Settlement Agreement Advice for Employees Leaving a Business


Settlement Agreement Advice for Employees Leaving a Business

If you’re being dismissed from your job by your employer, they may have asked you to sign a Settlement Agreement (sometimes referred to as a Compromise Agreement). This helps all parties to agree a way forward following your dismissal.

Our specialist team advises clients in different languages on a wide range of Employment Law matters. Call them on 0208 1111 911 or contact them through the website to discuss your circumstances with them.


What is a Settlement Agreement and why am I being asked to sign one?

A Settlement Agreement is a written agreement between the company and you as the employee, to conclude your employment. It is instigated by the employer, but you both have the right to negotiate the terms until you reach an agreement. You don’t have to sign the agreement until you’re happy with it.

It will typically include:

  • A breakdown of any severance pay you will receive including payment for any untaken annual leave you may have accrued.
  • Confirmation of your termination date and any requirement to attend work.
  • Company property that you need to return.
  • Agreement that the company will provide you with a reference – you may even be able to agree a specific wording before you sign the agreement.
  • A confidentiality and goodwill clause to prevent you from telling anyone details of the agreement, or spreading negative word of mouth about the company.

When issuing a settlement agreement to you, your employer should also pay for legal advice for you. By getting your own independent legal advice, from a solicitor of your choice, you can be sure that you know what you are signing. Once the agreement is signed, you won’t have the right to take any further action in respect of your dismissal (such as claiming Constructive Dismissal or applying for an Employment Tribunal) so it’s vital that you understand the agreement fully.


How does a Settlement Agreement benefit you?

The agreement allows you to draw a line under your departure and start to look for your next role, with clarity over your financial settlement and the receipt of a reference.


How do I get advice on Settlement Agreements?

If your employer has asked you to sign a Settlement Agreement and offered to pay for legal advice, we can represent you and ensure that you are clear on what you’re agreeing to. Call us on 0208 1111 911 or contact us through the website and we’ll discuss your circumstances with you.

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