What is a Settlement Agreement?
A settlement agreement is a legally binding contract used to resolve workplace issues or bring employment to an end on agreed terms. It gives both sides certainty and a clean break. For employees, it usually involves a financial payment. For employers, it provides protection against future claims. Independent legal advice is required for the agreement to be valid.
My role is to ensure the terms are fair, the payments are correct, and you fully understand what you are signing.
A settlement agreement is a legally binding contract used to resolve workplace issues or bring employment to an end on agreed terms. It gives both sides certainty and a clean break. For employees, it usually involves a financial payment. For employers, it provides protection against future claims. Independent legal advice is required for the agreement to be valid.
My role is to ensure the terms are fair, the payments are correct, and you fully understand what you are signing.
How I Can Help
I provide clear, practical advice on:
I provide clear, practical advice on:
- reviewing and negotiating settlement agreements
- improving financial terms
- highlighting tax implications of certain payments
- bonuses, benefits and post‑termination restrictions
- references and confidentiality
- SARs, ICO issues and data rights
- drafting agreements for employers
What do settlement agreements usually cover?
Most settlement agreements follow a similar structure and deal with a number of standard points. These terms are important because they set out exactly what each party must do before the agreement becomes binding.
The key areas usually covered include:
The key areas usually covered include:
- Termination DateThe agreement will confirm the date your employment ends. This is essential for calculating notice, benefits, and final payments.
- Salary and Benefits to the Termination DateYou should receive your normal salary and contractual benefits up to your final day of employment.
- Holiday PayAny accrued but untaken holiday must be paid on termination, unless you have already taken more holiday than you were entitled to.
- Notice Pay (AKA PILON)If your employer is not requiring you to work your notice, the agreement will usually include a payment in lieu of notice (PILON). This should be clearly set out so you understand how it has been calculated. Notice pay is always taxable.
- PensionYour pension contributions normally continue up to the termination date. The agreement should confirm how contributions are handled and whether any adjustments are required.
- ExpensesYou should resolve any outstanding expenses before signing the agreement. Once the agreement is completed, it can be difficult to recover unpaid expenses unless they are expressly included.
- DeductionsThe agreement will usually include wording allowing the employer to deduct any money you owe them—for example, a season ticket loan, cycle‑to‑work scheme payments, training courses or overpaid salary. These deductions must be clearly identified.
- Company Property and DocumentsYou will be required to return all company property—such as laptops, phones, passes, documents, and confidential information—before the agreement becomes binding. This is often set out in a clause confirming that you are making a formal promise to return everything.
- Confidential Information and Intellectual PropertyThe agreement will restate your ongoing obligations to protect the employer’s confidential information and intellectual property. These duties usually continue after your employment ends.
- Post‑Termination Restrictions
If your contract contains restrictive covenants—such as non‑compete, non‑solicitation or confidentiality obligations—the settlement agreement should confirm whether they:- continue unchanged
- are being varied
- are being waived
The Cost of Independent Legal Advice for A Settlement Agreement
Employers usually make a contribution towards legal fees involved in an agreement. This can cover the full amount of the review, including us producing an advisor's certficate as needed, meaning that you as an employee would not pay anything in legal fees. If the full amount is not covered, we will provide a competitive quote for the work involved.
Employers usually make a contribution towards legal fees involved in an agreement. This can cover the full amount of the review, including us producing an advisor's certficate as needed, meaning that you as an employee would not pay anything in legal fees. If the full amount is not covered, we will provide a competitive quote for the work involved.
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