»Ê¹ÚÌåÓýapp

Relevant legislation

»Ê¹ÚÌåÓýapp legislation that applies to this page is as follows:

• National Minimum Wage Act 1998, section 49

General

A settlement agreement (formerly compromise agreement) is a restrictive covenant which restricts the conduct or activities between parties. »Ê¹ÚÌåÓýapp 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.

»Ê¹ÚÌåÓýapp 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
• »Ê¹ÚÌåÓýapp worker must have received advice from a “relevant independent adviserâ€� 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)
• »Ê¹ÚÌåÓýapp 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
• »Ê¹ÚÌåÓýapp agreement must state the conditions of section 49 of the Act are satisfied.

»Ê¹ÚÌåÓýapp Act defines a “relevant independent adviserâ€� 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 employer. »Ê¹ÚÌåÓýapp person must be certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union
• works at an advice centre (whether as an employee or a volunteer) and is not employed by the employer or receives payment from the worker. »Ê¹ÚÌåÓýapp person must be certified in writing by the centre as competent to give advice and as authorised to do so on behalf of the centre, or
• is a person of a description specified in an order made by the Secretary of State unless any of the above reasons exclude them from providing advice.

»Ê¹ÚÌåÓýapp details of the settlement agreement are set out on a form which both parties sign to show that they accept the terms of the settlement. A form commonly used for this purpose is COT3 (where the agreement is made through Acas).

See also: Effect of settlement agreements and HMRC settlements on NMW Officers� investigation (NMWM05380).