Chapter NMWM05370

CourtHM Revenue & Customs
Record NumberNMWM05370
Published date16 April 2016
Relevant legislation

The legislation that applies to this page is as follows:


A settlement agreement (formerly compromise agreement) is a restrictive covenant which restricts the conduct or activities between parties. The most common use is to agree the actions of an employee after termination of employment and usually involves a financial settlement being made to the employee.

The conditions required to make such a settlement agreement valid are;

  • It must be in writing
  • It must specifically relate to the circumstances of the parties
  • The worker must have received advice from a “relevant independent adviser” as to the terms and effect of the agreement and its effect on the ability of the worker to take a case before an employment tribunal (industrial tribunal in Northern Ireland)
  • The adviser must be identified in the agreement and have suitable insurance or professional indemnity to cover the risk of a claim by a worker in respect of losses caused as a consequence of the advice provided
  • The agreement must state the conditions of section 49 of the Act are satisfied.

The Act defines a “relevant independent adviser” as someone who;

  • is a qualified lawyer who is not engaged by the employer
  • is an officer, official, employee or member of an independent trade union who is not the...

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