Settlement agreements are typically used in an employment context when an employee’s employment is being terminated, but also to resolve an ongoing dispute. You can read about the basics of settlement agreements here. It is important to note that settlement agreements cannot offer a blanket settlement of any and all claims as there are some exceptions.

What claims can be settled by a settlement agreement?

Most employment law claims can be settled by a settlement agreement. The potential claims can arise from either the terms of the employee’s contract, or from legislation. Whilst it would be quite tedious to list them all (and not particularly interesting to read), the main claims that people consider are:

• Discrimination claims relating to a protected characteristic (i.e. sex, race, disability, sexual orientation, religion or belief, age, gender reassignment, pregnancy and maternity, and marriage or civil partnership)

• Unfair dismissal

• Claims relating to holiday and holiday pay

• Unlawful deduction from wages

• Protection from harassment

• Breach of contract

• An existing personal injury claim

And the list goes on…

What claims cannot be settled by a settlement agreement?

The more important (and much shorter) list is of the claims that cannot be settled. There are three main claims that are excluded in settlement agreements:

1. Claims in connection with the settlement agreement itself. This means that neither party is prevented from bringing a claim if their opposition fails to comply with the terms of the agreement. For example, if your employer failed to pay you the sums owed under the agreement, you would be able to pursue them in the courts if necessary.

2. Claims in relation to accrued pension rights.

3. Personal injury claims that may have occurred during the period of employment but the employee could not reasonably have been aware of the claim at the time of entering into the settlement agreement. For example, where the employee has been exposed to asbestos and later suffers asbestos poisoning but was not aware of it as they were not suffering with symptoms.

There is also a limited number of claims that cannot be included in a settlement agreement. These include some collective consultation failures, particularly relating to collective redundancy situations and TUPE transfers, and claims that are for statutory maternity, paternity or adoption pay.

However, this is not an exhaustive list so, if you have a concern about a particular claim and whether it will or will not be settled under the terms of your agreement, make sure to raise these concerns with your independent legal adviser when seeking advice.

If you have been given a settlement agreement and need advice, please contact Kezia Brown by email or on 01494 893504.