Settlement Agreements

What are Settlement Agreements?

Sometimes, and for various reasons, employers want to end a particular employee’s employment.  A Settlement Agreement lets the employment be terminated on particular terms. These terms can be agreed between employer and employee.

What is the main purpose of a Settlement Agreement?

The main purpose of a Settlement Agreement is to:

  • Settle all issues between employer and employee
  • Stop employees bringing future claims against employers, in any court or tribunal, about things that happened during their employment

Why should employers use Settlement Agreement?

Advantages to the employer are:

  • Avoiding tribunal proceedings costs to settle any disputes
  • Knowing there will be no further issues to deal with for a particular employee

A Settlement Agreement can also deal with references.

When can employees be offered a Settlement Agreement?

Employees can be offered a Settlement Agreement before or after employment has been terminated.

Why offers should be made “without prejudice”

All Settlement Agreement offers should be made “without prejudice”. This means discussions between employer and employee will be off the record, subject to limited exceptions (such as the employer acting unreasonably or discriminatively).

Important matters to consider

The law requires a Settlement Agreement to be in a special format.  We can check that the Agreement is correct.  The law also requires that the employee receives advice from a solicitor (or other appropriate adviser) about the Agreement’s terms and effects.  By signing the Settlement Agreement the employee will give away his or her rights to bring claims against the employer.

Who pays for the legal fees?

Usually the employer agrees to pay a specific contribution to the employee's legal fees for seeing a solicitor to sign the Settlement Agreement.  

What service will Spratt Endicott provide?

We will:

  • Draft an appropriate agreement for your company's needs
  • Advise you on any suggested amendments that may be proposed by the employee's representative.
  • Act on your behalf in any negotiations that may be required.

Getting in touch

For further information on our Settlement Agreements service, please contact Carol Shaw on 01295 204140 or email