Clients often come to us having been handed a wad of paper, full of legal jargon, conspicuously titled “settlement agreement”. This can be an unnerving moment, even when it is expected.

So, what is a settlement agreement?

Put simply, a settlement agreement is an agreement between an employer and an employee to compromise an employee’s contractual and statutory claims on termination of employment. They are useful for employers and employees alike as they can bring employment to an end on mutual and agreeable terms. However, they can be weighed to be more favourable to the employer, and therefore it is important to make sure that you will be getting an equally fair deal.

There are various legal formalities which must be conformed to in order for the agreement to be valid; such things as: (a) it must be in writing, and (b) the employee must have taken legal advice. These issues are only a glimpse into the world of settlement agreements and that’s why taking legal advice is key.

You may have heard about similar agreements, called non-disclosure agreements, or NDAs, which have been getting a bad press recently. This is due to misuse of the agreements, because they contain “gagging clauses” whereby the person signing the agreement agrees to “shut up” for a payoff. Although a settlement agreement works on similar principles, they are rarely as controversial.

So, what do you need to do if you have been given a settlement agreement? Firstly, see a solicitor! You needn’t worry about this potentially eating into your pockets over the Christmas and New Year period, as employers will usually pay a fixed sum for you to see a solicitor to obtain the required independent legal advice. Our solicitors can navigate you through the various clauses, summarise the relevant information for you and pick out potentially tricky issues. We have expertise in these agreements and elements such as pay, tax and employment benefits are all aspects that can be considered and discussed in a meeting.

Get In Touch

At Barrett & Co we have advised hundreds of people on settlement agreements. If you have been given one and require advice, then our specialist team in Reading is on hand to help you. Simply call us on 0118 958 9711 or email us at

"barrettandco" and "Barrett & Co" are trading names of Barrett & Co Solicitors LLP, a Limited Liability Partnership incorporated in England and Wales under registration number OC356263, with registered office at Salisbury House, 54 Queens Road, Reading, Berkshire RG1 4AZ. Barrett & Co Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 549694).

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