreement
Related terms
- COT3
- A settlement recorded through ACAS (named after the form) that settles a tribunal claim or potential claim. Unlike a settlement agreement, a COT3 does not require the employee to take independent legal advice.
- Protected conversation
- A pre-termination settlement discussion that, under section 111A of the Employment Rights Act 1996, generally cannot be referred to in an ordinary unfair dismissal claim - even if there is no existing dispute. The protection does not cover discrimination, automatic unfair dismissal or whistleblowing claims, and is lost where there has been improper behaviour.
- Without prejudice
- A legal rule that protects genuine attempts to settle an existing dispute from being shown to a tribunal. For it to apply there usually has to be a real dispute already in existence between the parties.
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