Have you been offered a Settlement Agreement by your employer?
Being presented with a Settlement Agreement can be a stressful experience, especially when it comes out of the blue. The decisions you make now could have a significant impact on your financial and legal position.
Our expert employment law solicitors are here to help. We’ll explain everything clearly, protect your interests, and make sure you get the best possible outcome.
Contact our Employment Law Team for help
What is a Settlement Agreement?
A Settlement Agreement is a legal contract that sets out the terms agreed between you and your employer when your employment comes to an end. It provides financial clarity for both parties and makes clear exactly where you stand legally.
You sign away your right to bring an Employment Tribunal claim and often other rights, such as the ability to sue for breach of contract, in return for an agreed payment from your employer. A Settlement Agreement can be used whether the parting is amicable (for example, voluntary redundancy) or not (for example, a dismissal), provided both parties agree to the terms.
The agreement will typically set out all the payments your employer will make and when they will be paid, including:
- Final salary payment
- Holiday pay
- Notice pay
- Compensation for loss of employment (redundancy pay and/or ex gratia payments)
In many cases, a Settlement Agreement will also include agreed wording for any future job reference. You should usually be given a minimum of 10 days to consider the terms before signing.
Is a Settlement Agreement Legally Binding?
A Settlement Agreement is only valid and legally enforceable if it meets all of the following conditions:
- It is in writing
- It relates to a particular complaint or proceeding
- You have received independent legal advice from a solicitor or other appropriately qualified person, who will also sign the agreement
- Your adviser has professional indemnity insurance in place to protect you
- It states that the statutory conditions specific to Settlement Agreements have been met
This means you cannot be bound by a Settlement Agreement without first taking legal advice. Your employer will normally contribute to your legal costs as part of the agreement.
Understanding the compensation you are entitled to
Before you decide whether to accept what is being offered, it’s important to understand what you are actually entitled to. The right amount depends on several key factors:
1. Length of service – To qualify for statutory redundancy pay, you will need at least two years’ continuous service. Your length of service also affects how much you should receive.
2. Your notice period – The terms of your contract determine the notice pay you should receive and whether it should be paid as a lump sum or you should work the remaining period.
3. Outstanding employment claims – If you have an unresolved grievance or an existing employment issue – such as discrimination, unfair dismissal, or constructive dismissal – the potential value of that claim should be factored into any offer. This is a critical consideration, because once you sign a Settlement Agreement, you lose the right to bring that claim.
4. Time needed to find alternative employment – Settlement Agreements are designed to give you a financial cushion while you look for another job. Consider realistic timelines when evaluating whether an offer is fair.
A good employment solicitor will work through all of these factors with you to make sure you are not being short-changed.
Why you need an employment law specialist
Not all solicitors are equal when it comes to Settlement Agreements. It is important to choose someone who specialises in employment law, for several reasons:
You may have an Employment Tribunal claim you don’t know about: A specialist will identify whether you have grounds for a claim – such as unfair dismissal, discrimination, or breach of contract- and explain what it could be worth. Once you sign, you lose the right to bring a claim.
You may be entitled to more than is being offered: An experienced employment solicitor can spot underpayments and negotiate on your behalf to improve the financial terms.
The agreement may not be tax-efficient: Termination payments up to £30,000 are normally tax-free, but payments in lieu of notice are not. A specialist will advise on how payments should be structured to minimise your tax liability.
Your employer will usually contribute to your legal fees: If the agreement is straightforward, their contribution will often cover your costs in full. If negotiation is needed, an experienced solicitor can usually persuade the employer to increase their contribution, so you are no worse off.
“Protected conversations” require specialist handling: Your employer may have had a “protected conversation” with you before presenting the Settlement Agreement. What was said in that meeting may not be usable in future proceedings or negotiations, but the rules here are complex and require specialist advice to navigate properly.
Why use Backhouse Solicitors for your Settlement Agreement?
At Backhouse Solicitors, we are specialists in employment law and have helped thousands of employees get the best outcome from their Settlement Agreements.
At our meeting, we will go through the agreement with you section by section, explaining everything in plain English – no jargon, no confusion. If we think you are not being offered what you deserve, we will tell you, and we can negotiate directly with your employer to secure improved terms.
Our fee for advising you is normally paid by your employer. Where negotiations are more complex, we will always ask the employer to increase their contribution, and we will always agree any fees with you in advance.
To summarise, our expert team will:
Here are some reviews from clients we have helped
Frequently Asked Questions About Settlement Agreements
Settlement Agreement guide
Watch our video for some helpful tips if you have been offered a Settlement Agreement:
Contact us today for help with your Settlement Agreement
If you need advice on a Settlement Agreement, you need employment solicitors who respond quickly and can see you promptly. At Backhouse Solicitors, we understand you are working to a tight deadline.
Contact us today for a fast, friendly, and expert service.
Tel: 01245 893400 | 01702 410880
Email: info@backhouse-solicitors.co.uk
Visit our Chelmsford office: 17 Duke Street, Chelmsford, Essex, CM1 1JU
Visit our Leigh-on-Sea office: 22-24 Elm Road, Leigh-on-Sea, Essex, SS9 1SN
Or send us a message through the Contact Us page on this website