Resolution · Resolving workplace issues
Settlement Agreement Advice
A settlement agreement should be understood by everyone who signs it.
A settlement agreement is a legally binding contract that brings an employment relationship or a dispute to an agreed end — usually in exchange for a payment. For it to be binding, the employee must receive independent legal advice on its terms. We advise from both perspectives, but never on the same matter.
We advise employers preparing settlement agreements and employees who have been asked to sign them. We will never act for both parties in the same matter.
For Employers
We help employers structure and negotiate settlement agreements that bring employment relationships to a clear and certain conclusion.
Our advice covers:
Where settlement forms part of a wider employee relations matter, restructuring exercise or senior exit, we ensure that the agreement supports the broader legal and commercial strategy.
Common Questions
A settlement agreement may be appropriate where both parties would benefit from an agreed exit or resolution. We will help you assess the timing, legal risks and likely commercial outcome before an approach is made.
Potentially, but the legal protection is not absolute. We will advise on the appropriate basis for the conversation and help you plan it carefully.
There is no single formula. The appropriate offer will depend on the contractual position, legal risk, seniority, length of service, process already undertaken and the commercial value of achieving certainty.
Yes. References, internal and external announcements and agreed communications can be included in the settlement terms.
Employers usually make a contribution towards the employee’s independent legal fees. We can advise on an appropriate contribution and include it within the agreement.
For Employees
If you have been offered a settlement agreement, you must receive independent legal advice before it can become binding. Your employer will usually contribute towards the cost.
We will explain:
For senior executives and more complex departures, we can also advise on strategy and negotiate on your behalf by separate arrangement.
Common Questions
No. A settlement agreement is voluntary. We will help you assess the offer against your alternatives and likely next steps.
Straightforward agreements can usually be reviewed within a few days. Where the matter is urgent, let us know and we will confirm whether a faster turnaround is possible.
Your employer will usually contribute towards the cost of independent legal advice. In straightforward matters, this may cover our fee in full. Additional fees may apply where the matter is complex or you ask us to negotiate on your behalf. We will explain these before undertaking further work.
Potentially. Depending on the circumstances, there may be scope to negotiate the financial terms, notice pay, bonus, benefits, reference, restrictive covenants or other practical arrangements.
We will explain the agreement, identify unusual or potentially problematic terms, discuss your options and help you assess the overall package.
Usually, yes. Settlement agreements generally require employees to waive specified employment-related claims. We will explain which claims are covered and whether any rights are preserved.
That will depend on the circumstances. Your employment may continue, or the employer may pursue another process, such as redundancy, performance management, capability or disciplinary action. We will help you assess the likely position.
Yes. An agreed reference is often included or attached. We can review the wording and, where appropriate, seek amendments.
The first £30,000 of a qualifying termination payment may benefit from tax-free treatment. Salary, notice pay, holiday pay, bonus and certain other sums will ordinarily be taxable. We will explain how the payments are described in the agreement, but specialist tax advice may be required where the position is complex.
Yes. Independent legal advice is required for the settlement agreement to be legally binding. We will also ensure that you understand the legal and practical effect of the terms before signing.