Specialist Employment Solicitors – Providing The Legal Advice Need For Your Settlement Agreement
If your employer has offered you a deal and asked you to sign it off,t, you will almost certainly be told that you must obtain independent legal advice or your settlement agreement to be legally binding. 
This is not simply a recommendation. In almost every case it is a legal requirement.
At Bonallack & Bishop, our employment solicitors advise employees on settlement agreements every week. We explain exactly what the agreement means, answer your questions in plain English and make sure you understand the legal and financial consequences before you decide whether to sign.
In many cases the process can be completed quickly, often within a few days.
If your employer has agreed to pay your legal fees, as many do, our advice may cost you nothing personally.
Looking for specialist Settlement Agreement Solicitors? Call our experienced employment lawyers on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached
Independent Legal Advice for a Settlement Agreement – At a Glance
If your employer has given you a settlement agreement:
- You will normally need independent legal advice before signing.
- Your employer will often pay your solicitor’s fees.
- You are not obliged to accept the agreement.
- You may be able to negotiate a better financial package or other terms.
- A solicitor will explain your legal rights and the consequences of signing.
- In many cases, the advice can be provided within a few days.
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What Is Independent Legal Advice?
Independent legal advice means advice from a qualified legal adviser who is completely independent of your employer.
The purpose of the advice is to ensure that you:
- understand the agreement
- know which legal rights you are giving up
- appreciate any restrictions that will continue after your employment ends
- understand the financial terms being offered
- have an opportunity to ask questions before making your decision.
A settlement agreement only becomes legally binding if the statutory requirements are satisfied.
One of those requirements is that the employee has received advice from an independent adviser about the terms and effect of the agreement.
This requirement is contained in section 203 of the Employment Rights Act 1996, which allows employees to settle statutory employment claims only if specific legal conditions are met.
An employee cannot usually waive statutory employment claims through a settlement agreement unless the legal requirements of section 203 Employment Rights Act 1996 have been satisfied.
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Why Do I Need Independent Legal Advice?
Settlement agreements are legally binding contracts.
Once signed, you will normally lose the right to bring many employment claims against your employer.
These commonly include claims relating to:
- unfair dismissal
- redundancy
- discrimination
- breach of contract
- whistleblowing
- unlawful deductions from wages
- holiday pay
- working time rights.
The purpose of independent legal advice is to make sure you fully understand what you are agreeing to before those rights are given up.
According to the employment solicitors at Bonallack & Bishop, many employees are surprised to discover that settlement agreements contain provisions extending well beyond the financial payment. They frequently include obligations relating to confidentiality, future announcements, restrictive covenants, references and the return of company property.
Can I Choose My Own Solicitor?
Yes, you have the right to do so. Your employer cannot require you to use a particular solicitor.
The legal advice must come from an independent adviser acting in your interests.
Why Choose Bonallack & Bishop?
Our employment solicitors have extensive experience advising employees on settlement agreements across a wide range of industries and professions.
We provide advice that is:
- practical
- commercially focused
- straightforward
- easy to understand
- tailored to your individual circumstances.
We appreciate that being offered a settlement agreement can be stressful and unexpected.
Our aim is to explain your options clearly, answer your questions and help you reach the best possible outcome. Where appropriate, we can also negotiate improved terms on your behalf.
Whether your priority is achieving a higher financial settlement, obtaining a better reference or bringing matters to a swift conclusion, we will work to protect your interests throughout the process.
What Does An Employment Solicitor Actually Do?
Many people assume the solicitor simply signs the employer’s certificate.
That is not how the process works.
A good employment solicitor should carefully review every part of the agreement and explain its practical effect. Our role includes advising you about:
- whether the compensation appears reasonable
- whether you may have valuable legal claims
- the strengths and weaknesses of those claims
- whether negotiation may be worthwhile
- tax provisions
- confidentiality clauses
- references
- restrictive covenants
- post-termination obligations
- pension issues where relevant
- bonus or commission arrangements
- holiday pay
- outstanding benefits
- agreed departure dates.
We also answer any questions you have so that you can make an informed decision.
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Can I Negotiate A Settlement Agreement?
Yes, many employees believe the document they receive is a final offer. Often it is not. Although every case is different, settlement agreements are frequently negotiated.
Negotiations may involve:
- increasing the compensation payment
- improving the agreed employment reference
- changing confidentiality wording
- removing unnecessary restrictions
- changing the leaving date
- payment of bonuses
- commission
- holiday entitlement
- pension arrangements
- treatment of company equipment
- announcement wording
- legal fee contributions.
If your employer is willing to negotiate, improvements can often be achieved without damaging the overall relationship.
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Do I Have To Sign?
No, you do not. You are under no automatic legal obligation to sign a settlement agreement simply because your employer has offered one. Whether signing is the right decision depends entirely upon your own circumstances.
Important considerations for you may include:
- the financial package
- your legal rights
- whether disciplinary or redundancy procedures are ongoing
- the likelihood of future employment
- whether you wish to remain with your employer
- the strength of any legal claims
- how quickly you want the matter resolved.
At Bonallack & Bishop, we aim to help clients make informed decisions rather than pressure them towards a particular outcome.
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What Happens If I Decide Not To Sign?
If you choose not to sign, the settlement agreement simply does not take effect. In that case, your employment may continue, or your employer may decide to pursue another lawful process. Depending upon the circumstances, that could include:
- redundancy consultation
- disciplinary proceedings
- capability procedures
- performance management
- grievance procedures
- ongoing employment.
Declining a settlement agreement does not automatically mean you lose your job. Equally, signing one does not necessarily mean you have obtained the best possible outcome. Each case depends upon its own facts.
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Independent Legal Advice for a Settlement Agreement – Who Pays The Legal Fees?
One of the questions we hear most often is:
“Will I have to pay for the legal advice?”
In many cases, the answer is no. That is because it is common for employers to contribute towards, or pay in full, the employee’s legal costs.
This benefits both parties because the employer also needs the settlement agreement to become legally effective.
Usually the agreement specifies a contribution towards your solicitor’s fees.
If the contribution covers our charges, you may have nothing to pay personally.
In the unlikely event that additional work does become necessary—for example extensive negotiations—we will explain any likely costs before carrying out that work.
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How Quickly Can The Advice Be Completed?
Settlement agreements are often time-sensitive. Many employers ask employees to respond within a relatively short period.
Provided we receive all the necessary documentation promptly, we can often advise within a few working days.
Where urgent deadlines apply, we always try to accommodate them wherever possible.
Much of the advice can be provided by:
- telephone
- video appointment
- in person at one of our offices.
This means many clients never need to take additional time away from work.
Our Settlement Agreement Process
Most clients have never needed a settlement agreement before, so it is natural to wonder what happens next.
We aim to make the process as straightforward and stress-free as possible. In many cases, everything can be completed within a few days.
Step 1 – Send us your settlement agreement
Contact our employment law team and send us:
- your settlement agreement
- any covering letter from your employer
- any deadline for signing
- any questions or concerns you already have.
If your employer has offered to contribute towards your legal fees, please let us know the amount they have agreed to pay.
Step 2 – We review the agreement
One of our employment solicitors will carefully examine the agreement before speaking to you.
We look not only at the financial package but also at the legal terms, any restrictions after your employment ends, the proposed reference and whether there may be scope to negotiate better terms.
Step 3 – We advise you in plain English
We will arrange an appointment by telephone or video call. During that meeting we explain:
- what the agreement means
- which legal rights you would be giving up
- whether the financial offer appears reasonable
- any clauses you should be concerned about
- whether negotiation may be worthwhile
- any questions you would like answered.
Our aim is not simply to explain the legal wording but to make sure you understand the practical effect of signing the agreement.
Step 4 – We negotiate where appropriate
Not every settlement agreement needs to be negotiated.
However, if we believe improvements may be achievable, we will discuss the options with you before approaching your employer or their solicitors.
Negotiations commonly involve increasing the compensation payment, improving the wording of an agreed reference, removing unnecessary restrictions or clarifying uncertain terms.
Step 5 – You decide whether to sign
The decision is always yours. Our role is to give clear, independent advice so that you can make an informed choice.
If you decide to proceed, we will sign the independent adviser’s certificate required by law.
Step 6 – Your employer completes the agreement
Once both parties have signed, the agreement becomes legally binding and your employer will normally arrange payment of the agreed compensation and implement the remaining terms of the agreement.
Throughout the process, we keep you informed and are available to answer any further questions that arise.
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Independent Legal Advice for a Settlement Agreement – Is The Advice Confidential?
Yes, it is. Discussions between you and your solicitor are protected by legal professional privilege.
This means that, subject to very limited exceptions recognised by law, what you discuss with your solicitor remains confidential.
Your employer is entitled to receive confirmation that you have obtained independent legal advice, but not the confidential details of that advice.
What does a solicitor check in a settlement agreement?
There is no standard format – every settlement agreement is different. Some are relatively straightforward, while others deal with complex issues such as bonuses, share options, restrictive covenants or allegations of discrimination.
Before recommending that you sign, we will normally check matters including:
- The amount you will receive.
- How and when the money will be paid.
- Whether payments are taxable.
- Whether holiday pay has been calculated correctly.
- Whether bonuses or commission have been dealt with.
- The wording of any agreed employment reference.
- Confidentiality clauses.
- Restrictive covenants and post-employment obligations.
- Whether you are being asked to return company property.
- Whether all agreed benefits have been included.
- Whether there are any unexpected obligations or risks.
Our employment solicitors also consider whether there are any potential legal claims which may justify negotiating a better settlement.
According to the employment solicitors at Bonallack & Bishop, many clients are initially focused on the financial payment but later discover that the wording of the reference, confidentiality provisions or post-employment restrictions can be equally important.
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What Rights Am I Giving Up?
One of the most important parts of our advice is explaining exactly which claims you will no longer be able to bring if you sign.
The agreement will usually prevent you bringing most employment claims arising before the date of the agreement. These may include claims relating to:
- unfair dismissal
- constructive dismissal
- discrimination
- redundancy
- breach of contract
- whistleblowing
- unlawful deduction from wages
- equal pay
- working time
- holiday pay.
Exactly which claims are covered depends on the wording of the agreement. A settlement agreement should identify the legislation and types of claims being settled. It should not simply contain a vague statement that “all claims” are waived.
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Are Settlement Agreement Payments Taxable?
This is another area where employees often have questions. The tax treatment depends on the nature of each payment.
For example:
- Salary is normally taxable.
- Holiday pay is normally taxable.
- Bonuses are usually taxable.
- Payments in lieu of notice are usually taxable.
- Compensation for the loss of employment may qualify for different tax treatment, depending on the circumstances and current tax legislation.
Tax law surrounding termination payments has changed significantly in recent years.
For that reason, you should not assume that every payment under a settlement agreement will be tax-free simply because it is described as compensation.
Where necessary, we explain the tax provisions contained in your agreement and whether specialist tax advice may also be appropriate.
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What Happens After I Sign?
Once both parties have signed the agreement and the legal requirements have been satisfied, it becomes a legally binding contract.
The employer will then normally proceed to implement its terms. This may include:
- paying the agreed compensation
- paying outstanding salary and holiday pay
- providing an agreed reference
- confirming your employment has ended
- making pension contributions where applicable
- dealing with company property
- making any agreed announcement.
You should keep a copy of the signed agreement safely for future reference.
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Independent Legal Advice for a Settlement Agreement – The Law
Settlement agreements are governed by legislation rather than simply by contract law. The principal statutory provisions are found in:
- Employment Rights Act 1996, section 203
- Equality Act 2010 (where discrimination claims are being settled)
- other employment legislation depending on the claims covered.
The law requires certain conditions to be satisfied before statutory employment claims can be validly settled.
These include:
- the agreement must be in writing
- it must relate to particular complaints or proceedings
- the employee must receive advice from an independent adviser
- the adviser must be appropriately insured
- the agreement must identify the adviser
- the agreement must state that the statutory conditions have been met.
A settlement agreement that does not satisfy the statutory requirements may not prevent an employee from pursuing the employment claims that it was intended to settle.
Contact Our Employment Solicitors
If your employer has asked you to obtain independent legal advice before signing a settlement agreement, our employment solicitors are here to help.
We can:
- explain the agreement in plain English
- advise whether the terms are reasonable
- identify any potential legal claims
- negotiate improvements where appropriate
- complete the legal certificate required by your employer.
To arrange advice, please contact Bonallack & Bishop’s employment law team today.
Independent Legal Advice for a Settlement Agreement – FAQs
1. Is independent legal advice compulsory for a settlement agreement?
Yes. In most cases, a settlement agreement will only be legally effective if you have received independent legal advice from a qualified adviser who meets the statutory requirements.
2. Who can provide independent legal advice on a settlement agreement?
Independent legal advice is usually provided by a solicitor specialising in employment law. The adviser must be independent of your employer and meet the requirements set out in the Employment Rights Act 1996.
3. Does my employer usually pay for independent legal advice?
Many employers contribute towards or pay the employee’s legal fees because independent legal advice is required before the settlement agreement becomes legally binding.
4. Can I negotiate a settlement agreement before signing it?
Yes. Many settlement agreements can be negotiated. Depending on your circumstances, it may be possible to improve the financial package or amend other terms such as references, confidentiality clauses or post-employment restrictions.
5. Can I refuse to sign a settlement agreement?
Yes. You are not obliged to sign simply because your employer has offered one. Before deciding, you should obtain independent legal advice so that you understand your legal position and options.
6. How long does independent legal advice take?
Straightforward settlement agreements can often be dealt with within a few working days. More complex matters involving negotiations may take longer.
7. Is independent legal advice confidential?
Yes. Your discussions with your solicitor are protected by legal professional privilege. Your employer will normally only receive confirmation that you have received the required legal advice.
8. What happens after I sign a settlement agreement?
Once both parties have signed and the legal requirements have been met, the settlement agreement becomes legally binding. Your employer will usually arrange payment of the agreed compensation and implement the remaining terms of the agreement.
