Under employment law, settlement agreements (previously known as a compromise agreement) came into effect on 29th July 2013.
It is a legally binding agreement between you the employee and your employer.
There are a number of reasons you may enter into a settlement agreement such as a workplace dispute or a disagreement over pay for example.
Settlement agreements are voluntary and you do not have to agree to them or enter into discussion about them.
They usually include some form of payment to the employee and may often include a reference. There can be a process of negotiation during which both sides make proposals and counter proposals until an agreement is reached or both parties decide no agreement can be reached.
The principle behind a settlement agreement is that you, the employee have received independent legal advice before signing the agreement and therefore you understand the terms of the agreement. It is also important to clarify that you understand the affect the terms of the agreement will have.
Once a valid settlement agreement has been signed, you would be unable to make an employment tribunal claim about any type of claim which is listed in the agreement.