Settlement Agreements, formally known as Compromise Agreements, were introduced in 2013. They made it easier for employers to raise, in the right circumstances, the issue of someone leaving the organisation by having a “protected conversation” about their future. 

The conversation(s) allow the parties to come to a financial agreement (severance package) in return for the employee agreeing not to pursue the matter further through the tribunals. A Settlement Agreement details this information and provides scope for other protections for both parties in line with ACAS Guidance.

While these are designed to be easy to set up, they are specialist documents and need to give the employer protection in a number of areas. There is certainly no standard template, as each individual’s circumstances are different, and the interests of the employer and employee must be protected.

The benefits of settlement agreements:

  • Open and honest discussion about an employee’s future
  • Protection from future tribunal action
  • Quick and clean break for employer and employee, especially if wanting to avoid problematic redundancies
  • Employer can replace the role 
  • Employee has reassurance of a positive reference  
  • Fast, efficient and responsive handling from BackupHR™

Settlement Agreements are not appropriate in every circumstance, and we will be able to advise where they should not be used. We can also give clear direction on a number of the other important components of a Settlement Agreement

  • Appropriate financial package including the level of compensation payment
  • Protected conversations
  • Confidentiality, covenants, and other negotiated terms
  • References 
  • Outplacement

All agreements need to be signed by a solicitor with a provision for an element of cost paid by the employer to a solicitor. We can advise on the appropriate amount. 

For more information on this and our outplacement service, which helps employees to move on to the next stage in their career, please contact:

Contact: Jackie Bolton, Client Services & Events Manager
Mobile: 07501 224523 – Email:

We have been working with BackupHR for many years now, and their professionalism during Settlement Agreements is second to none.  A smooth, straightforward process leading to a satisfactory outcome for all.

We have used BackupHR on a number of occasions and have found their advice and support to be exemplary and very professional.   We had need to implement some Settlement Agreements and Peter from BackupHR provided valuable insight and guidance through the process, and inevitably the paperwork. Like all these issues, you never know what you need until you need it and Peter has a wealth of experience in this field. We would have no hesitation in recommending BackupHR to assist with any HR issues, small or large.

BackupHR are longstanding key partners in all parts of our company’s HR strategy, and their understanding and expertise in facilitating Settlement Agreements has been an extremely important part of this.