Why does my settlement agreement need to have a second signature other than mine?

A settlement agreement is used between an employer and employee in a number of situations. This could range from agreeing to leave your employment following issues at work such as discrimination or a new manager coming in who wants to appoint his own team or it could be because you have started a claim in the Employment Tribunal that the parties now wish to settle (i.e. reach financial and others to end the dispute). The process should be voluntary and employees should not be forced to sign them or be subject to any undue influence or duress. Employers often time pressure employees to sign. If you are in any doubt about what you are doing call a lawyer or call ACAS. You should not be bullied into a settlement agreement. 

A settlement agreement (previously known as compromise agreements) is legally binding meaning that both parties must do what they have agreed to do in the document. It’s a contract between the parties. To be legally binding there are certain conditions that must be met for the document to waive the employee’s claims. What does this mean? It means that usually you will be signing a settlement agreement to give up any current and future claims that you could bring against your employer and it is really important that you understand what you are committing to. For this reason, the law demands that the agreement must be in writing and that you must have received independent advice before it can be legally binding. 

Settlement agreements do not necessarily mean that you are agreeing to terminate your employment; one might be used to settle a dispute or tribunal case but you continue in your job. 

Usual terms in a settlement agreement include whether you are going to work your notice, be paid in lieu or placed on garden leave; requirements around company property and confidential information (although even if you don’t sign a settlement agreement you are bound by common law to keep the trade secrets of your employer once you leave employment), the financial terms which have been agreed and their tax treatment, what the deal is in relation to an agreed reference and so on. 

 A solicitor and a limited number of other individuals (authorised trade union officer, authorised legal advice centre adviser) are authorised to countersign settlement agreements. The document is not legally enforceable unless it is countersigned. This is because it is a legal requirement that you should have received independent legal advice on the agreement before you sign it in order to ensure there is no duress and that you understand the contract you are entering into. 

If you are asked to enter into a settlement agreement the first step you should take is to contact a lawyer. You are not required to use a solicitor that has been recommended to you by your employer although some employers will not pay for the advice unless you use their adviser. Most good lawyers can sort your settlement agreement quickly and at a fixed cost. Just make sure you are getting independent advice and that you are agreeing to something that you want to agree with. 

ACAS has issued good guidance on settlements which you can find here: ACAS Guidance.

You can also download our FAQs on the settlement agreements page of our website.