Settlement Agreements: a guide for employees


Are you looking for legal advice because your employer has offered you a Settlement Agreement? Or because you think they may do? Or even because you want to suggest it to them?

Well, you’re in good company. The vast majority of our employee clients will ultimately negotiate a Settlement Agreement with their employer. Some clients come to us having already got what they want on the table, and they simply want to be able to ‘do the deal’ as quickly and efficiently as possible.  Others approach us at a much earlier stage, perhaps where exit negotiations have only just started, or aren’t even yet being discussed.

We offer straight-forward, good-value advice in all these scenarios and in every situation in between.

What is a Settlement Agreement?

Let’s start with the basics. A Settlement Agreement (they used to be called Compromise Agreements – it’s the same thing) is a legally binding document. By agreeing to its terms, you (the employee) sign away your rights to bring legal claims against your employer relating to your employment and its ending.  This might include claims such as unfair dismissal, discrimination, redundancy payment, etc. In return, your employer pays you some additional money beyond your basic entitlements.  So the deal is that you leave quietly, with some extra money, and agree not to bring any employment law claims.

Requirement for legal advice

The law requires that for a Settlement Agreement to be valid the employee must have independent legal advice – in other words, advice from a lawyer who is not connected with your employer. That’s a safeguard to prevent unscrupulous employers persuading people to sign away valuable claims for very little money.  This advice must, at a basic level, explain to you what you’re signing, particularly the fact that you are giving up your right to bring any employment-related claims against your employer.

We’ll happily provide you with this basic level of advice – explaining to you what the legal effects of the agreement are and ensuring you understand it.  For some of our clients, that’s all they need.  And it’s traditional for your employer to offer to pay for some or all of our fees for us to provide that advice to you.

Additional legal support

However, our wealth of expertise and experience that means we can also offer you much more than that basic ‘off the peg’ service.

For many of our clients, we go considerably further than just the basic advice.  Here are just some of the things we can help with:

  • We know what the ‘going rate’ is for terminations in various sectors and circumstances. We’ll give you the lowdown on when to push for more – and when to stick. Often (though sadly not always) we can help you negotiate a larger payment or some other extra benefit.
  • Have you thought about reputational issues? How to announce your departure, what internal and external message will be given? What you’ll say on LinkedIn? What they’ll say in the Annual Report? We have. We’re used to negotiating amendments to confidentiality and other reputational clauses which are often drafted to the employee’s disadvantage.
  • We often negotiate around when or whether you have to return your employer’s property. Generally it’s the car, the mobile or the laptop, but one of us had a client who wanted to keep the set of first-edition novels decorating their office in a publishing house. And we got them.
  • What about the additional technicalities if you’re a statutory director? Or if you have restrictive covenants in your contract? Now’s the time to sort them out, and we’re here to help.
  • There is often a range of unexpected commitments in a Settlement Agreement that you might be asked to agree to. As well as standard things like agreeing to keep the details confidential, sometimes there are requests for you to do (or not do) things you weren’t expecting.  We can help you navigate all the unexpected contents of a Settlement Agreement and guide you on what’s worth arguing about and what’s not.
  • Finally, we’re not afraid to make the opening move. Some of our most successful cases have been where we’ve acted for clients who have opted to propose an agreed exit for them in circumstances where their employer hadn’t yet suggested it. We’re happy to advise whether this is a good option in your case, and work together to time it right.

This additional support will often cost more than your employer’s contribution to our fees, but will be well worth it.  We will tell you how far your employer’s fee contribution takes us, so that you are fully in control of costs and won’t receive an unexpected bill.

We’re there for you

The end of an employment relationship is often a very difficult time. It’s completely normal to experience feelings of stress, uncertainty, unfairness or even betrayal.  Hopefully often there is also relief and the excitement of a fresh start and new opportunities.

It’s your journey; but we’ve got the roadmap and can help with the steering.  So give us a call on 0117 325 0526 or get in touch and let’s discuss how we can help you.