City-lawyers Mackrell Turner Garrett are warning employees of the dangers of not seeking legal advice for those presented with settlement agreements.

Settlement agreements are legally binding agreements between an employer and an employee which sets out the financial and other terms on which they will go their separate ways.

They are proposed in various circumstances namely, redundancy, mutual agreement, dismissal and to settle an employment tribunal claim.

Donna Martin, a specialist employment solicitor at MTG, said employees must seek legal advice for any agreement to be legally valid.

She said: “It is a legal requirement to see a lawyer under s.203 Employment Rights Act 1996 in order to explain the terms and effect of the agreement.

“Seeking advice is deemed necessary as you are “compromising” a number of your rights by signing the agreement.

“It is standard practice for the lawyer to sign the certificate confirming that they have provided advice annexed to the agreement.

“The important thing to be aware of is that once you have signed a compromise agreement you are accepting the terms in full and final settlement and are ‘waiving’ your rights to bring an employment related claim against your (former) employer in the employment tribunal.”

Donna added that employees should also be aware of the risk of not signing an agreement.

“Employees should be made aware that if you decide not to seek legal advice, and therefore fail to fulfil the conditions or sign a compromise agreement, your employment can be terminated with you receiving only what you are contractually or statutorily entitled to.

“If you decide not to sign and to instead pursue a claim against your employer at the employment tribunal you will usually have three months, minus one day, from the termination date to lodge your claim. However, if you are complaining of discrimination before your employment ended then time is of the essence!”

Employees are being asked to note that any contributions to legal fees will not be paid if you fail to sign a compromise agreement.

For more information on settlement agreements, see MTG’s employees guide to settlement agreements on or call Donna on 00 44 (0) 20 7240 0521.