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When can I use a settlement agreement?

When can I use a settlement agreement?

Settlement agreements are legally binding contracts which can be used to end an employment relationship on agreed terms. They can also be used to resolve an ongoing workplace dispute and can be an effective way of ending an employment relationship. They are entirely voluntary and neither employers nor employees have to enter into them if they do not wish to do so, or they are unhappy with the proposed content.

Settlement agreements can be a very effective way of managing exits from a school, whilst also managing the risks involved.

By offering a settlement agreement to an employee you are effectively buying off the risk of a claim. A settlement agreement can also a useful way to bind exiting employees to additional provisions on confidentiality and post termination restrictions, where necessary.

Employers need to be very careful when discussing potential settlement with employees, as a poorly managed conversation can in itself trigger claims. For further information on how to conduct these conversations, please see: Guidance on holding protected conversations in the document section.

You also need to be mindful that you must comply with the Academies Financial Handbook if considering making a payment under settlement agreement, particularly if any non-contractual element exceeds £50,000.