Settlement Agreements

SERVICE settlement agreements

What is a Settlement Agreement?

A Settlement Agreement is a document signed by the employee and employer on termination of employment. The effect of the agreement is that the employee waives their rights to bring any claims relating to their employment in return for a Compensation Payment.

The following are examples of the kinds of claim you may be able to bring against your employer in an Employment Tribunal:

  • Unfair Dismissal
  • Constructive Dismissal
  • Notice Pay
  • Statutory Redundancy Payment
  • Discrimination
  • Equal Pay
  • Unlawful Deductions from Wages
  • Holiday Pay
  • Breach of Contract

In order to be valid a Settlement Agreement must satisfy various statutory requirements. One of the requirements is that, before signing, the employee must first receive advice from a “relevant independent adviser” (usually a solicitor). The solicitor then signs an Adviser’s Certificate confirming that advice has been given.

The employer will usually make a contribution towards the employee’s legal fees in obtaining advice on the agreement.

What are the terms of a Settlement Agreement?

A Settlement Agreement will usually include the following terms:

  • Compensation Payment
  • Notice pay or Payment in Lieu of Notice (PILON)
  • Holiday Pay
  • Benefits (e.g. pension, bonus, commission, shares)
  • Tax indemnity
  • Post-termination restrictive covenants;
  • Agreed reference
  • Confidentiality
  • Contribution towards legal fees

Should I sign a Settlement Agreement?

It depends. Waiving your rights to bring claims in the Employment Tribunal is a serious matter and you should, therefore, give careful consideration to the terms of the agreement before signing. The main issue is usually whether the employer is offering adequate compensation in the agreement.  

Are the terms of a Settlement Agreement negotiable?

Yes, the terms of a Settlement Agreement are often negotiable.

Before signing a Settlement Agreement you should discuss the following 3 questions with your solicitor:

  1. What potential claims do I have?
  2. What is the value of the claims?
  3. How likely is it that I would win?

Answering these questions will help you decide whether the compensation offered by your employer is sufficient for you to waive your rights to bring claims in the Employment Tribunal.

Can I make an appointment immediately to see a solicitor immediately?

We understand that employers will often impose tight deadlines for signing a Settlement Agreement giving you limited time to consider the offer and obtain legal advice. For this reason we make every effort to see you at short notice. If very urgent, same day appointments are often possible.

Why choose OWC?

We guide hundreds of employees every year through their Settlement Agreements. We, therefore, have the experience to advise whether or not you are being offered a good deal and the expertise to negotiate the best possible terms on your behalf.

Contact our Employment Law Solicitors in London, Surrey and Middlesex

For a free initial phone call to see if we can help you, please contact Jeremy Parkinson on 020 8890 2836, email This email address is being protected from spambots. You need JavaScript enabled to view it. or you can contact us by filling out our online contact form.

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