Once parties sign a settlement agreement, it becomes a legally binding contract. If either side fails to comply with its terms, serious legal consequences may follow. This article explains:
The consequences of breaching a settlement agreement
- How breaches are enforced (employee vs employer)
- Recommended actions and professional support
1. Consequences of Breach
When a settlement agreement is breached, the party responsible may face:
Financial liability: obligation to repay compensation or indemnify the other side
Contractual damages: compensation for losses suffered from the breach
Legal action: claims in Employment Tribunal or County/Civil Courts
Reputational damage: costs, negative publicity, stress, and uncertainty
Because the agreement is a contract, failure to abide by its terms opens the breaching party to legal liability.
2. Enforcement: Employee vs Employer
Below is a side‑by‑side view of what enforcement looks like depending on who breaches:
| Breaching Party | Enforcement Steps & Remedies | Key Provisions / Mechanisms |
|---|---|---|
| Employee | 1. Employer issues a breach notice (letter) outlining the breach and supporting evidence
2. Allow a response period (often 14 days) 3. If unresolved, pursue legal action (Employment Tribunal or court) 4. Recover repayment under a repayment clause if included 5. Rely on an indemnity clause to claim compensation for losses |
Repayment clause, Indemnity clause, Breach notice period, Tribunal enforcement |
| Employer | 1. Employee brings a breach of contract claim against employer
2. Claim may be advanced in Employment Tribunal or the appropriate court 3. Employer may be ordered to compensate losses suffered by the employee due to breach |
Contractual damages, Claim in Employment Tribunal / County Court, Compensation for losses |
3. Recommended Actions After a Breach
- Document the breach — Gather evidence (emails, notices, communications)
- Issue a formal notice — clearly specify which term was breached and reference relevant clauses
- Provide response window — allow the other party time to respond or remedy
- Consider negotiation / settlement — sometimes resolving without litigation is preferable
- Initiate legal proceedings if needed — via Tribunal or Court
- Seek legal advice early — avoid procedural missteps
4. Professional Support
If you, or the other party, have breached a settlement agreement:
- Don’t delay. Clear steps and legal clarity matter.
- The expert settlement agreement solicitors at Freeman Jones can assist with enforcing rights, advising on claims, or defending against allegations of breach.
- You can book a free, no‑obligation 20‑minute consultation with them.
- They have offices in Chester, Liverpool, Warrington, and Wrexham.
