Settlement Agreements

Settlement Agreements

Brachers can provide advice on “without prejudice” discussions/protected conversations including strategy and responses.

What is a Settlement Agreement?

Settlement Agreements are legally binding agreements between an employer and employee. The purpose of a Settlement Agreement is to provide a formal means by which an individual agrees that they will not bring specified claims against their employer.

Why do I need legal advice?

Settlement Agreements are not legally enforceable unless they meet certain requirements, one being that the employee has received independent legal advice on the terms. Employees have to receive the advice before signing the agreement to ensure they understand the terms of the agreement and the effect this has on bringing a claim against the employer.

What rights am I waiving by signing the Settlement Agreement?

You would be waiving the rights set out in the agreement; these can include:

  • Statutory rights; for example, your right not to be unfairly dismissed, your right to a statutory redundancy payment, maternity and paternity rights as well as the right not to be discriminated against;
  • Contractual rights as set out in your employment contract, such as your notice period, salary and other benefits including bonuses, pension and shares; and
  • Other rights; for example rights to holiday pay and in some cases rights in respect of injuries or ill health you have suffered.

Do I have to sign the Settlement Agreement?

No. An employee has a choice whether to enter into a settlement agreement or not.

I am not happy with the deal offered. Can I negotiate?

Yes. To comply with the legal requirements, you do need to get advice on the terms of the agreement. However, if you feel that what has been offered is not acceptable to you then you can seek to negotiate a different arrangement.


An employer normally pays a contribution towards an employee’s legal fees for obtaining advice on the terms of the agreement. Contributions are normally around £350 – £500 plus VAT.

What happens next?

Once you have been provided with a draft agreement, you will need to seek advice on the terms. If you decide to sign the agreement once you have been advised about the content, then your solicitor will normally be asked to provide a certificate confirming advice has been given.

If a settlement agreement is offered we have extensive experience of providing the required advice, particularly in relation to senior individuals, including Directors.

We are able to explain the implications of settlement agreement terms including those relating to employee benefits entitlements, including share options and retention plan entitlements. If you feel the offer is not in your best interests, Brachers can negotiate with your employer on your behalf and draft changes to the documentation to protect your interests.

Documents we will need to see to be able to advise include:

  • the draft settlement agreement
  • your employment contract (if you have one)
  • background documents including documents relating to any benefits