Settlement Agreement

Our Employment Law Specialists provide tailored advice to individuals presented with a settlement agreement designed to bring their employment to an end or settle their potential claims. 

We have specialist Settlement agreement Solicitors within our Employment Law team who regularly advise and assist with the legal requirements when an employee is offered a settlement agreement.

We consistently and regularly provide expert assistance to negotiate favourable terms and packages for employees departing their employment. Our Employment Lawyers are available to assist with and advise on a settlement agreement at short notice.

What is a Settlement Agreement?

A settlement agreement is a document provided to an employee by their employer with the intention of bringing the employment relationship to an end or to settle potential claims the employee has against their employer. The agreements generally include provision for a compensation or termination payment to be paid to the employee in exchange for the employee’s agreement not to pursue any employment claims against the employer.

In order for a settlement agreement to be binding, there are certain legal formalities the agreement must comply with. One of these is that the employee needs to take independent legal advise on the agreement and its effect, and this is something our Employment Department is well equipped to help with.

How much does the advice cost?

The cost of taking advice on a settlement agreement differs depending on the complexity of the situation, the detail of the agreement and the extent of assistance required. Settlement agreements are often presented with a contribution to the employee’s legal fees included, and our lawyers are often able to provide advice within that contribution.

Our Settlement Agreement Solicitors can assist with:
  • Reviewing and advising on the terms of settlement agreements
  • Negotiating more favourable terms in the agreement for employees
  • Negotiating improved compensation figures and packages for employees
  • Drafting and negotiating bespoke amendments tailored to specific client needs and requests
  • Identifying and valuing potential claims arising out of the circumstances leading up to the termination of employment

Our Employment team’s expertise and experience allow us to provide our clients with the most up to date advice and practical solutions whilst negotiating fair and favourable settlement terms.

Our assistance goes above and beyond simply advising on the agreement, and we will always look to tailor our service depending on what our client requests or needs out of the situation.

Alex Harper, Tom Hyatt and Samuel Gray are each highly experienced in advising on and negotiating the terms of settlement agreements. We ensure that a member of the team is always available on short notice to provide you with fast and comprehensive advice on your settlement agreement.

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    Settlement Agreement Solicitors FAQs


    Why are settlement agreements used?

    The main purpose of a settlement agreement is for the employee to agree that their role with an employer will come to an end, usually in exchange for a financial termination payment, and for the employee to also settle any potential claims that they have against their employer.

    What effect does a Settlement Agreement have?

    If signed, a settlement agreement will have the effect of ‘waiving’ or settling any employment claims the employee may otherwise be entitled to bring against the employer which will normally include claims such as unfair dismissal and discrimination.

    An employee presented with an agreement will generally not, however, be waiving their rights in respect of claims for:

    • personal injury claims for which they are currently unaware of
    • accrued pension rights and
    • enforcing their settlement agreement

    Although in specific circumstances, this could be required.

    What are the tax implications of a Settlement Agreement?

    Our Employment Department are not tax advisers and so are unable to provide any specific advice as to the tax arrangements which will apply to the payments being made to an employee. Should you need any tax advice, we would be pleased to refer you to an appropriate adviser.

    However, an employee is usually entitled to receive up to £30,000 tax free as long as it is genuinely and solely compensation for the loss of their employment. This would not include any payments that are due to the employee under their contract of employment, for example, notice pay or annual leave payments.

    An agreement will also often include a tax indemnity (i.e. a promise to reimburse) in favour of the employer, and our specialist team will be able to advise on whether this applies to your specific agreement and the implications of this.

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