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Employment Law 

Settlement Agreements  

Sometimes employers will propose a severance package to employees in which they settle their employment claims under a settlement agreement (formerly known as a compromise agreement). – is a legally binding contract made between an employer and employee; either towards the end or just after employment has ended. Employees are required to take independent legal advice upon settlement agreements and their employers will normally pay a contribution to the legal costs of doing so.

It sets out the terms of leaving and, once signed, means you cannot later bring legal action against you employer regarding the termination of your contract or any work related matters. This is usually in exchange for a ‘termination payment’ and other benefits which are set out in the agreement.


The main benefit of entering into a settlement agreement is to provide an amicable, clean break between yourself and your employer.

Most settlement agreements include a tax efficient payment, clauses to ensure that your employer does not make any unfavourable comments about you together with a job reference. In return, your employer will be protected against you making any future legal claims against the company.

If you are being asked to consider a settlement agreement, you will need to seek independent legal advice before signing any documents.

At Seymours Solicitors, our professional, knowledgeable and friendly team of employment law experts can guide you through the process and ensure that a settlement agreement is fair, just for you.

Once signed, there is no going back – a settlement agreement is legally binding. If it’s not in the agreement there is no going back.

To find out how we can help you with advice on settlement agreements speak to a member of our Employment team.

To find out more about our fees click here.

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