How we use cookies

We use necessary cookies to make our site work. We'd also like to set optional analytics cookies to help us to improve it. We won't set optional cookies unless you enable them. Using this tool will set a cookie on your device to remember your preferences.

For more detailed information about the cookies we use, see our 'Cookies Page'.

Necessary cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytics cookies

We'd like to set Google Analytics cookies to help us to improve our website by collecting and reporting information on how you use it. For more information on these cookies please see our 'Cookies Page'. The cookies collect information in an anonymous form.

Select your preference:

Analytics cookies



Sat 13 Jan 2018


In July 2013, UK legislation around settlement agreements changed making it easier for employers to make settlement offers. As a result, we have seen a steady increase in the number of people contacting us about settlement agreements, particularly in the last year.

Formerly known as compromise agreements, a settlement agreement is a legally binding agreement that sets out the full terms of a settlement between an employer and an employee.

A settlement agreement is usually drafted when an employee is being made redundant, either on a voluntary or compulsory basis. However, they can also be offered to employees if an employer thinks he or she is performing poorly in their job or finds that they are guilty of misconduct. In addition, settlement agreements tend to be used when employers are offering to pay their employee more than the statutory minimum entitlement.

Each settlement agreement varies but typically, the agreement will contain:-

  • the claim (s) to be settled;
  • the payment the employee will receive and the relevant tax issues;
  • a confidentiality clause.

Legislation dictates that an employee must seek independent legal advice on the terms and effect of a settlement agreement. It is customary for the employer to pay for this, or at least make a significant contribution.

It is important to ensure you receive advice from an employment specialist. We can advise you on the terms of settlement offered by your employer, whether there are any hidden traps and whether you have any grounds for a claim against your employer – such as discrimination or unfair dismissal. We can examine both your contract of employment and your settlement agreement to ensure the latter reflects what has been agreed between you and your employer and to advise you on the legal effect of your settlement agreement.

Please contact Catherine Burgess, a solicitor at JPC Law on 020 7644 7283 for more information.

more news

Bookmark and Share