Settlement agreements, formerly known as compromise agreements, offer employers a legally secure way to end an employment relationship on agreed terms.
A settlement agreement provides a clean break between employer and employee. In exchange for waiving their right to bring legal claims, the employee receives a financial settlement. This may include:
• Pay in lieu of notice
• Outstanding bonuses or holiday pay
• Compensation for ending the employment
Settlement agreements can be used to resolve disputes, manage voluntary redundancies, or vary employment terms during the course of employment. They offer a faster, more cost-effective alternative to litigation—and ensure confidentiality for both parties.
We tailor each agreement to suit your business and the circumstances of the departure. Typical clauses include:
• Waiver of claims – Preventing the employee from pursuing legal action
• Financial terms – Including lump sum payments and tax considerations
• Confidentiality – Covering both the agreement and business information
• Reference provision – Specifying what will be included in any future reference
• Restrictive covenants – Preventing the employee from contacting clients or competing with your business
Because settlement agreements involve the waiver of legal rights, employees are required by law to seek independent legal advice before signing. Employers typically contribute to the cost of this advice.
We provide clear, commercially focused advice to help you:
• Identify when a settlement agreement is appropriate
• Draft bespoke terms that protect your business
• Negotiate with employees or their representatives
• Ensure compliance with employment law and tribunal rules
Our team understands the importance of resolving employment matters quickly and discreetly—allowing you to move forward without disruption.
• Extensive experience drafting and negotiating settlement agreements
• Clear, practical advice tailored to your business needs
• Strong negotiators focused on protecting your interests
• Recognised in the Legal 500 and awarded the Law Society Mark of Excellence
Our specialist commercial lawyers offer a one-stop-shop for legal advice for all types of business – from start-ups to established companies.
All of our lawyers are specialists in their area of law. Book in for an initial discussion where we will discuss all of your options with you.
