The new settlement agreements are now of course in place to replace “compromise agreements”. These apply to all employment law claims.

There are of course no such stringent requirements to settle an ordinary contractual dispute before the County Court.  The age old rules of offer, acceptance and consideration apply here. Rather unfortunate that the firm on the receiving end of a recent High Court Judgment forgot those principles or at best made a drafting error.  The case of Newbury v Sun Microsystems, revolved around a letter the employer’s solicitor had sent to the employee.  It set out the sums for settlement but very little in the way of terms.  The employee wrote back accepting the offer and then the employer’s solicitors tried to agree terms.

The Court found that the letter should have included the words “subject to contract” if the employer had intended for there to be further negotiations as to terms. As such, the original offer letter (which included consideration) and the subsequent acceptance by the employee created a binding contract so it was game over.