A settlement agreement (sometimes called a compromise agreement) is a legally binding contract between an employer and an employee, most often used to end employment on mutually agreed terms.

In return for waiving certain legal claims against the employer – both current and future – the employee will usually receive a financial payment (up to £30,000 of which may be tax-free), and sometimes additional benefits such as an agreed reference.

What Makes a Settlement Agreement Valid?

For a settlement agreement to be legally enforceable, the following conditions must be satisfied:

• It must be in writing.
• It must relate to a specific complaint or legal proceedings.
• The employee must receive advice from an independent qualified adviser (for example, a solicitor or authorised trade union representative).
• The adviser must have professional indemnity insurance to cover any potential claims.
• The agreement must name the adviser.
• The agreement must state that the statutory conditions governing settlement agreements have been met.

How We Can Help You

Our solicitors regularly act for employees negotiating settlement agreements. We aim to secure the best possible terms for you – often at no cost, since employers usually contribute towards legal fees.

We understand that leaving a job, or facing a workplace dispute, can be stressful. That’s why we provide clear, straightforward advice and keep you fully informed of your rights at every stage. Our role is to ensure that any settlement you sign is fair, reasonable, and in your best interests.

Beyond Ending Employment

Settlement agreements are not only used when employment ends. They can also be used to resolve ongoing workplace disputes – for example, to prevent unlawful treatment – without requiring you to leave your job.

Accessible Support Wherever You Are

You don’t need to be local to receive our help. We can deal with everything by phone or email, so you can get expert advice from the comfort of your own home.