Settlement agreements

Expert legal advice

At Hutchinson Thomas we regularly advise employees on the terms of settlement agreements and work with them to obtain the best possible deal from employers.

Leaving employment can be a stressful and difficult time, particularly if you believe you have been treated unfairly by your place of work. A settlement agreement offers you a clean break, however you should be sure that you are being offered a good deal.

Our employment team are strong negotiators and if we work with you, we will ensure that your settlement agreement is the best possible option for you. It is customary for your employer to pay some or all of your costs of obtaining legal advice.

What is a settlement agreement?

A settlement agreement is a legally binding agreement made between you and your employer. A payment is made to you in return for you agreeing not to make any legal claims against your employer at any point in the future.

You are also likely to be asked to agree to a number of other terms. One of the main requirements is usually to keep all information relating to the settlement agreement confidential. Your employer may also want you to keep aspects of your work and their business confidential.

Depending on the type of employment, you may be asked to sign covenants agreeing not to set up a business in direct competition with your employer or to work for a competitor or to solicitor your employer’s clients or customers. If you are asked to agree to other terms such as these, we can advise you as to whether or not they are fair and reasonable.

The benefits of a settlement agreement

A settlement agreement offers a clean break for you and your employer. This can be preferable to legal proceedings, which could be lengthy, stressful and disruptive.

Your employer should let you have a breakdown of the proposed sum of money they will pay to you so that you can see how much tax will be deducted and consider whether the amount offered is fair. As well as a lump sum, you should also receive the amount that would have been due if you had worked your notice period, any bonus or commission that you would have received and payment for any holiday you have not taken. Tax is not usually payable on the lump sum, up to £30,000, but will be payable on money you would have earned.

We can advise you as to the amount you could expect to receive and also enter into negotiations on your behalf if we believe the figure is inadequate and should be improved upon.

We will also ensure that any other appropriate benefits are included. One example is a reference that you can take with you to your next job. We can work with you and your employer to agree the wording of the reference and ensure that it is included in the settlement agreement. 

There may also be non-financial benefits that can be agreed upon, such as keeping a phone, laptop or car, and we will explore the possible options with you.

Choosing Hutchinson Thomas

Our employment team has in-depth experience of negotiating and agreeing strong settlement agreements for employees who are leaving their employment or whose employment conditions are being altered.

A settlement agreement is a waiver of your rights to bring a claim for compensation against your employer, so it is vital that you receive legal advice before signing. We will ensure that your payment is fair and that you understand the other terms and conditions that you are agreeing to.

We are a friendly and approachable team and we understand that leaving employment can be a difficult time. We will be supportive throughout and make sure that we are available to speak to you to discuss the matter and to answer any questions you may have.

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.

If you have been offered a settlement agreement and you would like legal advice before signing it to ensure that it is the best deal for you, please feel free to call us on the following numbers or fill in our contact form.