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Settlement Agreement Advice for Employers

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Settlement Agreements were introduced in 2013 to replace the almost identical Compromise Agreements. They are legally binding contracts between you and your employee that waive their rights to make a claim against you at the Employment Tribunal over something that is covered in the agreement, usually in return for a sum of money.

Richard Nelson LLP’s employment team have considerable experience working with employers to draft settlement agreements that achieve their goals. Get in touch using the form on this page to discuss your business’s needs further.

How Our Settlement Agreement Solicitors Can Help Employers

Our experienced employment law solicitors work with employers to ensure that Settlement Agreements are correctly drafted and do not leave your organisation vulnerable to unintended consequences. Our lawyers can fully advise you on all of the potential implications of a Settlement Agreement as well as endeavour to ensure that the sum offered to the employee represents a fair amount and is not unfairly inflated by the employee’s solicitor, enabling you to deal with any employee disputes efficiently and quickly, whilst limiting the financial impact on your organisation.

It is important that you seek legal advice before presenting a Settlement Agreement offer to an employee, as doing so prematurely can risk the relationship of trust and confidence being severely eroded, as well as all of the off-the-record discussions and ‘without prejudice’ correspondence concerning the Settlement Agreement being raised in a formal grievance against your organisation.

Why do Employers Need Settlement Agreements?

Employers most commonly consider using Settlement Agreements when making redundancies or during periods of business reorganisation, although they can also be used when an employee is off sick or where there is a workplace dispute.

As an employer, it is imperative that any Settlement Agreements you use are properly drafted to allow you to terminate employment in a cost effective manner that significantly reduces the risks and doesn’t leave you open to unintended consequences. A poorly drafted Settlement Agreement could expose you to unnecessary costs and the risk of having claims brought against you in the Employment Tribunal.

When Might An Employer Use A Settlement Agreement?

Settlement Agreements are used by employers in a range of different situations when you have mutually agreed severance terms with an employee. The agreement, as well as any amounts paid, seek to provide a clean break that benefits both parties with the aim of avoiding your employee from taking you to an Employment Tribunal.

An employer may consider using a settlement agreement when dealing with employee work performance or other work related issues when there is a concern whether disciplinary action or the procedures available will achieve the required improvement within a reasonable period of time. Alternatively, if an employer is faced with having to make redundancies, a Settlement Agreement may be considered a quicker and more cost effective solution than having to go through a full redundancy procedure.

Settlement Agreements are not limited to employees leaving an organisation, and an employer may offer one at any stage of the employment relationship. Settlement Agreements can also be used to resolve a dispute with an existing employee and create a legally binding contract that protects the employer by preventing the employee from making a claim at the Employment Tribunal and ensures the details of the dispute and any settlement amount are confidential.

Employer Protection Through Settlement Agreements

The primary function of Settlement Agreements is to allow employers to terminate employment or resolve disputes with the peace of mind that an employee does not wish to bring any claims against them in a tribunal. In addition to this, they will almost always include clauses to also protect your business in relation to a number of workplace scenarios. These include preventing your employee from making disparaging remarks about your business, to reaffirming their post-termination covenants.

The post-termination restrictions or restrictive covenants that can be included or reaffirmed in a Settlement Agreement can cover a range of anti-competitive behaviour. This typically includes:

The length and duration of the restrictions outlined in the Settlement Agreement should be defined and reasonable.

Why Employers Choose Richard Nelson LLP For Settlement Agreement Advice

Richard Nelson’s employment law team is headed by partner Jayne Harrison, an experienced lawyer with considerable knowledge of employment matters that businesses may have to deal with. Our wider team consists of employment specialists across the UK, each of whom is well-placed to support your business with employment matters including the Settlement Agreement process from start to finish.

We are flexible with how you choose to work with us and we offer Settlement Agreement advice for employers as part of our bespoke employment law packages that can be tailored to fit with the practicalities of your business. We are proud to offer the following charging structures:

Insurance backed advice packages
Unlimited ongoing support for a fixed monthly or annual fee
A monthly payment contract for a defined number of hours (from one hour upwards) with unused hours which can be rolled over to the following months

Alternatively, we are also happy to do any work for employers regarding Settlement Agreements on an hourly rate basis.

Richard Nelson LLP’s employment solicitors will act as trusted partners to your business, ensuring that Settlement Agreements are correctly negotiated and drafted, so that you can focus on your work with the peace of mind that your business is protected against claims in the Employment Tribunal. We take the time to get to know our clients and work closely with them. This ensures we are able to offer clients practical and commercially sensitive advice, which is tailor-made to their needs.


Get in touch

For more information about the services we can provide and about how we can help you and your business, contact us.

Jayne Harrison, employment solicitor and head of employment law at Richard Nelson LLP

Jayne Harrison


Sara Mayhew

Consultant Solicitor

Lisa Townsend

Consultant Solicitor

Craig Hollingdrake

Consultant Solicitor

George Miller

Chartered Legal Executive

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What we do...

Our settlement agreement services for employers include;

  • Negotiate and draft Settlement Agreements

  • Assist with negotiating should the employee demand more favourable terms

  • Advise on legal measures you should choose if you are taken to an Employment Tribunal.

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