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There are occasions where an employer and their employee simply cannot resolve their differences, but it may be that the circumstances don’t warrant a dismissal or any other disciplinary action. A Settlement Agreement is a legally binding contract to end an employment relationship on agreed terms.

At Clifton Ingram, our employment department can help you ensure your Settlement Agreement is properly drafted and that it is followed appropriately so that neither party breaches their obligations and we can achieve a ‘clean break’ to the relationship.

You may decide to offer an employee a Settlement Agreement (formally known as a Compromise Agreement) in a number of situations. For example, if your relationship with an employee has irretrievably broken down, in redundancy situations where you want to make an enhanced payment to the employee or where you have come to a mutual agreement to end the employment.

A Settlement Agreement can be a valuable document for an employer, particularly where the employee is aggrieved or upset. It draws a line under any issues surrounding the employment. There are a number of key considerations to bear in mind about Settlement Agreements:

  • They waive an individual’s rights to make a claim covered by the agreement to a Tribunal or Court;
  • They must be in writing;
  • They involve payment to the employee usually and often include a reference;
  • They are voluntary; and
  • They can be offered at any stage of an employment relationship.

Payments under a Settlement Agreement can usually be paid tax free up to a total of £30,000.

A Settlement Agreement has to follow a certain form in order to comply with the relevant legislation. The employment department at Clifton Ingram can assist you with every step of drafting an effective Settlement Agreement to ensure it is compliant. We can advise you on whether a Settlement Agreement is appropriate and on the level of compensation to offer. We can also prepare the Settlement Agreement for you and guide you through the whole process as painlessly as possible.

If you are an employee, we can advise you on the Settlement Agreement in order for it to be binding. You should consult us prior to entering into the Agreement to ensure that everything is being done fairly.

For a Settlement Agreement to be binding, there are a number of conditions that need to be met:

  • The Agreement must be in writing;
  • The Agreement must relate to a particular complaint or proceedings;
  • The employee must have received advice;
  • The Agreement must identify the employee’s legal adviser; and
  • The Agreement must state that the applicable statutory conditions regulating it have been met.

“The ‘always proactive’ Clifton Ingram LLP predominantly acts for employers, in both contentious and non-contentious matters and advises on discrimination claims, redundancy issues and TUPE regulations. Alison Gair ‘maintains superb subject knowledge ‘and ‘has a great ability to convey complex content into comprehensible information’. Robert Cherry advises on workplace policies, grievance procedures and redundancies.”


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Contact our Settlement Agreement Solicitors in our Wokingham, Reading and Farnham, Thames Valley and M3 Corridor offices

Our solicitors at Clifton Ingram are a highly experienced, proactive and down-to-earth team, bringing a high-quality and professional service to your local area.

We regularly advise clients across the South East, including Berkshire, Hampshire, Oxfordshire, Surrey, Wiltshire and London. Speak to one of our team today to see how we can help by calling 0118 978 0099. Our solicitors will move fast to find a solution personal to you.


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