Settlement Agreements for Employees

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Settlement Agreements for Employees

A settlement agreement (previously known as a compromise agreement) is a contract entered into between you and your employer, usually when you are leaving your employment, which means your employer will make a payment to you, and sometimes other benefits, in return for you relinquishing your legal rights to bring any employment claims against your employer.

How can we help with your settlement agreement?

If you have been offered a settlement agreement by your employer, we can either assist with:

  • advising you on the terms and assisting to complete the Adviser’s certificate, if you are happy to accept the financial offer made by your employer. If there are minor amendments required, we can help with this too; or
  • negotiating the financial and non-financial settlement offer being made under the settlement agreement. Using many years of experience across various industries, for all levels of employee, we can employ well-honed, tried and tested strategies to best maximise the ex-gratia payment being made to you, (up to £30,000 of which can be paid tax free) and to maximise any other contractual and non-financial benefits you will receive.

What if I would like a settlement agreement but my employer has not offered me one?

There may be any number of reasons why you have not been offered a settlement agreement by your employer. It could be a lack of awareness by your employer that the relationship has broken down to the extent that a settlement is required, or that a settlement agreement is an option. It could be that your employer thinks that a settlement agreement will be too expensive and an option to avoid.

You could have a ‘protected conversation’ with your employer or send your employer an initial email labelled ‘without prejudice’ to make clear that you would like to consider an amicable termination of your employment and suggest a settlement agreement is provided to you, to see what your employer’s reaction to this is. If you are going to try this approach without initial legal advice it is advisable not to suggest a settlement figure or commit yourself to your employer’s suggested settlement terms, as this could affect your ability to negotiate later.

If you have tried approaching your employer about a settlement agreement and it was unsuccessful or you would like guidance before you do this and a fast and impactful result, which is strongly recommended, you could instruct us to draft a more detailed without prejudice letter on your behalf. This would put your best foot forward and state your reasoning for requesting the agreement, what claims you have and what you are looking for by way of settlement, if your employer is to avoid defending an Employment Tribunal Claim.

Some employers may still require for further action to be taken before they will agree to discuss a settlement agreement. If your employer will not enter into without prejudice discussions with you, we can review your case and suggest next steps.

How much will settlement agreement advice cost?

If you are only looking for minor amendments to be made to the draft settlement agreement document and / or for advice on the terms and completion of the agreement, the latter of which is required by law for a settlement to be legally binding, your employer will usually make a contribution to your legal fees. We will not charge you personally for this service, this will be payable by your employer only.

If you would like to instruct us to act on your behalf to negotiate the more substantial terms of your settlement agreement, such as the ex gratia tax free, payment you will receive, this is payable by you personally and in addition to the employer’s contribution for advising you on the final version of your settlement agreement. The fees for negotiation will differ depending on the complexity and facts of your case, but there are different fee structures available and so please do contact our employment team for a more specific guide, which we will provide before we start work.

We always look to add value and will be transparent with you as to whether we believe there is scope to improve the settlement offer made to you and whether you have claims which require to be settled, as well as how much those claims are likely to be worth.

Can we help with COT3 Agreements?

Absolutely. If you have contacted ACAS and you and your employer are looking to agree wording for a COT3 Agreement, we can assist you with this. There is not the same convention for an employer to offer a legal fee contribution as in a settlement agreement. This is something that could be negotiated and if not, something that you might be prepared to pay for, to have a specialist solicitor negotiate on your behalf or just to read through and assist you with before you agree to settle your employment claims.

We will always act in your best interests to support you through the settlement process and do our best to ensure you are fairly compensated for any ill-treatment whether this be under a settlement agreement or through taking further action, if required.

If you would like to see if a settlement agreement is a possibility, if you have been offered a settlement agreement and would just like advice on the terms or would like further help with negotiating the terms, we would like to talk to you and see how we can help.

Go back to: Employment Advice for Employees

How to Get in Contact

We can assist wherever you are based. We can arrange an online or in person meeting where suitable.
To speak to our specialist lawyers, please call +44 203 841 7470 or email for more information.

Key Contact:
Samantha Jolliffe