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Settlement agreements: five things to check before you sign
A settlement agreement can’t bind you until an independent adviser has explained it. Here’s what that advice should cover.
By
Amara Okafor
If your employer has offered you a settlement agreement, the law says you must get independent advice before it can bind you. That advice is usually quick. These are the five things it should cover.
1. What you’re giving up
The agreement will list the claims you agree not to bring. Make sure you understand which ones, and whether any claim you might have is worth more than the payment.
2. How the payment is taxed
Part of a termination payment can be tax-free; notice pay and holiday pay usually aren’t. The agreement should say how each part is treated.
3. The reference
An agreed reference is common and worth asking for. It should be attached to the agreement, not promised in an email.
4. What you can say
Confidentiality clauses can’t stop you reporting wrongdoing or speaking to the police or a regulator. Check the wording doesn’t suggest otherwise.
5. Who pays for the advice
Employers usually pay towards your legal costs. Check the amount and that it’s paid directly to your adviser.
This is general information, not advice on your situation.
This is general information, not advice on your situation. For advice, start a matter or call 020 7946 0958.
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