Protect your business against future claims with an effective settlement agreement

  • If you’re concerned that a departing employee could bring a claim against you in the future, you could offer an enhanced termination package within a settlement agreement where they renounce their right to make claims against the company in the future.
  • A settlement agreement will be invalid if it fails to fully comply with the relevant legislation, so you will need to seek expert legal advice to ensure the agreement is drafted correctly.
  • Our employment team has extensive experience of producing and negotiating settlement agreements, so we can take care of the process and put your mind at rest.

Are you concerned that an employee who is about to leave your business may have a possible claim against you? Would you like to seek to agree a financial sum on their termination to prevent them from bringing such a claim? Do you have an existing dispute with a current employee that needs to be solved?

Whether you are seeking to settle an existing dispute with an employee or ex-employee, considering dismissing an employee or you believe they may soon decide to leave your business, it is beneficial to consider whether they may have any claim against you, such as unfair dismissal, discrimination or unlawful deduction of wages. If you believe they may have such a claim, you might to consider agreeing an enhanced termination package with the employee and asking them to enter into a settlement agreement to renounce the claims. The employee will be required to get their own independent legal advice on the terms of the agreement.

What is a settlement agreement?

An employee has the right to make a claim to an employment tribunal or court and this right cannot be excluded unless the employee and employer have entered into a formal settlement agreement that fulfils strict statutory requirements. Settlement agreements can be used to end an employment relationship on agreed terms or to solve a dispute in an ongoing employment relationship. They usually involve a severance package for the employee.

Why would my business need a settlement agreement?

Once a valid settlement agreement has been signed by both parties, an employee will be unable to make an employment tribunal claim in relation to any type of claim listed in the agreement. In the absence of a settlement agreement, an ex-employee may be able to bring a claim against your business months or even years into the future.

The severance pay offered and any other terms cited within the agreement would be accepted by the employee in return for agreeing not to bring a future claim.

How much would a settlement agreement cost?

The fees for a settlement agreement depend on how complicated it is and how much negotiation is required for all parties agreeing to the terms. However, we will provide a full cost update throughout, so there are no surprises.

How we will help you

Due to the strict statutory requirements, it’s important you instruct a solicitor to ensure that the settlement agreement is legally compliant. If the agreement fails to comply with the legislation, the waiver within that agreement will be void for certain claims, meaning your ex-employee could still bring certain claims against the business.

Our team of specialist employment solicitors has extensive experience in drafting, advising on and negotiating the terms of settlement agreements. Our expertise and experience range from straightforward agreements to complex, contentious ones, meaning that we can advise any business in relation to any form of dismissal. Our in-depth knowledge means we can advise you on the most pragmatic and commercially sound way to dismiss staff, so you can focus on running your business.

We have offices in Southampton, London, Lymington, Guildford, Richmond and Woking. Contact us for specialist support.

If you’re an employee looking for advice in this area or expert settlement agreement solicitors to assist with your exit from an employment contract, we can also help.