Agree an exit
that holds.

Settlement agreements give employers a way to provide compensation to an employee who has made, or could make, a claim against them. Used well, they resolve disputes between employers and employees and avoid the expense and inconvenience of an employment tribunal. They are commonly used at the end of employment, for example on redundancy or restructuring, but can also be offered during employment in particular circumstances.

To settle statutory employment claims, an agreement must meet the conditions in section 203 of the Employment Rights Act 1996. It must be in writing, relate to the particular claims or proceedings, and the employee must have received independent advice from a relevant independent adviser who is named in the agreement and has insurance cover. An agreement that misses these conditions may not stop a claim.

We help you prepare an agreement that is clearly worded and covers what you intend it to cover, from the payment and its tax treatment to confidentiality, references and any restrictions. Unclear drafting is a common source of later disputes, so careful wording at the outset matters. We also deal with any changes the employee’s adviser proposes.

We can also advise on how to open the conversation with the employee, including the rules on protected and without prejudice conversations, so that discussions are handled appropriately from the start. Threats, undue pressure or discrimination can remove the protection those conversations would otherwise have, and expose the employer to legal risk.