Settlement Agreements (employer guidance)

Looking to exit an employee smoothly and protect your business from future claims? A settlement agreement – formerly known as a compromise agreement – is a legally binding contract that allows an employer and employee to part ways on agreed terms. In a settlement agreement, the employee typically receives a financial payment (often a severance or compensation sum) and possibly other benefits (like an agreed reference), in exchange for agreeing not to pursue any legal claims against you. This provides a clean break for both parties and protection for you.

Settlement agreements are voluntary and reached through negotiation, but once signed and legally advised on, they become final and enforceable. For employers, using a settlement agreement can avoid the time, cost and stress of an employment tribunal, while ensuring confidentiality and minimal disruption to your business. At Springhouse Solicitors, our expert employment law team has extensive experience drafting, negotiating, and enforcing settlement agreements for employers. We offer clear, pragmatic advice in plain English to make the process as smooth as possible (employment laws of England and Wales apply).

What is a settlement agreement?

A settlement agreement is a written legal agreement between an employer and an employee (or ex-employee) that formally settles any employment-related claims and usually ends the employment relationship. In essence, it’s an agreed “exit package”: the employee accepts a specified payment and other terms, and in return waives their rights to bring certain legal claims (such as unfair dismissal or discrimination) against you . Settlement agreements can also sometimes be used without ending employment – for example, to resolve a specific dispute like a bonus disagreement – but most often they coincide with the employee’s departure.

Key legal requirements: To be legally valid, a settlement agreement must meet certain conditions under the laws of England and Wales. It must be in writing and relate to particular complaint(s) or proceedings (it can’t just broadly cover “all claims” without specifics). The employee must have independent legal advice on the agreement’s terms for the waiver of claims to be effective – typically from a solicitor – and the agreement must name the adviser (who must have appropriate insurance and be independent of/not advising your business). It’s customary for you to contribute towards the employee’s legal fees for this advice to ensure the employee signs and to ensure the agreement is binding. Once these conditions are met and the agreement is signed by both parties (and the employee’s legal adviser signs a certificate), the settlement agreement becomes a legally binding contract that settles the matters covered.

Plain English: In simple terms, a settlement agreement is a way to draw a line under any disputes. The employee gets a negotiated sum of money (and possibly other assurances), and you get the certainty that there won’t be an employment tribunal claim in future over those issues. It’s a mutual compromise – neither side admits fault, but both agree to move on. (Settlement agreements were called “compromise agreements” before 2013, so you might hear that term – they mean the same thing.)

Why and when do employers use settlement agreements?

• Employers use settlement agreements as a pragmatic solution in a variety of situations. If you’re facing a sensitive or contentious employment situation, a settlement agreement can be an effective tool to resolve it quickly and confidentially. Common scenarios include:
• Workplace dispute or grievance: If an employee has raised a serious grievance (e.g. alleging discrimination or harassment) or there’s an ongoing dispute, a settlement agreement can avoid protracted conflict. The agreement allows a clean break – the issue is settled privately, and the employee leaves with compensation while agreeing not to pursue legal action.
• Poor performance or misconduct: Perhaps you have an underperforming employee or a conduct issue. Rather than going through a lengthy performance management or disciplinary process, you might prefer to offer an agreed exit. A settlement agreement lets the employee depart with dignity (often labeled as a “mutual agreement”) and saves management time. It also protects you, because the employee waives any potential claims (for example, they can’t later claim unfair dismissal if they’ve signed the agreement).
• Redundancy or reorganisation: Settlement agreements are frequently used in redundancy situations or restructures, especially for senior staff or high-risk cases. You might offer an enhanced redundancy package through a settlement agreement, above the statutory minimum, to encourage the employee’s agreement. In return, you get the assurance that the redundant employee won’t bring claims (such as unfair dismissal or unfair selection for redundancy). This can speed up the redundancy process and provide certainty for both sides.
• Protecting business interests: When you need to ensure confidentiality or prevent competitive harm, a settlement agreement can help. For example, if a key employee is leaving, the agreement can include clauses to safeguard your business – such as confidentiality and non-disparagement clauses (so they cannot bad-mouth the business or its staff) and reaffirming any restrictive covenants (to stop them poaching clients or staff) . In cases of sensitive terminations, keeping the details private via an agreement can be crucial for your reputation, subject to the limitations around non-disclosure agreements.
• Avoiding legal risks and costs: Even if you believe you have fair grounds to dismiss someone, there’s always a risk they could bring a claim. Employment tribunal proceedings are time-consuming, costly, and unpredictable. A settlement agreement effectively buys certainty – you may pay a sum now, but you avoid legal fees and the risk of a large tribunal award (not to mention management time, inconvenience and ongoing salary). It allows you to focus on running your business without a looming dispute or ongoing issues.

In summary, employers tend to use settlement agreements when they want to handle an exit on agreed terms and minimise risk. If the employment relationship has broken down or there’s a potential claim on the horizon, a settlement agreement can be the fastest and surest way to resolve matters amicably. It’s important, however, to use them in appropriate circumstances – our solicitors can advise if a settlement agreement is the best approach for your situation, including, what to offer and when. Sometimes, good performance management or following a fair process may resolve an issue without needing an agreement.

Timing considerations: When should you offer a settlement agreement? It’s generally best to wait until you have a clear reason or business case for the termination, and then act before the situation escalates. You can initiate a protected conversation (an off-the-record discussion under the laws of England and Wales) to propose a settlement agreement even if no formal dispute has started, but note there are limitations with such and what claims they protect against. Many employers present the offer at the start of a disciplinary or redundancy process, or when an irreconcilable issue is identified – this can shorten the process. Always allow the employee adequate time to consider the offer; the ACAS Code of Practice recommends giving an employee at least 10 calendar days to review a settlement agreement and obtain legal advice before signing. Rushing or pressuring an employee could invalidate the protection of the discussion or sour the negotiation. We can guide you on the proper, fair way to propose a settlement agreement that complies with the legal guidelines and puts you in the best position if the offer is refused.

What should a settlement agreement include?

• Each settlement agreement should be tailored to the specific employee and situation – there is no truly “one-size-fits-all” template. However, most settlement agreements for employers will contain several key terms. Below are the typical clauses (in plain English) that a well-drafted settlement agreement will include:
• Termination details & notice period: Clarification of the employee’s end date and whether or not they will work their notice period. The agreement will state if the employee is working their notice period or if you’re paying in lieu of notice (so they leave immediately). It may also cover any garden leave arrangements or the right for you to impose it; all of which also impacts any remaining holiday entitlement (e.g. you will pay for untaken holiday, or you will require the employee to take their holiday).
• Settlement payment: The severance payment or compensation amount the employer will pay, and any other payments due to the employee. This section lists all sums the employee will receive, such as outstanding salary, bonus or commission, accrued holiday pay, statutory redundancy pay (if applicable), and the ex-gratia settlement sum for agreeing to the terms. It will also specify the timing of payment (e.g. within 28 days of signing) and any conditions (such as returning company property).
• Waiver of claims: A crucial clause where the employee agrees to waive (give up) any legal claims they have or may have in the future arising out of their employment or its termination. This typically covers claims for unfair dismissal, breach of contract, discrimination, redundancy pay, etc. (the agreement will usually list the specific statutes or types of claims to ensure it’s comprehensive). In simple terms, the employee is signing away their right to sue you on those matters. Exception: Certain rights cannot be waived even in a settlement (for example, personal injury claims that the employee isn’t yet aware of, or their accrued pension rights) – the agreement will carve these out so these narrow potential claims remain untouched.
• Confidentiality and non-disparagement: Almost all settlement agreements include a confidentiality clause. This requires the employee (and often you too) to keep the terms and sometimes even the existence of the agreement confidential. In practice, that means the employee should not disclose the settlement amount or circumstances of their departure to others (with usual limited exceptions such as immediate family or legal/tax advisers). Often a related non-disparagement clause is included, which means both parties agree not to make any derogatory or negative remarks about each other. These clauses protect your business’s reputation and prevent sensitive issues from being broadcast. (For instance, you wouldn’t want a departing employee telling colleagues they got a big payout, as it could encourage more “pay-off” expectations.)
• Reference letter: Frequently, the agreement will set out an agreed basic reference that you, as the employer, will provide to future employers of the departing employee. The wording of the reference is usually appended to the agreement, or a clause will state that a neutral reference confirming job title and dates will be given. This gives the employee peace of mind about their future job prospects, and it ensures everyone is clear on what will be said – avoiding disputes later about references.
• Restrictive covenants: If the employee had contractual post-termination restrictions (like a non-compete and/or non-solicitation of clients or staff), the settlement agreement can reaffirm those existing covenants. You might be able to introduce new ones in some cases, but this can be difficult/costly of there are no existing valid restrictions in place. For example, if you’re concerned about the employee joining a competitor or taking clients, you might include a clause that they agree to certain restrictions for a defined period (or remind them that their contract’s restrictions still apply). It’s important these clauses are reasonable in scope and duration; overly broad restrictions will not be enforceable, so we draft them carefully.
• Employee warranties: The employee is usually asked to confirm certain statements are true – these are called warranties. A common warranty is that they haven’t already secured another job or contract that they haven’t told you about, which matters if you’re compensating them for loss of employment. If they have another job, you will want to know, as this will impact the amount of compensation you need to pay. They may also warrant that they have not committed any serious wrongdoing that would justify immediate dismissal (like fraud or gross misconduct) and that they haven’t concealed any such issues. These warranties give you, the employer, additional protection; if a warranty later proves false, you could potentially reclaim the settlement money or treat the agreement as breached and recover your loss.
• Legal fees contribution: Since the employee must get independent legal advice you, as the employer, will usually agree to contribute a fixed amount towards the employee’s solicitor fees for reviewing and signing the settlement agreement. This is usually £500 (plus VAT). Including this not only encourages the employee to accept the offer (as they won’t be out of pocket for the advice) but also helps ensure the agreement is legally binding (because the employee will indeed get the required advice). The agreement will state the specific contribution amount and that it will be paid directly to the adviser upon proof of invoice.
• Tax indemnity: Tax treatment of termination payments can be tricky (more on tax below). A well-drafted agreement usually contains a tax indemnity clause. This means if HMRC later decides that additional tax is owed on the payment, the employee will be responsible for paying that tax (or will reimburse you for any tax you have to pay on the employee’s behalf). In effect, the employee agrees to indemnify (protect) you against any unexpected tax bills on the settlement monies. This clause is there so that you, as the employer, aren’t left footing a tax bill that was not anticipated if, for example, HMRC determines some of the payment was taxable after all.
• No admission of liability: Typically, the agreement will state that by signing it, you are not admitting any wrongdoing. This is a standard clause to ensure that the settlement is seen purely as a commercial resolution, not an admission that you did something wrong. It protects your position, especially if the dispute involved allegations against the company.
• Every settlement agreement should be bespoke. Our solicitors draft these agreements to fit the precise circumstances – covering all the necessary points above in plain language and adding any other clauses needed for your situation and protection. We also ensure that the agreement meets the latest legal requirements and includes all required wording (such as references to the relevant legislation) so that it is effective and enforceable.

Are settlement agreement payments taxable?

• Termination payments in the UK can have complex tax rules. In general, payments made under a settlement agreement can be split into taxable and tax-free elements. Here’s an overview (but note we are not tax experts or advisers – specialist advice should be taken):
• Normal earnings (taxable): Any part of the settlement that represents ordinary earnings or salary must have tax and National Insurance (NI) deducted as usual. This includes things like unpaid salary, outstanding holiday pay, bonuses, or a payment in lieu of notice (PILON). Essentially, if you would have paid the amount as part of employment anyway, it’s taxable like normal wages. (Since 2018, even if the contract didn’t have a PILON clause, UK legislation requires tax on an equivalent notice period payment – so either way, notice pay is taxable.)
• Ex-gratia compensation (tax-free up to £30,000): Genuine compensation for loss of employment – often the settlement compensation sum – can be paid tax-free up to £30,000 under UK tax law. This tax-free allowance typically covers statutory redundancy payments and any portion of the payment that is ex gratia (not legally required). For example, an extra sum given as compensation for agreeing not to claim unfair dismissal can usually be paid without income tax or NI deductions on the first £30k. Any amount above £30,000 is taxable – the excess will incur income tax (and employer NI contributions).
• Specific taxable elements: Certain payments made in a settlement are likely to be taxable regardless of amount. For instance, any payment allocated to restrictive covenants or an enhanced confidentiality clause (if you pay the employee extra to sign, say, a non-compete or gag clause, but note these may nto be enforceable) is treated as taxable earnings.
• Payments to third parties:  If you pay third parties, such as for outplacement services or payment made directly to the employee’s solicitor for their legal fees these can usually be paid without income tax.

In practice, we clearly distinguish the portion that is notice pay (taxable) and the portion that is compensation (tax-free up to £30k). We also include the tax indemnity (as mentioned above) to help protect you from any surprises. It’s wise to get specific tax advice if the sums are large. Always remember that HMRC ultimately decides on tax status, and we are not tax experts, but specialist advice can be sought where needed.

Note: The £30,000 tax-free cap is a cumulative limit for the termination, and it hasn’t changed in recent years. If an employee has already received other termination payments from you in the same tax year, those count towards the cap. Also, the employer must still pay employer’s NI contributions on any amount over £30,000.

Employer FAQs on Settlement Agreements

Below we address some frequently asked questions employers have about settlement agreements. If you have other questions or need specific advice, our solicitors are happy to help.

When should I offer a settlement agreement to an employee?

• Knowing the right moment to propose a settlement agreement is important. You should consider offering one when a situation has arisen that would otherwise likely lead to a dispute or a termination, and both parties might prefer an amicable, immediate resolution. Typical moments include:
• Redundancy consultations: If you’re planning redundancies, especially with enhanced packages, you should introduce a settlement agreement at the beginning of consultation, offering above-standard payouts if a settlement agreement is signed. This can expedite the termination avoiding consultation and ensure no claims later.
• During a dispute or grievance: After an employee raises a formal grievance or when there’s a breakdown in the employment relationship, an employer can propose a settlement to avoid the issue escalating. Often, once positions are clear, you can have an off the record/protected conversation to see if the employee is open to an exit on agreed terms.
• Performance or disciplinary situations: Perhaps you’re in the middle of a performance improvement plan or a misconduct investigation, and it’s evident the employee is not working out. You might decide to shortcut the process by offering a settlement agreement instead of going through lengthy dismissal procedures. However, be cautious – if you offer too early or without any context, the employee may be taken by surprise and think they are in a strong position. It can sometimes be wise to follow some procedure (even if only initially) to demonstrate the issue, and then offer the agreement as an alternative route. This way the employee sees the writing on the wall but has a chance to choose an exit package.
• After a without prejudice discussion: In some cases, the employee might initiate without prejudice talks (or a “protected conversation” under s.111A Employment Rights Act) about parting ways. If those discussions indicate mutual interest, that’s the time to negotiate and draft a settlement agreement with the terms discussed.

In essence, offer a settlement agreement when you’re prepared to let the employee go and are willing to pay for a clean break, and when the alternative would be a costly, lengthy or risky process. Always handle the offer tactfully. Ensure the discussion is confidential (so it can’t be used as evidence later if no deal is reached) and non-threatening. Don’t say things like “Agree to this or you’ll be fired” in a way that could be deemed improper pressure Instead, frame it as an option for the employee to consider. We often help employers plan how to present the offer in a sensitive, legally safe manner. Remember to give the employee a reasonable deadline (10 days minimum) and indicate that it’s their choice (they can take legal advice and decide). This approach makes it more likely they will accept, since they don’t feel coerced.

How much should I pay in a settlement agreement?

• There is no fixed formula for the payout in a settlement agreement – the amount is negotiated based on the circumstances. However, putting forward a reasonable offer is key, as an unrealistically low offer may insult the employee and derail negotiations permanently. When deciding how much to offer, consider factors such as:
• Statutory or contractual entitlements: At minimum, you’ll likely be paying what the employee is already entitled to (notice pay, any accrued holiday, statutory redundancy pay if applicable, bonus due, etc.). These are the baseline.
• Length of service: Employees with long service might expect a higher payment, especially if they’ve dedicated many years to the business.
• The strength of any legal claims: Try to evaluate how much risk the employee could pose if they went to tribunal. For example, if they might successfully claim unfair dismissal or discrimination, what could an award cost you (including legal fees and management time)? If your legal position to dismiss is weak, you may need to offer more to make it attractive. On the other hand, if a potential claim is on shaky ground, you might negotiate a lower sum.
• Employee’s salary and benefits: Higher earners or those with valuable benefits (company car, private health, etc.) often command bigger settlements, partly because their potential claims (like loss of earnings) would be higher.
• How long it might take them to find a new job: This often influences negotiations – for instance, an employee who is likely to secure a new role quickly might accept less, whereas someone in a specialised role or a tough job market might insist on more compensation to cover a longer job hunt. 
• Precedents and company practices: Have you given settlement agreements to others in similar roles or situations? Employees talk, and if it’s known that a colleague got, say, 6 months’ pay, another employee might expect similar if the situation is analogous.
• Avoiding legal costs and publicity: Consider the legal fees you’d spend if the case went to tribunal, and the potential reputational harm a public dispute could cause. Many employers will factor in the saved legal expenses and offer some of that as part of the settlement sum, since both sides avoid going down a litigious route.

Ultimately, a “reasonable” settlement figure is one that the employee’s solicitor can tell them is fair given their prospects of winning a claim and the compensation they might get in tribunal, weighed against the benefit of an immediate payout. As a very rough guide, some employers start around the equivalent of a few months’ salary (e.g. 3–6 months’ pay), then adjust up or down based on the above factors – but it truly varies case by case. We will advise you on what is an appropriate offer in your specific situation, balancing generosity to encourage agreement with not overpaying. Our goal is to help you strike a deal that the employee will accept and that you feel is cost-effective for the business. Remember, you can also negotiate – if the employee comes back asking for more, we can handle those discussions to reach a middle ground.

Can I reuse a settlement agreement template?

• It might be tempting to pull out a previous settlement agreement you used and just change the names and amounts – but reusing a template without careful review is risky. While many settlement agreements follow a similar structure, the details matter and must be customised to each case. Here are a few reasons you shouldn’t simply reuse an old agreement:
• Different circumstances require different clauses: The content of the agreement should reflect the context. For example, an agreement for a redundancy situation will be worded differently than one for a performance-related exit. One employee might need a reference letter clause; another might not. One might be getting a garden leave arrangement, so you need a clause for that; another might be leaving immediately. A generic template may leave out important provisions relevant to the new case, and often names and job titles get missed, which can cause GDPR issues.
• Contractual differences: Employees have different contracts and entitlements. An agreement should be checked against the individual’s contract. Is there a PILON clause in their contract? Do they have particular bonus schemes or stock options that need addressing? Do they have restrictive covenants that need protecting? Reusing a template from someone with a different contract could mean you miss or mis-handle something crucial.
• Law and best practice evolve: Employment law changes over time, and so do recommended best practices (like those in the ACAS Code). An agreement drafted even a couple of years ago might be out of date in terms of legal references or required language. For example, the waiver clause needs to reference the current legislation and specific claims – if the law has updated or if new types of claims (like references to whistleblowing or discrimination laws) aren’t properly covered, the waiver might not protect you fully. Non-disclosure agreements require specific wording to be enforceable, so it’s always safer to have an up-to-date draft.
• Tailoring = better outcomes: A tailored agreement can actually save money and prevent disputes. The time it takes to review and adapt an old/reused template could outweigh the cost of having a new one drafted – and a poorly adapted agreement might leave loopholes. Issues such as confidentiality specifics, return of property, post-termination restrictions, or even an announcement to staff about the person’s departure should be considered each time. If you “copy-paste”, you might accidentally leave in clauses that don’t apply or omit ones that do.

In summary, while you can start from a precedent, you should always have each settlement agreement reviewed (or drafted) by an employment law solicitor for the current situation. This ensures nothing is missed and the agreement is enforceable. Our team can turn around bespoke settlement agreements quickly, so you’re not stuck relying on an old document. It’s a worthwhile step to protect your business and make sure the settlement agreement does exactly what you need it to do in each case.

Do I have to pay the employee’s legal fees for the settlement agreement?

It’s standard practice for you, as the employer, to contribute towards the employee’s legal fees when offering a settlement agreement, although the amount is usually capped and is a matter of negotiation. Technically, there’s no absolute legal obligation for you to pay their solicitor – however, since the employee must get independent legal advice for the agreement to be valid, if you don’t offer to cover that cost (or at least most of it), the employee may be less inclined to sign. They won’t want to end up out of pocket just to receive their settlement.

Typically, employers offer a fixed contribution in the agreement, often in the range of  £500 + VAT, depending on the complexity. This usually covers a basic review of the document by the employee’s solicitor. The agreement will specify that payment is contingent on the employee providing an invoice from their adviser addressed to the employee and marked payable by you for you to pay the solicitor directly (and only if the agreement is signed). If the employee negotiates changes or seeks additional advice beyond the basic review, often they cover any extra fees themselves or try to negotiate a higher contribution.

From your perspective, paying a few hundred pounds for their legal advice is well worth it to ensure the settlement is binding. Also, remember that the portion of legal fees you pay directly to the adviser is not treated as a benefit to the employee, so it’s usually tax-free and does not count toward the £30k cap. This is a minor cost relative to the benefit of a clean break. We can advise on a reasonable contribution figure for your situation. In some cases, if negotiations become drawn out or complex, the employee’s solicitor might ask for an increased contribution – we’ll discuss with you if that arises. But generally, offering to pay their advice costs is a normal and expected part of the settlement agreement process.

What if an employee refuses to sign the settlement agreement?

Settlement agreements are voluntary – an employee can choose not to sign, or they might push back with changes. If an employee refuses the offer (or you refuse their counter-offer), you should be prepared to proceed with the alternative course of action (e.g. continuing with a performance management, redundancy process, or disciplinary procedure). Do not retaliate or threaten the employee for saying no. Simply because they reject the settlement doesn’t give grounds for dismissal in itself. Instead, you would follow through with your normal process fairly.

In many cases, a refusal is actually an opening to negotiation. The employee might refuse initially because the payment is too low, or they’re unhappy with a term (like an overly broad restrictive covenant or no reference provided). There may be a bit of “back-and-forth” through solicitors. We are skilled negotiators and often can reach a revised deal that both sides accept – for instance, modestly increasing the payment or tweaking the wording of a clause. We’ll discuss strategy with you if the employee, or their solicitor, comes back with demands.

If despite efforts no agreement is reached, you will have to manage the situation as if no offer was made. Make sure any without prejudice conversations and letters are kept confidential so they can’t be used against you later (except in limited circumstances like discrimination cases). Proceed with the fair procedure (e.g. disciplinary or redundancy) and be sure you have documented your reasons for any eventual dismissal. The protection of an off the record conversation (e.g. a “protected conversation”) means the employee generally can’t mention your offer of a settlement in a claim, so long as the protection applies and is maintained (e.g. you haven’t engaged in “improper behaviour” when making the offer). We will guide you on securing and  maintaining that protection.

In short, if an employee doesn’t sign, you should calmly continue with managing the employment issue in the normal legal way. Often the possibility of that (for example, the prospect of a capability hearing or a redundancy with only statutory pay) will prompt the employee to reconsider the settlement. Most settlement agreements are ultimately agreed, because they provide benefits to both sides. Our role is to help ensure that happens smoothly, but we’re also prepared to advise you on next steps if a deal truly cannot be reached.

How are settlement agreements enforced?

• Once a settlement agreement is signed by all parties and the employee has received independent advice, it becomes a legally binding contract. If either side breaches its terms, the other side can take legal action for breach of contract. For employers, the most common concern is an employee breaching confidentiality or post-termination restrictions, or perhaps disparaging the company despite a non-disparagement clause. If that happens, you have a few options:
• Remedies for breach: You could potentially sue the ex-employee for damages (for example, if their breach of confidentiality caused you financial loss). In many agreements, we include a clause that any breach by the employee of key terms (confidentiality, covenants, etc.) may require them to repay some or all of the settlement money – this creates a strong deterrent against breach. Another remedy is seeking an injunction from the court to stop ongoing or threatened breaches (like to prevent the misuse of confidential information or removal of clients).
• Settlement sum conditions: If you haven’t paid the settlement sum in full yet (say, it’s payable later or in instalments), and you discover a breach or a misrepresentation by the employee, you may be able to withhold payment under the terms of the agreement. We make sure to structure payment timing and conditions in a way that gives you leverage until everything is in order (for instance, requiring return of company property or compliance with certain obligations before payment).
• Employee claims after signing: In the reverse scenario, what if an employee signs a settlement, takes the money, and then still tries to file a claim? Generally, the tribunal will dismiss the claim if it falls under the claims they validly waived in the agreement. We ensure the waiver clause is comprehensive, which is your best defense. If they bring a claim about something genuinely outside the scope (or an excluded claim, like an unknown personal injury), we’d address that on a case-by-case basis. But a properly drafted settlement agreement should prevent the vast majority of post-termination litigation. In rare cases, an employee might allege they signed under duress or without understanding – those challenges are uncommon and usually not successful if the legal advice certificate is in place. We would help defend the integrity of the agreement.

Springhouse can assist not only in drafting the agreement but also if enforcement issues arise later. If you believe a former employee has breached their settlement agreement, contact us for advice on the most practical course of action. Often, a firm solicitor’s letter reminding them of their obligations (and the repayments or damages that could ensue) is enough to resolve the issue.

Expert support with Settlement Agreements for employers

• At Springhouse Solicitors, we pride ourselves on being specialists in employment law – settlement agreements are one of our core areas of expertise. Our team has an in-depth understanding of the legal intricacies and best practices, having advised hundreds of employers on using settlement agreements effectively. We can help you with every aspect of the process:
• Drafting tailor-made agreements: We prepare settlement agreements crafted to your needs, ensuring every clause is relevant and enforceable. By addressing the specific circumstances (whether it’s a redundancy, a dismissal, or a dispute) and your business requirements (for confidentiality, protection of clients, etc.), we produce agreements that robustly protect your interests. Importantly, we write in clear, plain English so that everyone can understand the terms – no unnecessary legalese.
• Negotiating the terms: If you’re in discussions with an employee or their solicitor about a settlement, our solicitors are seasoned negotiators. We can either coach you through making the initial offer and negotiating directly, or handle the negotiations on your behalf. Our goal is to secure the best possible deal for you – whether that’s minimising the payout, securing strong protective clauses, or simply getting a quick agreement signed. We’ll use our experience to anticipate the employee’s likely demands and prepare a strategy to address them.
• Advice on strategy and process: Not sure how to broach the subject of a settlement with your employee? Worried about the legal risks in offering one? We provide strategic advice on the proper procedure – for instance, how and when to initiate an off the record (e.g. protected conversation), what to document (and what not to put in writing) during negotiations, and how to handle things if the employee declines. Because we focus exclusively on employment law, we’re up to date with the ACAS Codes and all relevant guidelines, so we’ll make sure you approach settlements in a compliant way.
• Enforcement and post-agreement issues: Even after a settlement is signed, you might need support. In the uncommon event of a breach by the employee, we are here to enforce your rights under the agreement. Conversely, if an employee tries to renege or raise a claim despite the agreement, we’ll stand by you to resolve it swiftly. Essentially, we don’t just draft and walk away; we’re your partners through the whole lifecycle of the settlement agreement.

We expert yet approachable. We know that legal jargon can be intimidating, so we explain your options and the settlement terms in straightforward language. You’ll understand exactly what you’re agreeing to and why it’s there. We also move fast – often settlements need to be turned around quickly to address a live issue. With offices across London and the South (and remote consultation available), we can act promptly to meet your timelines.

If you’re an employer considering a settlement agreement – whether you want one drafted, need guidance on offering it, or require help negotiating terms – contact Springhouse Solicitors today. Our friendly, knowledgeable employment law solicitors will discuss your situation confidentially and outline your options. We offer a fixed-fee consultation to get the process started. Call us on 0800 915 7777 or get in touch online to ensure your settlement agreements are handled with the utmost care and expertise. Let us help you achieve a fair, legally sound resolution that protects your business.

(All advice is provided in accordance with the laws of England and Wales. Springhouse Solicitors (part of Kilgannon & Partners) has offices in London, Chichester, Croydon, Twickenham, Winchester and Woking – we’re ready to assist wherever you are.)