Legal Advice for Employers

Ending an employment relationship the right way protects your business, your reputation and your management team’s time. At Settlement Agreement Advice, our solicitors provide clear, commercially-minded legal advice for employers on settlement agreements.

If you’re considering offering an employee a settlement agreement, do not send one out without first understanding the risk it’s meant to cover. A poorly scoped agreement, a badly timed offer or a process that hasn’t followed the right steps can leave you just as exposed as having no agreement at all. 

Our employment solicitors advise businesses across England and Wales.

Are you an employer seeking legal advice?
Request a call back from one of our employment law solicitors

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Legal Advice for Workplace Issues

Settlement agreements don’t exist in a vacuum. They’re almost always the resolution to a specific workplace issue. Our legal advice for workplace issues starts with understanding the underlying risk, not just the paperwork, so the agreement you offer actually closes the matter down rather than storing up problems for later.

You may need our advice if you are dealing with:

  • A redundancy or restructuring exercise affecting one role or many
  • A performance or capability issue that hasn’t improved despite a formal process
  • A conduct matter you’d rather resolve without a full disciplinary hearing
  • A grievance that’s escalated, or a relationship that’s broken down beyond repair
  • A senior exit that needs to be handled discreetly
  • A potential discrimination, whistleblowing, or unfair dismissal claim you want to settle before it reaches a tribunal

Request a Call Back to discuss your situation or Start My Settlement if you already have a draft agreement.

Making Sure Your Process is Fair

An Employment Tribunal will look closely at how you reached your decision, not just what the decision was. A dismissal can be found unfair even where there were good grounds for it, if the process followed was not reasonable. Before offering a settlement agreement, we’ll help you think through:

  • Whether a fair and reasonable process has been followed or needs to be
  • Whether the employee has raised any protected disclosures, grievances, or complaints that could complicate a straightforward exit
  • Whether a protected conversation or without prejudice discussion is the right way to open the conversation with the employee

Risk Areas We Help You Manage

  • Unfair dismissal and constructive dismissal: Advice on exposure where a formal process hasn’t been followed or an employee has resigned citing your conduct
  • Discrimination claims: Covering age, disability, gender, pregnancy and maternity, religion or belief and sex discrimination: Claims where compensation is uncapped, so early, well-advised settlement matters
  • Whistleblowing: Identifying exposure early where an employee has made a protected disclosure, since dismissal or detriment linked to whistleblowing can also lead to uncapped compensation
  • Post-termination restrictions: Reviewing and drafting restrictive covenants so they’re enforceable if a departing employee later needs to be held to them
  • Confidentiality, NDAs and reputation management : Appropriate confidentiality clauses that comply with current legal requirements on NDAs in discrimination and harassment cases

2026 Legal Developments Employers Should Know About

Employment law has moved significantly in the last year and several changes affect how settlement agreements should be approached.

The Employment Rights Act 2025

Reforms under the Act are reshaping dismissal and redundancy rights, with further changes expected into 2027. Businesses relying on short service to manage risk should take advice early, as protections are being extended and loopholes closed.

Day one rights

Protection from discrimination has always applied from an employee’s first day, including during recruitment. The Act is closing loopholes some employers previously relied on around “short service” dismissals, meaning tribunal scrutiny now applies much earlier in the employment relationship than before.

Increased injury to feelings awards

From 6 April 2026, the Vento bands used to calculate injury to feelings awards in discrimination cases increased, with the upper band now reaching £62,900 for the most serious cases and exceptional cases exceeding that figure. This has a direct effect on the value of settlements involving any element of discrimination.

Redundancy selection under closer scrutiny

Tribunals are increasingly requiring employers to demonstrate that redundancy selection criteria are genuinely neutral across protected characteristics such as age. Where selection produces disparate outcomes for a particular group, you’ll need to be able to objectively justify it.

Our solicitors can advise on how each of these developments affects your specific situation and what it means for the value of any settlement offer.

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What a Settlement Agreement Should Cover for Employers

A settlement agreement needs to do more than record a payment figure, it needs to properly close down your legal exposure. A well-drafted agreement should address:

  • A full and final waiver of all potential claims, tailored to the specific risks in your situation
  • Confidentiality and non-disparagement provisions that comply with current legal limits
  • Reference wording agreed in advance, to avoid later disputes
  • Treatment of notice, holiday pay, bonus and any other contractual entitlements
  • Post-termination restrictions, where relevant and their enforceability
  • Correct tax treatment of each element of the payment, including any indemnity from the employee
  • The employee’s contribution towards their own legal costs and confirmation they’ve received the required independent advice

Why Work With Settlement Agreement Advice

We see both sides of the table

Our solicitors advise both employers and employees on settlement agreements. That gives us an accurate, current picture of what terms are genuinely standard, where employees’ solicitors typically push back and what will get an agreement signed without unnecessary back-and-forth.

Same-day advice and fast turnaround

In most cases we can turn around advice and a draft agreement the same day it’s needed and see it through to a clear, fixed three-step process so you’re not left waiting on a slow-moving adviser while a situation sits unresolved.

Genuine Employment Tribunal experience

Our solicitors regularly handle tribunal litigation directly, not just settlement paperwork. That means the risk assessment behind your agreement is grounded in what actually happens at tribunal, not a theoretical worst case.

We only recommend what’s actually needed

We won’t pad out a process or manufacture negotiation for its own sake. If a straightforward agreement is the right call, we’ll say so; if there’s real exposure that needs addressing before you offer terms, we’ll flag it clearly.

Frequently Asked Questions

Do we have to offer a settlement agreement, or can we just dismiss the employee?

There’s no legal requirement to offer a settlement agreement. However, where there’s any risk of a claim, discrimination, whistleblowing, or a process that hasn’t been followed properly, a settlement agreement is often the fastest and cheapest way to close the matter down with certainty, rather than risking a tribunal claim later.

 

Is it true we usually have to contribute to the employee's legal fees?

It’s standard market practice, rather than a strict legal requirement, for an employer to contribute a fixed amount towards the employee’s independent legal advice. Without this contribution, an employee may be reluctant to engage, which can slow the whole process down.

What's the difference between a protected conversation and a without prejudice discussion?

A protected conversation lets you raise the prospect of a settlement agreement even where no dispute currently exists, without it being used against you in a later unfair dismissal claim. Without prejudice discussions apply where there’s already a genuine, existing dispute. Choosing the right route matters, the wrong one can leave the conversation admissible as evidence.

Can a settlement payment be paid tax-free?

Certain payments, such as a portion of a termination payment, can be paid free of tax up to £30,000, provided they don’t include other contractual entitlements. Read more on how settlement agreement payments are taxed. We’ll advise on the correct tax treatment of every element of your specific agreement.

How quickly can we get advice and paperwork turned around?

In most cases we can provide initial advice the same day, with a draft agreement following shortly after. Timescales depend on the complexity of the situation, but we work to keep the process moving quickly once you’re ready.

What happens if the employee's solicitor pushes back on our terms?

This is common and doesn’t need to derail the process. We can negotiate directly with the employee’s solicitor on your behalf to reach terms both sides can sign off, without you needing to have a difficult direct conversation with the employee.

Complete your agreement in 3 easy steps

1
Start
Start by clicking "Start process", calling us, or requesting a callback from us.
2
Get Advice
We'll give you free legal advice on what your settlement agreement means and what your options are on the same day as we receive it. Negotiation services are available where applicable.
3
Sign-Off
Once you're happy with your employer's terms, sign and return it to us. We'll speak with your employer to seek closure that same day. We'll return your completed agreement so you can get back on with your life.

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