PO Box 28287
Telephone: 0131 662 6988
Fax:0131 667 8175

23 Cramond Glebe Rd
Cramond Village
Telephone: 0131 336 1619

Free EnquiryWhat Is The Difference Between Compromise And Settlement Agreements?

The answer here is – not a huge deal. It is more a matter of simplicity. Both Compromise Agreements and Settlement Agreements are used to agree the terms of the termination of a contract between an employer and an employee. The paperwork is used to prevent an employee engaging in an unfair dismissal claim against their employer and to ensure that the employee’s legal rights are not violated during their dismissal. Settlement agreements are an updated version of the previously used Compromise Agreements which are being brought in by the government as a replacement.

Overall, Settlement Agreements are intended to be a lot simpler. Settlement agreements make it quicker and easier to dismiss staff – it is lot easier to agree dismissal terms with an employee via a settlement agreement than via a Compromise Agreement. The government also may provide employers with template agreements so they can use these to ensure they cover all the legalities of the dismissal in the correct way. Simple and easy to follow guidelines are also aimed to be formulated and laid out for all parties involved. The name change is more akin to a cosmetic change as both of the documents will ultimately fulfil the same role in the eyes of the law. In fact the government has explicitly stated that name change is in aid of more accurately reflecting the purpose of the agreements.

One key aim is proposed to be being pursued though, which to reduce the amount of employment tribunals taking place as they can be time consuming and expensive. Many employment tribunals have been taking place in which it has been unclear as to whether a genuine dispute existed between the ex-employee and the employer prior to the dismissal. The use of Settlement Agreements as evidence in employment tribunals is proposed to no longer be allowed if they have been negotiated in a genuine attempt to dismiss the employee entirely fairly. This means an employer now has far more flexibility about how they can go about dismissing their employee.

The key piece of advice if you are faced with a Settlement Agreement discussion is to get yourself a lawyer as soon as possible. They will give you the information you need about the legal rights you have in terms of employment law. If you are beginning discussions you should make sure that you do not sign an agreement until you have consulted with a lawyer as if you sign anything it will be legally binding and you could end up being tied into something you are unhappy with – such as a largely undervalued severance pay figure.

Need An Expert Employment Law Solicitor in Scotland?

Please call us on 0131 662 6988 or 0131 336 1619 or complete our online enquiry form.



"Faced with a complex industrial dispute involving three parties, Callander Golf Club called on the expertise of The Work Ethic to help resolve the situation. Sound legal advice backed by high-level negotiating skills led to an out-of-court settlement to the satisfaction of the Firm’s clients."

J Morrison, Callander Golf Club


"Hi Stan

I would like to thank you so much for everything you did for us. It was also my pleasure to know a gentleman like you.

Looking forward to seeing you in better occasions.

All very best,


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