Settlement Agreement Solicitors for Employees
If your employer has handed you a Settlement Agreement and asked you to “sign and return it”, you must obtain independent legal advice before it becomes legally binding. In most cases, your employer will pay your legal fees for this advice, so there is usually no cost to you in getting an expert assessment of whether the deal is fair.
NA Law’s specialist settlement agreement solicitors act for employees, executives and workers across England and Wales. Same‑day appointments are often available by phone or video, and in most cases your agreement can be reviewed, advised on and signed within 24 hours.
What is a settlement agreement?
A Settlement Agreement (previously called a Compromise Agreement) is a legally binding contract between you and your employer that sets out the terms on which your employment will end. In return for a severance payment or other benefits, you agree not to bring certain employment claims in the Employment Tribunal or civil courts.
Settlement agreements are commonly used where there are concerns about redundancy, performance, misconduct, long‑term sickness, discrimination or a breakdown in the working relationship. Your employer may also require you to keep the terms confidential and to use only agreed wording if asked why you left.
Why have I been given one?
Employers use settlement agreements when they want a clean break and to avoid the time, cost and uncertainty of internal procedures or Tribunal proceedings. Typical situations include redundancy, performance or conduct concerns, grievances, bullying, harassment, discrimination and negotiated exits for senior staff on enhanced packages.
Being offered a settlement agreement does not automatically mean you have done anything wrong. It usually means your employer wants to agree terms now rather than leave matters open to future claims.
Is my settlement agreement valid?
For a settlement agreement to be legally valid and enforceable, it must meet specific legal requirements, including:
- It must be in writing and relate to particular complaints or potential proceedings.
- You must receive advice from a relevant independent adviser, such as a solicitor or certified trade union adviser.
- The adviser must have professional indemnity insurance and sign a certificate confirming they have advised you.
- The agreement must identify the adviser and state that the legal conditions regulating settlement agreements have been satisfied.
If these requirements are not met, the agreement may not prevent you bringing an Employment Tribunal claim, even if you have signed it. For more information on the legal requirements, see the ACAS guidance on settlement agreements.
Tax on settlement payments
The tax treatment of a settlement package can be complex and depends on how each element is structured. As a general rule, up to £30,000 of genuine compensation for loss of employment can usually be paid free of income tax, with amounts above that normally taxable at your usual rate.
From 6 April 2018, all payments in lieu of notice (PILON) – including non‑contractual PILON – are subject to income tax and Class 1 National Insurance contributions. Salary, holiday pay, bonus and benefits are always taxable in the normal way. For detailed information on tax treatment, visit GOV.UK guidance on termination payments.
A correctly drafted settlement agreement should spell out how each element of your package will be treated for tax purposes. If the agreement is unclear or appears to under‑state your notice pay or holiday pay, expert advice can help you understand whether the offer is fair and whether it can be improved.
Why use a settlement agreement solicitor?
You are legally required to obtain independent legal advice before a settlement agreement can take effect. There are also important practical reasons to use a specialist employment solicitor.
Making sure you understand the document
A settlement agreement usually involves waiving rights to bring a wide range of claims, including unfair dismissal, redundancy pay, discrimination, whistleblowing and breach of contract claims; a specialist will explain in plain English which rights you are giving up and what you are receiving in return.
Checking whether the offer is fair
An employment law solicitor can assess the potential value of your claims in light of your length of service, salary and benefits, the strength of any unfair dismissal or discrimination claims and how long it might take you to find alternative work.
Negotiating better terms
Where appropriate, your solicitor can negotiate for an increased ex‑gratia payment, better reference wording, a later termination date, gardening leave, continued benefits or changes to restrictive covenants.
Ensuring your employer pays your legal costs
Most employers contribute a fixed amount towards your legal fees for advice on the settlement agreement, which in many cases covers all your costs.
Why choose NA Law Solicitors?
Choosing the right settlement agreement solicitor can make a real difference to your outcome and peace of mind. NA Law offers specialist employment lawyers experienced in unfair dismissal, redundancy, discrimination and whistleblowing claims, providing fast, pragmatic advice with same‑day phone or video appointments where possible.
You receive clear guidance on whether your offer is fair and what could realistically be negotiated, with straightforward communication and a focus on achieving a dignified exit on the best terms available. To arrange a confidential discussion about your settlement agreement, call 0203 524 5439, email admin@nalawsolicitors.co.uk or send a copy of your agreement using our online contact form.