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Settlement Agreements for Employees

What is a Settlement Agreement?

If you have had a dispute with your employer and wish to bring an end to your employment, you may wish to consider whether you want to enter into a Settlement Agreement.

Settlement Agreements are legally binding contracts that can be used to end an employment relationship on agreed terms. Settlement Agreements were previously known as a compromise agreements.

Once a Settlement Agreement has been signed, it prevents the employee from bringing a claim against their employer in respect of their employment and / or its termination. This is usually in exchange for a termination payment and other benefits, such as an agreed reference, which are also set out in the Agreement.

Settlement Agreements are also used in redundancy and dismissal situations.

Before you can enter into a Settlement Agreement, it is a legal requirement that you must have received independent advice in relation to the Settlement Agreement.


Truth Legal regularly deal with Settlement Agreements and it is our aim to make the terms of Settlement Agreements as beneficial for our clients as possible. If you wish to make any amendments to a Settlement Agreement, we will contact your employer to discuss this. We also provide advice in relation to any changes we consider should be made to the Settlement Agreement.

If you require advice on a Settlement Agreement then we will offer a free first consultation, with no obligation to instruct us. In terms of fees, we try to stick to the contribution offered by the employer, but if we need to negotiate on your behalf, we may need to charge you more than the employer’s contribution. We will keep you advised at every stage of the process.

Funding a settlement agreement with legal expenses insurance

If you have taken out legal expenses insurance, or you have legal expenses cover as part of your car or home insurance, you may be able to use this to fund your case. Our guide on legal expenses insurance explains this funding option in more detail.

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