Settlement agreements for employers
Ending an employment relationship cleanly, with a binding agreement.
How we can help
- Advising whether a settlement agreement is the right route
- Drafting agreements that are binding and cover the risks you actually have
- Structuring payments correctly for tax
- Including confidentiality, references and restrictive covenants where appropriate
- Advising on the protected conversation rules and their limits
- Managing the negotiation so the relationship does not deteriorate further
What happens next
- Tell us the situation, what you are willing to offer, and the outcome you want.
- We advise on the risks being settled and draft the agreement.
- We handle the exchange with the employee’s adviser through to signature.
Fees for this work
Fixed fee for drafting a standard agreement. You would also normally contribute towards the employee’s legal advice, which is a statutory requirement for the agreement to bind.
Common questions
Why do we have to pay for their solicitor?
Because a settlement agreement is only binding if the employee has taken independent legal advice on it. The contribution is usually modest and it is what makes the agreement worth having.
Can we have a protected conversation?
In limited circumstances, pre-termination negotiations are inadmissible in an ordinary unfair dismissal claim. The protection does not extend to discrimination or automatic unfair dismissal claims, and it is lost where there has been improper behaviour. It is narrower than most employers assume.
What should we offer?
It depends on the strength of any claim, length of service and how quickly you want matters resolved. Offering too little wastes the opportunity; offering too much sets a precedent your other staff may hear about.
Is the payment tax free?
Part may be. Compensation for loss of employment is often tax free up to a threshold, but notice pay and holiday pay are taxable. The agreement usually places responsibility for any tax on the employee, but the structure needs to be right.
Tell us what's happened
Confidential, reviewed by a solicitor, answered within one working day.