Have you been offered a settlement agreement by your employer? Before you sign anything, you need independent legal advice — and the good news is that your employer is required to cover your legal fees.
At Adam Bernard Solicitors, our employment law team advises employees across London on settlement agreements every day. We explain what you are signing, assess whether the terms are fair, and where necessary, negotiate a better outcome on your behalf. Whether you are facing redundancy, dismissal, or a workplace dispute, we are here to protect your interests.
Call us on 0207 100 2525 for immediate advice, or book a free consultation at our High Holborn or Upton Park offices.
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What is a settlement agreement?
A settlement agreement (formerly known as a compromise agreement) is a legally binding contract between an employee and their employer. By signing it, you agree to waive your right to bring any claim against your employer — typically in exchange for a financial payment and other agreed terms.
Settlement agreements are commonly used when:
- An employment contract is being terminated
- A redundancy process is under way
- There is an ongoing workplace dispute or grievance
- An employer wants a clean and confidential end to an employment relationship
Because a settlement agreement is final and legally binding, it is essential to understand exactly what rights you are giving up before you sign.
What does a settlement agreement typically include?
Every settlement agreement is different, but most will cover some or all of the following:
- Compensation payment — a lump sum in lieu of claims, often partly tax-free up to £30,000
- Notice pay — whether you will work your notice period or receive payment in lieu
- Confidentiality clause — preventing either party from disclosing the terms of the agreement
- Non-disparagement clause — restricting negative comments about either party
- Reference wording — an agreed reference your employer will provide to future employers
- Post-termination restrictions — for example, restrictions on working for competitors
- Return of company property — laptops, phones, access cards
- Outstanding bonuses or benefits — clarity on what you are and are not entitled to
Our solicitors will review every clause in detail and explain the practical implications for your situation.
Do I need a solicitor to sign a settlement agreement?
Yes — this is a legal requirement. A settlement agreement is only legally valid if the employee has received independent legal advice from a qualified solicitor (or other authorised adviser) before signing. Your adviser must confirm they have explained the terms and effect of the agreement.
This protects both parties: it ensures you have genuinely understood what you are agreeing to, and it makes the agreement enforceable in law.
Who pays the legal fees?
In the vast majority of cases, your employer pays your legal fees for settlement agreement advice. The amount is usually stated in the agreement itself — a standard contribution ranges from £250 to £500 plus VAT.
If you wish to negotiate harder for improved terms, there may be additional fees depending on the complexity and length of negotiations. We will always be transparent about any costs before proceeding.
How can Adam Bernard Solicitors help?
Our employment solicitors will:
- Review the agreement in full and explain every clause in plain English
- Assess whether the offer is fair based on your employment history, potential claims, and circumstances
- Identify any claims not covered by the agreement that you may be unintentionally waiving
- Negotiate improved terms including higher compensation, better references, or removal of unfair restrictions
- Advise on tax implications of the proposed payment
- Sign the certificate confirming you have received independent legal advice — a legal requirement for the agreement to be valid
We act quickly — settlement agreements often come with short deadlines, and we understand the urgency.
What if I want to negotiate better terms?
You are not obliged to accept the first offer your employer makes. Many employees are unaware that settlement agreements are negotiable. Our solicitors will assess the strength of any potential Employment Tribunal claim you may have, which directly affects your negotiating position.
Common areas where we secure improvements include:
- Increasing the compensation amount
- Improving the agreed reference wording
- Removing or narrowing post-termination restrictions
- Extending the period of health or car benefit cover
- Securing an earlier effective date to allow you to start a new role sooner
Get in touch with our expert Solicitors today.
Frequently Asked Questions
There is no fixed statutory timeframe, but the Advisory, Conciliation and Arbitration Service (ACAS) code of practice recommends a minimum of 10 calendar days to consider the agreement. Your employer may propose a shorter deadline — we can advise you on whether this is reasonable.
No. A settlement agreement must be entered into voluntarily. You cannot be compelled to sign one, although your employer may make clear that the alternative is a formal process such as a disciplinary or redundancy procedure.
Potentially, yes. How the payment is structured may affect your entitlement to Universal Credit or Jobseeker's Allowance. We will explain the implications as part of our advice.
Redundancy is a specific legal process with statutory entitlements. A settlement agreement may be offered as part of a redundancy — or as an alternative to it. The two are not mutually exclusive, and both require careful consideration.
Once a settlement agreement is signed, you will typically be unable to raise further claims against your employer. This is precisely why taking legal advice before signing is so important.
