If you have a dispute with an employee, need to make redundancies or the time has come for an amicable parting of the ways, then to avoid the risk of a Tribunal Claim you will need the employee to sign a Settlement Agreement.

Formerly known as a Compromise Agreement, this is an Agreement between you and your employee which provides that in return for whatever you agree to give them (usually a payment of some kind) they will not pursue a Claim against you.

The Agreement must be in a very specific format in order to comply with the applicable legislation. Get it wrong and it will not be a binding settlement and the employee will be able to keep the money and then still bring a Claim for more!

You also need to be careful about how you raise the topic with the employee in the first place – if you do this in the wrong way then you could leave yourself open to a Tribunal Claim for constructive dismissal and/or discrimination.

Contact our employment law specialist Richard Ennis, based in our Wolverhampton office, for advice about all aspects of bringing the employment relationship to an end and for information about how we can draft a Settlement Agreement that meets the specific requirements of your situation.