Settlement agreements

The advantages to an employer of a settlement agreement

A settlement agreement represents a clean break between employer and employee. The employee agrees not to bring any claim against the employer at any time. In return for waiving all claims, they will receive a payment. This will compensate them for the waiver and also for other items such as pay that would have been due in respect of the notice period, outstanding bonuses and payment in lieu of holiday.

An agreement can be used to end a dispute or potential claim as well as for employees taking voluntary redundancy. It can also be used during a term of employment to vary the terms and conditions of employment.

Putting a settlement agreement in place allows for a quicker end to a period of employment, with the employer leaving immediately rather than working out their notice.

You can agree to provide a reference for the employee and you can specify what this will include.

The employee will be required to agree to confidentiality, both in respect of your business and in respect of the agreement itself.

Because a settlement agreement is a waiver of an employee’s rights, they are required by law to seek independent legal advice before signing. It is usual for an employer to pay towards the costs of this. 

Clear advice and legal security

If you have an employee whom you believe would be a suitable candidate for a settlement agreement, we can advise you on the appropriate terms and conditions to include in the document and draw up a bespoke agreement. We understand the importance of dealing quickly and efficiently with employment issues to prevent escalation of any dispute and disruption to your organisation.

At Hutchinson Thomas we have experience of drawing up settlement agreements for employers across a wide range of sectors. We will negotiate on your behalf where necessary and ensure that the agreement fully protects your rights and interests once your employee has left. 

Contact us

Hutchinson Thomas is the first law firm in Wales to be awarded the Law Society Mark of Excellence. The firm and many of our lawyers are recognised year on year in the Legal 500 publication as leading individuals in their field.

We work with employers across all of their employment law requirements. If you would like to discuss have a settlement agreement drawn up to protect your rights and interests once an employee leaves, ring us on the following numbers or fill in our contact form.