If you have been made redundant or been dismissed by your employer, you may be asked to sign a Settlement Agreement (sometimes referred to as a severance agreement, separation or release agreement and formerly known as Compromise Agreement). By doing so, you are waiving your right to bring a claim against your employer in return for a sum of money.
Not only are they used for redundancy (voluntary or compulsory) and dismissal situations, but settlement agreements are also used to settle potential claims, or as an alternative to a disciplinary or performance procedure.