What Is Settlement Agreement? | HR Glossary | BambooHR
A legally binding agreement resolving an employment dispute or ending employment on agreed terms.
A settlement agreement is a formal, legally binding contract in which an employer and employee agree terms to resolve a dispute or to bring employment to an end, usually in exchange for a payment and with the employee waiving certain claims.
Such agreements provide certainty and finality for both sides, avoiding the cost and uncertainty of a claim before a tribunal. Terms often cover payment, references, confidentiality and the return of property.
In Ireland, for a waiver of statutory employment rights to be effective, the employee should receive independent advice and the agreement must be clear about the rights being given up. In the UK, comparable rules require independent legal advice for a settlement agreement to be valid.
