A settlement agreement (formerly called a compromise agreement) is a legally binding document in which an employee waives their employment rights and agrees not to pursue any legal action against their employer/former employer, usually in return for some financial compensation or other benefits. They are often used to terminate an employment relationship by mutual agreement or to settle an ongoing dispute.

Once a settlement agreement has been signed, you are unable to make any of the claims which are listed in the agreement. A settlement agreement will often contain confidentiality obligations and deal with any outstanding payments owed to you, such as holiday and notice pay.