Settlement Agreements

Expert Legal Advice for Employment Settlement Agreements

If you’ve been offered a settlement agreement by your employer, you need independent legal advice to ensure your rights are protected and you receive fair terms. Our employment law specialists provide comprehensive guidance through this process. Contact us today: 0203 909 8399 | Book a Consultation

What Is a Settlement Agreement?

A settlement agreement is a legally binding contract between an employer and employee that ends the employment relationship or resolves a workplace dispute on agreed terms. These agreements typically involve the employee waiving their right to bring tribunal claims in exchange for compensation or other benefits.

When Are Settlement Agreements Used?

Settlement agreements commonly arise in:

Redundancy situations
Dismissal or termination scenarios
Resolving workplace disputes
Negotiated exits
Performance or conduct issues

Key Components of Settlement Agreements

Financial Terms

Severance payments
Notice pay
Holiday pay
Bonus entitlements
Pension contributions
Share options

Non-Financial Terms

Reference provisions
Confidentiality clauses
Non-derogatory statements
Post-termination restrictions
Return of company property

Legal Requirements

For Valid Settlement Agreements

Must be in writing
Must relate to particular complaints or proceedings
Employee must receive independent legal advice
Adviser must have indemnity insurance
Agreement must identify the adviser
Must state statutory requirements are met

Alternative to Settlement Agreements

COT3 agreements through ACAS
Direct negotiation without agreement
Tribunal proceedings
Internal grievance resolution

The Settlement Process

Initial Offer

Employer proposes terms
Protected conversation may occur
Time to consider offer
Seek independent advice
Review all documentation

Negotiation Phase

Counter-proposals
Clarifying terms
Improving financial package
Adjusting non-financial terms
Finalizing agreement

Completion

Legal advice certificate
Signing ceremony
Payment arrangements
Fulfilling obligations
Post-termination compliance

What We Review

Financial Analysis

Adequacy of compensation
Tax implications
Payment structure
Comparison to entitlements
Hidden value elements

Legal Assessment

Claims being waived
Strength of potential claims
Restrictive covenant impact
Confidentiality obligations
Future employment effects

Tax Considerations

£30,000 Exemption – First £30,000 often tax-free
PILON – Payment in lieu of notice usually taxable
Contractual Payments – Generally subject to tax and NI
Ex-Gratia Payments – May qualify for tax exemption
Legal Fees – Usually paid by employer directly

Common Negotiation Points

Financial Improvements

Increased severance payment
Enhanced notice period
Bonus considerations
Pension enhancements
Healthcare continuations

Non-Financial Improvements

Better reference wording
Announcement terms
Reduced restrictions
Earlier payment dates
Outplacement support

Why Choose Connaught Law

Specialist settlement agreement expertise
Same-day consultations available
Commercial yet friendly approach
Employer-paid fee arrangements
Nationwide service

Our Settlement Agreement Service

Free initial consultation
Comprehensive document review
Tax efficiency advice
Negotiation support
Signing formalities
Post-agreement guidance

Understanding Your Position

Assessment of leverage
Alternative options analysis
Risk evaluation
Timeline considerations
Personal circumstances review

Next Steps

Don’t sign a settlement agreement without proper legal advice. Our employment law team provides expert guidance to ensure you receive fair terms and understand all implications. We work to maximize your settlement while protecting your future interests. Call 0203 909 8399 or Book Online for a free initial consultation.

Settlement Agreements