Settlement agreements are often used when an employment relationship is coming to an end - whether through redundancy, a negotiated exit, or a workplace dispute.
If you’re leaving your job and have been presented with a settlement agreement, it’s important to understand what it is, what it means and what you are agreeing to.
At Pre-Law, we provide clear, fixed-fee legal advice to help you understand the terms of your settlement agreement, protect your rights, and move forward.
Understanding Settlement Agreements
A settlement agreement (previously known as a compromise agreement) is a legally binding contract between you and your employer. It’s usually offered when your employment is coming to an end and sets out the agreed terms of your exit.
Most agreements include:
- A financial exit package (sometimes tax-free)
- A waiver of your right to bring legal claims
- Confidentiality clauses and terms around references
Because you're giving up important legal rights - including the right to bring a claim to an employment tribunal - you must get independent legal advice from a solicitor before signing. Without this, the agreement won’t be legally binding.
When Are Settlement Agreements Used?
Settlement agreements are commonly used:
- During redundancy processes
- As part of mutual exits or where working relationships have broken down
- Following disputes or grievances at work
- To avoid the time and cost of potential employment tribunal claims
Whether it’s a redundancy scenario or a negotiated exit package, a well-drafted settlement agreement helps both parties avoid lengthy disputes and draw a clear line under the employment relationship.
Do I Need a Solicitor for a Settlement Agreement?
Yes - it’s a legal requirement that you receive advice from a qualified solicitor (or authorised legal adviser) for the agreement to be valid. In most cases, your employer will pay for this advice or offer a contribution toward the cost.
At Pre-Law, we offer a clear, fixed-fee service to help you understand your options and protect your rights. We will:
- Review your settlement agreement in full
- Explain your rights and what you're being asked to sign — in plain English
- Help you negotiate a better deal, where appropriate
- Sign off your agreement to make it legally binding
We also offer remote appointments and flexible scheduling, so the process is handled smoothly and without unnecessary stress.
What Makes a Fair Exit Package?
What’s considered a fair exit package will depend on your individual circumstances - but it should reflect your contractual rights and your length of service. Typically, a fair offer might include:
- Pay for your full notice period
- Any outstanding holiday pay
- A tax-free ex-gratia payment
- Pension or bonus entitlements, where applicable
We’ll help you understand what’s reasonable in your situation - and if anything’s missing or unfair, we can support you in renegotiating the terms before you sign.
How Pre-Law Can Help
Whether you’re being made redundant, considering a severance package, or have been offered a settlement agreement -we’re here to support you.
We’ll explain your rights, review the terms, and, if necessary, help you negotiate the best outcome for your situation.
For more information, contact us on 01524 907100, email info@pre-law.co.uk or fill out our online enquiry form.
