What is a Settlement Agreement if my employer is terminating my employment?

My employer has approached me about terminating my employment. They want to make a payment to me through a Settlement Agreement. What does this mean? They have told me I need to see a Solicitor.

A Settlement Agreement is a legally binding agreement which records the terms on which an employee’s employment is brought to an end and settles any employment claims they may have against their employer. The employer usually makes a financial payment to the employee in return for the employee agreeing to settle their employment claims.

It is a requirement that the employee takes independent legal advice from a solicitor because once advice has been given and the Agreement signed, the employee will be barred from pursuing any employment claims they may have. This would include common valuable claims such as unfair dismissal, discrimination, holiday pay and other statutory claims, as well as contractual claims for bonus, share options or other contractual benefits.

An employer will usually contribute to the employee’s legal fees incurred in taking advice on the terms of the Agreement.

If an employer is proposing a Settlement Agreement, it is important that you take advice. You should seek advice from a solicitor who specialises in employment law and can advise you on your legal position and options. They can also recommend and negotiate, if necessary, amendments to the Agreement and an increase to the proposed financial terms.

If you find yourself in this position, please contact David on 01722 820935, or by email at This email address is being protected from spambots. You need JavaScript enabled to view it. who will be able assist.

David Coward