Settlement agreements
[ch 8: page 64]It is not unusual for an employer to require an employee to sign a settlement agreement in respect of an enhanced redundancy payment. The basic effect of this kind of agreement (previously known as a “compromise agreement”) is to replace the employee’s right to bring claims against the employer in the employment tribunal with a contractual right to be paid agreed sums of money on the terms set out in the agreement. Employees must take independent legal advice on the nature and effect of the agreement for it to be valid.
In Garratt v Mirror Group Newspapers [2011] EWCA Civ 425, the Court of Appeal upheld an implied term based on custom and practice that enhanced redundancy payments were only payable to employees who had signed such agreements.
There is more information on settlement agreements in LRD’s annual employment law guide Law at Work (www.lrdpublications.org.uk/lawatwork).