Search

How can we help?

Icon

The Increased Prevalence of Settlement Agreements

A settlement agreement is a contract entered into by an employer and employee whereby the employee agrees to waive certain claims they may have in return for some form of consideration. Usually the agreement will involve an end to the employment relationship but not always. Under the terms of the agreement, an employee will sign away employment rights such as their rights to bring a claim against their employer at the employment tribunal. In exchange for this, the employee is usually offered a compensatory payment which is often paid tax free, up to the value of £30,000.

A settlement agreement can provide clarity for both parties about how and when the employment relationship will come to an end.

There is no limit on what can be agreed under a settlement agreement, but common clauses relate to what claims are being waived, what payments the employee will receive, whether they will be required to work their notice period or receive a payment in lieu of notice, confidentiality provisions, post-termination restrictions and arrangements for returning company property.

A settlement agreement can provide clarity for both parties about how and when the employment relationship will come to an end.

Employees must receive independent legal advice on their settlement agreement before signing, and their legal adviser must sign the agreement as well. If you have been offered a settlement agreement and would like to speak to one of our settlement agreement solicitors to meet this requirement, please do not hesitate to get in touch.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 14 February 2025
  • Immigration

Bringing your Valentine to the UK

This year, thousands of couples have to spend Valentine’s day alone, due to the UK’s strict Immigration rules.

art
  • 14 February 2025
  • Employment

How to manage romance in the workplace

We spend most of our time at work, whether that be in the workplace or remotely via teams or slack. With all this time to chat and get to know colleagues, it comes as no surprise that romance has become commonplace in the modern workplace.

art
  • 13 February 2025
  • Public Procurement

Procurement Act 2023 – Coming into force on 24 February 2025

After a four-month delay from its original commencement date of 28 October 2024, the new Procurement Act 2023 is now due to come into force later this month on 24 February 2025.

art
  • 13 February 2025
  • Commercial Real Estate

What are restrictive covenants and how do they relate to the planning system?

Restrictive covenants on use can be one of the more problematic aspects of a property transaction. Even if the restrictive covenants do not affect one’s development plans for the land, they may be an issue for subsequent buyers or future lenders.

art
  • 13 February 2025
  • Immigration

Skilled Worker New Entrant Exemption – is it a good investment?

The “new entrant” exemption under the UK Skilled Worker Visa is a vital but often underappreciated element of the immigration system. It offers valuable benefits to both employers and employees.

art
  • 12 February 2025
  • Employment

Balancing the Equality Act: Lessons from Higgs v Farmor’s School

The Court of Appeal have today issued a judgment in the Kristie Higgs v Farmor’s School case, in which it has ruled that the actions of the school in dismissing Ms Higgs for expressing LGBT+ critical posts on her personal Facebook account, was unlawful discrimination on the grounds of religion or belief.