Settlement agreements were previously referred to as compromise agreements.
Settlement agreements and are a legal document between an employee and an employer which outlines the terms to which they agree to sever the employment contract and the employee agrees to waiver their rights to taking legal action through an Employment Tribunal.
The employer will commence discussions regarding a settlement agreement and this can often be, although no always, a complete surprise for employees. The agreement is entirely voluntary and employers cannot force or put pressure upon an employee to sign away their rights if they do not wish to do so.
Negotiations regarding a settlement agreement are confidential and therefore if an agreement cannot be reached these discussions are often not admissible as evidence in an Employment Tribunal.