Settlement Agreement – The Basics (Part 2)

To be valid, a settlement agreement must comply with the provisions set out in section 203(3) of the Employment Rights Act 1996, namely:

• It must be in writing.
• It must relate to a "particular complaint" or "particular proceedings".
• The employee must receive independent legal advice on the terms and effect of the proposed agreement. This is particularly relevant when explaining to the employee their ability to pursue any rights before an employment tribunal or any other court. The adviser must have a current contract of insurance (or professional indemnity insurance).
• The agreement must state that the conditions regulating settlement agreements under the relevant statutory provisions have been satisfied.
• It must be signed by the parties as well as the adviser.

If a settlement agreement fails to comply with any of the requirements, it will be invalid. This means informal discussions or negotiations which don’t meet these minimum requirements will be invalid and the employee free to continue with a claim.

If you have any questions concerning a settlement agreement, please contact Noel McNicholas on 01926 887700 or noel.mcnicholas@thomasflavell.co.uk.