Settlement Agreements

October 3rd 2019

What are Settlement Agreements?

Sometimes, and for various reasons, an employment relationship comes to an end in circumstances that could entitle the employee to bring a tribunal claim against their employer. Settlement Agreements can terminate the employment relationship on particular terms that are agreed between the parties.

What is the main purpose of a Settlement Agreement?

The main purpose of a Settlement Agreement is to:

  • Settle issues between employer and employee
  • Stop employees bringing future claims against employers, in any court or tribunal, about things that happened during their employment
  • Compensate the employee in return for them waiving their employment rights

What do employees get from signing a Settlement Agreement?

Advantages to the employee are:

  • Knowing what they will be paid
  • Avoiding tribunal proceedings costs to settle any disputes
  • Being paid quickly after signing the Agreement
  • Drawing a line under any bad experiences

A Settlement Agreement can also deal with references, letting you know what your employer will say about you to future employers.

When can a Settlement Agreement be offered?

Employees can be offered a Settlement Agreement before or after their employment has been terminated. There is no need for a particular procedure (such as disciplinary or capability proceedings) to have been completed before an Agreement is offered, although ACAS guidance now provides that an employee should be given at least 10 calendar days to consider an offer.

Why offers should be made “without prejudice”

All Settlement Agreement offers should be made “without prejudice” or following a pre-termination discussion. This means discussions between the employer and employee will be off the record and cannot be disclosed to a court or tribunal (subject to limited exceptions).

What service will Spratt Endicott provide me with?

If you have been offered a Settlement Agreement by your employer then before you sign it the law requires you to take independent legal advice from a solicitor for an explanation as to how its terms affect your entitlement to bring a claim in the Employment Tribunal. This is because in signing the Agreement you would be waiving statutory rights, which are given to you by the government.

When you have received that advice you can then make an informed decision as to whether the offer is right for you.

We will:

  • Advise you on Agreement’s terms and effects
  • Advise you on any suggested amendments, including tax consequences of signing
  • Write to you confirming our advice
  • Sign the adviser’s certificate

Who pays for the legal fees?

One of the common questions that is quite understandably asked by our clients is how much it costs to take advice on their Settlement Agreements, particularly if leaving their employment was not their idea in the first place.  

It is usual in Settlement Agreements for the employer to agree to pay a contribution towards their employee’s legal advice. We are transparent on fees and will provide you with an estimate or a fixed cost depending on your requirements.

It is important to bear in mind, however, that if you do not sign the Agreement after taking advice then your employer does not generally have to pay your legal fees.

What if I am not satisfied with the amount offered in the Settlement Agreement?

In some circumstances you may wish to instruct us to negotiate an increase to any severance payment on your behalf. We can do this and we will provide you with estimates for that as we go along so that you do not receive any unexpected bills once matters are concluded.

Getting in touch

We understand that the prospect of losing your job is stressful, and we consider it incredibly important that the issue of legal costs does not have an adverse effect on our clients’ access to expert advice on their employment rights.

If you have received a Settlement Agreement and would like to have a discussion about our services, please contact Carol Shaw on 01295 204140 or email