Ciaran Robertson | Solicitor

Settlement Agreements

As settlement agreement lawyers, Jackson Boyd frequently advise both employers and employees on settlement agreements.

What are settlement agreements?

The vast majority of settlement agreements are created on the termination of employment and prevent the employee pursuing all actual and potential claims in either the Employment Tribunal or Court. Examples include claims for unfair dismissal or discrimination. Monetary compensation is given in exchange for the employee waiving their rights to make a claim.

Frequently, settlement agreements are discussed when there is a disciplinary process in the background or an employer wishes to terminate an employee’s contract without going through the necessary legal process.

Are settlement agreements legally binding?

In short, yes. However, settlement agreements are only legally binding if the below statutory conditions are met:

  • The agreement is in writing.
  • The agreement relates to a particular complaint or particular proceedings.
  • The employee has received independent legal advice on the agreement and, crucially, its effect on their ability to pursue any all actual or potential claims.
  • The legal adviser is identified in the agreement and has the insurance in relation to the advice given.
  • The agreement states that the conditions regulating settlement agreements in the relevant legislation have been met.

As listed above, independent legal advice must be given. Whilst it is not a legal requirement, in practice most employers contribute between £350 to £500 towards legal advice for the employee. This would be paid directly to the instructed advisor. Jackson Boyd would advise from the outset if the amount initially contributed towards legal advice would be sufficient to cover the expected work.

What payments should normally be included in a settlement agreement?

The below list are standard payments expected in a settlement agreement:

  • Payment in lieu of notice (PILON), subject to tax and NI contributions
  • Payment in respect of any outstanding holidays, subject to tax and NI contributions. This only applies to your statutory entitlement and not additional contractual holiday entitlement.
  • An ex gratia payment, usually exempt from tax (i) . Jackson Boyd would advise on whether the ex gratia payment is reasonable, as this amount varies on a case-to-case basis. Sometimes the ex gratia payment will be a reflection on the value of the potential claim the employee is waiving their right to pursue, and other times it will be the equivalent to an employee’s wage, for example, 3 months’ gross pay.
  • A contribution towards legal advice.

Can references be included in a settlement agreement?

Yes. Jackson Boyd will always try to negotiate settlement agreements to include an agreed reference, as there is no legal requirement for an employer to provide one. Separately, despite common assumptions, an employer can give a bad reference as long as it is factual. An example of this could include a reference saying an individual has been dismissed due to performance concerns. An agreed form of reference allows the employee the best opportunity to obtain subsequent employment.

Should I accept my settlement agreement?

This is dependent on a variety of factors and is something Jackson Boyd would advise you on. Factors include the terms offered and balancing the monetary payments offered with the possible award an employee could get from pursuing a claim in the Employment Tribunal or Court.


(i) As a general rule, the first £30,000 of a termination payment is exempt from tax. The tax on PILON will depend on if it’s contractual or not.

How can Jackson Boyd’s settlement agreement lawyers help you?

When you first contact our specialist team here at Jackson Boyd, we will discuss your case in detail with you, in order to get a full and comprehensive understanding of the situation and exactly what has happened. This will enable us to find out what your desired outcome is, and will allow us to seek it in the best and most effective way possible.

Jackson Boyd is very proud of its first class client care and legal expertise. We want to use this to your advantage, and help you get the results that you need. It is very important to seek legal advice about settlement agreements as soon as possible. This will help to ensure that whatever the nature of the agreement that needs to be reached, it can be done as quickly and efficiently as possible.

Jackson Boyd is always here to help you. Our specialist team, who deal with settlement agreements and the surrounding issues, are ready to help you resolve matters as quickly as possible. Because our legal knowledge and skill is second to none, you can relax in the knowledge that you are in safe hands. Because of our extensive experience in dealing with settlement agreements, we can help you in an objective and constructive way, which will enable us to come to an informed and clear decision as to the best way to proceed in your given situation.

"Can I also thank you very much for all of your efforts in securing this very good settlement. We are all very grateful for your excellent help in dealing with the matter."

Mr P M

Jackson Boyd’s client care is excellent, and we are committed to giving you the time and expertise necessary to get the best from the settlement agreement.

Contact Our Settlement Agreement Lawyers Today

To discuss your options regarding a settlement agreement, regardless of whether you are an employer or an employee, please contact Jackson Boyd today. You are always guaranteed to speak to someone with knowledge and understanding of what you are going through, and someone with experience of dealing with cases just like yours.

We will guide you through the legal process from beginning to end, helping to ensure that it is as stress-free a process as possible.

For a free consultation, please contact us today via our online enquiry form or by calling 0333 222 1855. We very much look forward to discussing your case with you.

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