How to enforce a settlement agreement – top tips for employees and employers

Chris Hadrill, partner in the employment department at Redmans, examines how parties to a settlement agreement may enforce the terms of a settlement agreement if they believe that there has been a breach of the agreement

Broad principles relating to enforcement

Generally, when one party has breached a settlement agreement, the other party may:

• Seek to enforce its terms.
• Seek damages by bringing a breach of contract claim.

If you believe that there has been a breach of your settlement agreement you should therefore consider whether you wish to seek to enforce the terms of the agreement, or whether you wish to seek damages against the other party. In respect of both types of action you will have to consider a number of factors, including, in particular, which forum you can bring the relevant claim in.

Employment Tribunal jurisdiction to enforce a settlement agreement

An Employment Tribunal only has legal jurisdiction to consider certain contractual claims which arise out of, or are outstanding at, termination of employment. An Employment Tribunal can therefore only seek to enforce settlement agreements where the settlement agreement has been entered into either prior to the employment terminating or at the same time as the employment terminated.

If the settlement agreement was entered into post-termination then the Employment Tribunal cannot enforce the agreement; a claim for enforcement must be brought in the civil courts.

How to enforce a settlement agreement

Enforcing a settlement agreement will generally involve a consideration of the following:

1. Has there been a breach of the settlement agreement?
2. Is it worth litigating to enforce the settlement agreement?
3. If so, which forum should you bring the claim in?
4. Issue the claim in the relevant forum

Has there been a breach of the settlement agreement?

If you wish to enforce your settlement agreement then you should first determine what clauses in the settlement agreement the other party has failed to implement, as the first hurdle you will have to clear is being able to persuade the court or tribunal that, on the balance of probabilities, a relevant term of the settlement agreement has been breached.

Is it worth litigating to enforce the settlement agreement?

Once you have determined which clauses have been breached, and which you therefore wish to enforce, you should consider the importance of the breach, and the cost/benefit of further litigation to enforce the agreement.

Which forum should you bring the claim in?

Should you wish to proceed to enforce the settlement agreement then you should consider which forum you wish to try and enforce the agreement in: will it be the Employment Tribunal or civil courts? (see above).

Issue the claim in the relevant forum

Once you have identified which forum to issue the claim in you must then, should you wish to enforce the settlement agreement, bring a claim in the relevant forum.