Employment Settlement Agreements

We provide clear, pragmatic, and empathetic legal advice to both employees and employers navigating settlement agreements. Whether you’re an employer seeking to end an employment relationship swiftly and amicably or an employee deciding whether to accept a proposed agreement, our expert employment solicitors are here to ensure your rights and interests are fully protected.

What is a Settlement Agreement?

A settlement agreement is a legally binding contract between an employer and an employee that sets out the terms for ending the employment relationship. It typically includes:

• A waiver of the employee’s rights to bring certain claims (e.g., to an Employment Tribunal).
• Details of termination payments (e.g., redundancy pay, compensation, notice pay).
• Additional clauses like confidentiality, references, and post-termination restrictions.

For the agreement to be legally binding, the employee must receive independent legal advice on its terms and effect, and the adviser must sign a certificate confirming this advice.

How We Help Employers and Employees

For Employees

We help employees understand:

• What they are agreeing to: Ensuring you fully understand the terms of the agreement, the implications for your legal rights, and whether the compensation offered is fair.
• Potential claims and liabilities: Advising on any potential claims (e.g., for unfair dismissal or discrimination) to assess whether the agreement adequately compensates you for waiving those rights.
• Negotiating better terms: If the initial offer is insufficient, we can negotiate for improved payments, benefits, or conditions.
• Clarity on post-termination restrictions: Ensuring you know how restrictive covenants, such as non-compete clauses, will impact your future career.

For Employers

We assist employers in:

• Drafting settlement agreements: Creating clear, legally compliant agreements tailored to your needs.
• Minimising risk: Ensuring the agreement protects the business from potential Employment Tribunal claims or breaches of confidentiality.
• Managing employee negotiations: Advising on how to approach negotiations to achieve a smooth and amicable resolution.
• Compliance with legal requirements: Ensuring the process meets all legal standards, including providing employees access to independent legal advice.

Main Issues in Settlement Agreements

There are several key areas where disputes or confusion often arise in settlement agreements:

1. Potential Claims and Liabilities

Employees are often waiving their rights to bring claims for:

• Unfair dismissal.
• Discrimination (e.g., based on age, race, sex, disability).
• Breach of contract.
  We help assess the strength and value of these claims to determine if the agreement offers fair compensation.

2. Termination Payments

This is often the most contentious part of the agreement. We help clarify and negotiate terms such as:

• Ex-gratia payments (compensation beyond statutory entitlements).
• Redundancy pay and notice payments.
• Tax treatment of payments (e.g., ensuring non-taxable elements like up to £30,000 compensation are maximised).

3. Post-Termination Restrictions

These include:

• Non-compete clauses: Preventing the employee from working for a competitor for a set period.
• Non-solicitation clauses: Restricting contact with former clients or colleagues.
• We ensure these are reasonable, necessary, and enforceable, and do not unnecessarily limit future career opportunities.

4. Confidentiality and References

Agreements often include confidentiality clauses and agreements on the reference an employer will provide. These should be reviewed carefully to protect reputations and future employability.

Frequently Asked Questions (FAQs)

Contact Us

Whether you’re an employee reviewing a settlement agreement or an employer seeking to draft one, we can expert guidance to ensure your interests are protected.