Settlement Agreements

Settlement Agreements are contracts between an employer and employee which facilitate the termination of the contract of employment.

The purpose of a Settlement Agreement is to prevent an employee from bringing a claim at the Employment Tribunal in relation to their employment with the Employer or the termination of their employment

Employees may be offered a Settlement Agreement where they have been made redundant or where they have a dispute with their employer and they wish to leave employment on agreed terms. Alternatively, following a dismissal, an employee may be offered a Settlement Agreement before a claim is made at the Employment Tribunal.


Settlement Agreements are written in legal language and often contain complicated clauses concerning restrictions on an employee’s ability to work after their employment ends. Invariably, there are also clauses on the tax implications of any compensation payment.

In order for a Settlement Agreement to be legally binding, its terms and effects need to have been reviewed by a Solicitor, and the employee needs to have received independent legal advice in this regard.

Our standard fee for advising an employee on the terms and effect of a settlement agreement is £500 + VAT. Most employers contribute towards their employees’ legal fees and, where they have done so, we normally limit our fees to the amount which the employer is contributing, so that our services are free for the employee. We can discuss this with you in more detail when you contact us. Where a Settlement Agreement is inadequate or an employee believes that they should be paid more than the amount payable in the draft, we can attempt to negotiate amendments to the Agreement and we can offer a fixed fee for our settlement agreement negotiation service.

We also offer fixed fee services to employers who require a tailored settlement agreement and assistance to negotiate the settlement agreement terms with the employee and/or their representative.

A settlement can also be reached with the employer following a claim having been made at the Employment Tribunal. We can assist in negotiating these types of settlements and in drafting the appropriate terms on behalf of the employer or the employee.

Contact our Employment Law team on 020 7228 0017 if you have a Settlement Agreement.

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