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Reasons for a Settlement Agreement

For an employer, a Settlement Agreement can provide a quick and stress free solution to a difficult employment situation. Settlement agreements can be used when an employer is:

  • Considering making an employee redundant
  • Anticipating dismissing an employee
  • Wanting to settle a dispute between itself and an employee – this could either be an internal grievance or a Court or Tribunal case
settlement agreements for employers

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Standard Terms

A well drafted settlement agreement should ideally set out all the details of the termination of the employment such as the payment terms, the tax treatment of the compensation payment, the providing of a reference, return of company property, continuance (or not) of confidentiality clauses and restrictive covenants after the employment has ended, warranties and outstanding holiday pay. Employers will also often ask that the employee provide an indemnity against any tax payable on the compensation sum.

Many Human Resources Departments provide departing employees with a short-list of firms of solicitors to go to for independent advice on compromise agreements. At Wainwright Timms LLP we are conscious that our professional duty is to the employee rather than the employer but, wherever possible, we endeavour to take a sensible approach so that matters can be concluded quickly and efficiently to the benefit of all parties.


Most compromise agreements include a clause in which the employer agrees to contribute a sum towards the employee’s fees in taking legal advice upon the agreement. Where an agreement has been reached “in principle”, we are almost always able to provide the necessary advice for the fee suggested by the employer. This means that the employee will not have to pay any additional fees. However, should further advice and negotiation be required, we endeavour to take a commercial approach in order to provide value for money.


How we can help

We have over twenty years of experience in advising large and small employers. If you are an employer and need any advice on Settlement Agreements or have any other concerns regarding employment law, please contact us today.

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If need be, we can see clients outside normal office hours and at other locations. In extreme cases, say where a company takeover has concluded after midnight, we have been known to drive up to the City of London at that hour, in order to provide independent legal advice to departing employees receiving suitable severance packages. In some circumstances, we can see employees at their workplace or in or near their homes.