Settlement Agreements

In most settlement agreement matters, the employer contributes towards the employee’s legal fees and that contribution is usually enough to cover the advice required, meaning there is no additional fee for the employee to pay.

If the agreement is unusually complex or negotiations become more extensive, we will explain this clearly before carrying out any additional work so there are no unexpected costs.

Settlement agreements are often time-sensitive, so we aim to deal with matters promptly and efficiently while ensuring clients fully understand the terms before signing.

No. Signing a settlement agreement is entirely voluntary. You should not feel pressured to agree to any terms until you fully understand your rights and the consequences of the agreement.

• Settlement agreements are designed to formally conclude the employment relationship and prevent future claims, but you retain the right to refuse or negotiate terms.
• Our solicitors review each agreement carefully to ensure it is fair, reasonable, and legally compliant, explaining the implications for things like future employment, references, pensions, and any financial entitlements.
• You only sign when you are confident that the agreement protects your interests, and we ensure you are aware of all potential risks and benefits before making a decision.

Yes. Settlement agreements are negotiable in most cases. The employer may propose initial terms, but there is often room to improve financial and non-financial provisions.

• Common negotiable elements include:
  • Severance pay or redundancy payments
  • Notice periods or pay in lieu of notice
  • References and wording provided to future employers
  • Restraints of trade or confidentiality clauses
  • Release of claims and non-compete provisions

We work closely with clients to identify priorities, negotiate the best possible outcome, and ensure the final agreement is legally enforceable and tailored to individual circumstances.

Some severance payments may be tax-free, while others are subject to income tax and National Insurance contributions.

• Under current HMRC rules, the first £30,000 of a genuine redundancy or settlement payment may be exempt from tax, but amounts above this limit are typically taxable.
• We explain clearly how tax applies to all elements of your settlement, including pay in lieu of notice, accrued holiday pay, bonuses, and pension contributions.
• Early advice ensures that you maximise your entitlements and structure the agreement in a way that is financially and tax-efficient.

Timescales vary depending on the complexity of the agreement, the number of issues involved, and how quickly both parties engage, but many agreements can be reviewed and completed within a few days to a couple of weeks.

• We provide a clear timeline from initial review to final signing, ensuring you know what to expect at each stage.
• Early engagement with a solicitor can significantly reduce delays and prevent unnecessary stress or prolonged negotiations.
• For more complex settlements involving high-value compensation, restrictive covenants, or disputed claims, we manage the process efficiently to achieve a timely, fair outcome.

Independent legal advice is a legal requirement for a settlement agreement to be valid.

• Solicitors ensure that the agreement is legally sound, fair, and compliant with employment law and ACAS guidance.
• We review all terms, clauses, and implications, including financial, contractual, and restrictive provisions, making sure nothing unfairly restricts your rights or exposes you to future liability.
• Legal advice also provides peace of mind, allowing you to sign the agreement confidently, knowing you fully understand your rights and entitlements.
• In addition, our team can negotiate improvements to the terms on your behalf, often resulting in enhanced financial or practical benefits compared to the original offer.

Yes, but it is critical to understand that signing a settlement agreement usually involves waiving certain claims, such as unfair dismissal, redundancy pay, or discrimination claims.

• Before signing, we carefully review your situation to identify claims you may be giving up and advise on whether it is in your best interest to negotiate additional compensation or amendments.
• For employees considering bringing a claim, our advice ensures you do not inadvertently waive rights without proper protection.
• We also help employers structure agreements so they are compliant, clear, and enforceable, while offering a fair resolution to employees.

Yes. Settlement agreements can include a range of non-financial benefits in addition to pay:

• Enhanced references to support future employment
• Continuation of healthcare, insurance, or pension contributions
• Flexibility in notice periods or departure dates
• Agreement on confidentiality, restraint of trade, or return of property

We help clients ensure these benefits are clearly documented, enforceable, and aligned with their overall employment objectives.

Once a settlement agreement has been signed and the statutory 7-day consideration period (for employees) has passed, it is generally legally binding and cannot be reversed.

• Early review with a solicitor ensures you fully understand the terms before signing and reduces the risk of regret or dispute.
• For employers, we advise on the correct implementation of agreements to avoid potential challenges from employees after execution.

Yes. Settlement agreements are designed to safely conclude an employment relationship while protecting the interests of both employees and employers:

• Employees gain financial certainty, clarity on entitlements, and protection from future claims.
• Employers reduce the risk of costly tribunal claims, reputational damage, and ongoing disputes, ensuring a clean, legally compliant exit.

Getting professional advice early is key. Our team will:

• Review the proposed agreement in detail
• Explain each clause and its implications for your rights and obligations
• Advise on negotiation strategies to improve terms
• Ensure compliance with legal requirements for validity
• Guide you through signing, providing peace of mind and security

By working with a solicitor, you ensure that the settlement process is efficient, legally sound, and maximises your benefit.