Settlement agreements can be proposed by either the employer or the employee, although they are most commonly proposed by employers in an attempt to resolve potentially difficult employment situations. If a settlement agreement can be achieved in these circumstances, this may avoid the need for the employer to continue with any formal procedure.

 

They are entirely voluntary, and neither party is obliged to accept a settlement agreement that may have been proposed by the other party.

 

An employer may offer a settlement agreement prior to engaging in any formal procedure (such as a disciplinary or performance management procedure), or whilst a formal procedure is ongoing. If a settlement agreement can be achieved in these circumstances, this would avoid the need for the employer to continue with any formal procedure.