Do you need an expert team to help you with the terms on a settlement agreement?

Solicitors Specialising in Settlement Agreements

A settlement agreement (formally known as a compromise agreement) is a legally binding contract that’s made between an employer and employee. It’s normally used in connection with ending an employment contract on pre-defined and agreed terms. Usually, the employee will receive a payment in exchange for agreeing not to bring specific claims against their employer. The employer would generally make a contribution to the employee’s legal costs. However, it could also be used in the scenario where an employment relationship is on-going, but the 2 parties want to settle a dispute between each other.

If you’ve been offered a settlement agreement, then it’s a legal requirement to seek specialist advice from a settlement agreement solicitor before you sign the contract. This is a complex area of employment law that our team are highly skilled in. We regularly advise a diverse range of clients from public and private sector workers to shareholders and directors. In certain circumstances, we’re instructed to not only advise our clients but also negotiate higher settlement sums on their behalf.

The team here at BTMK are highly experienced in providing unparalleled advice and representation across a range of complex employment law disputes including settlement claims. We fully understand that raising an issue with your employer can be daunting, especially if you work for a large business. But, our goal is to help you by using our professional knowledge and negotiation skills to help you come to an agreement which is beneficial to you.

BTMK have a team of settlement agreement solicitors in Essex and we have offices across the region and London. If you feel that you need any legal advice relating to a settlement agreement, please contact us by calling 03300 585 222 or by sending an email to [email protected].

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Why Instruct Our Settlement Agreement Solicitors?

A settlement agreement will not be legally binding unless the employee receives independent legal advice.

Our highly experienced settlement agreement solicitors will:

It is crucial that you act quickly and take strategic advice as early as possible if you would like to obtain a settlement agreement or have already been offered one.


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What is a protected conversation?

The purpose of a protected conversation is to allow an employer to speak freely with an employee. These conversations normally have the purpose of determining whether an employee would be interested in agreeing to certain terms on which their employment comes to an end. The reason that it’s called a “protected conversation” is that whatever is discussed must be kept completely confidential. Additionally, it cannot be used in any future tribunal claim.

What is a COT3 agreement?

A COT3 agreement is an alternative to a settlement agreement and is negotiated through the Advisory Conciliation and Arbitration Service (ACAS). However, they’re limited when it comes to their scope, which is why employers prefer to use settlement agreements.

Do I have to accept a settlement agreement?

No. Accepting a settlement agreement is entirely voluntary and your choice. However, a settlement agreement can be withdrawn at any time by your employer until you’ve both signed it. This is why it’s so important to take your time and read through it thoroughly.

What does "without prejudice" mean?

This means that a draft agreement is off the record and cannot be presented to a court as evidence of admissions against an employer or employer. The concept of “without prejudice” is based on the principle that it’s helpful for both parties to speak openly knowing that what they say to settle the matter will not be used against them should negotiations fall through.

What happens if I fail to comply with my obligations?

If you fail to comply with the obligations set out in your settlement agreement, then you are in breach of contract and can be taken to court. You could be ordered to comply with the terms set out in the settlement agreement and/or pay compensation to your ex-employer.

Is a settlement agreement the same as redundancy?

Settlement agreements can be used in a redundancy situation. But they’re not the same, so it’s important to understand the difference.  A settlement agreement will document that an employee agrees to waive their rights when it comes to taking legal action against their employer. However, redundancy does not waive employee rights.

When it comes to redundancy, an employee could sign a settlement agreement rather than taking a redundancy package because they could get more money. But, by signing one means they would give up their legal right to make a claim against their employer for unfair dismissal.

Are settlement agreements tax-free?

The amount of compensation that an employee may receive as part of their settlement agreement will determine whether they pay any tax or not. However, the first £30,000 is typically tax-free. Any payments that are made for wages or holiday pay will be taxable under the employment contract as per usual.

Can I get a reference with a settlement agreement?

An employer doesn’t have any legal obligation to provide a reference. And can refuse to provide a reference if they want to. However, it’s common practice include a reference as part of an agreed settlement agreement.

How long do I have to decide whether I want to accept a settlement agreement?

Your employer should give you a minimum of 10 days to decide whether you wish to accept a settlement agreement. Any demands for you to sign the contract immediately could be seen to be improper behaviour and invalidate the terms included in the agreement.

Fiona McAnaw

Litigation & Dispute Resolution , Employment | BTMK Solicitors

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