On departure from employment, a large proportion of employees are now asked to sign up to a settlement agreement (formerly known as a compromise agreement).

Settlement agreements are legally binding contracts, the purpose of which are to ensure that the employee waives their rights to pursue their legal claims against their employer in return for (usually) a sum of compensation. They often deal with all aspects of the termination of an employment relationship agreement.

Employers often use these agreements to lay out the terms under which an employee will leave the company. The employer may also use the agreement to protect themselves, e.g. by adding confidentiality clauses and restrictions on competition.

In order to be legally binding an employee must obtain independent legal advice on the agreement and we can assist in that regard. Your employer will usually offer to make a contribution towards the cost of that advice.

We have vast experience in drafting, advising and negotiating settlement agreements. This is a specialist area for Wellers Law Group LLP.

We do not simply talk you through the terms of the settlement agreement and accept the terms as standard, but rather we take the time to investigate with you the full detail of your situation and the background to your departure in order that we can provide a comprehensive service giving not just legal, but practical (and tactical) advice (including on negotiating an enhanced settlement of the claims which you are surrendering, where appropriate).

Things to look out for:-

  • You need to ensure that all payments that you expect to receive are specially cited in the settlement agreement (especially if there is an entire agreement clause)
  • Clauses that are particularly onerous e.g. a penalty clause that requires an indemnity beyond a standard damages payment, or one that requires you to repay a contractual/statutory payment in the event of a breach by you of the terms of the settlement agreement
  • Clauses that introduce new restrictive covenants for example, that were not included in your contract and for no additional consideration (payment)
  • Clauses that are particularly ambiguous e.g. where terms are not clearly defined and are therefore left wide open to interpretation


In terms of fees, assuming you are happy with the offer that has been made, and do not therefore require any advice over and above advice on the meaning and implications of the settlement agreement that has been provided to you, then we can normally agree to act for you for the fixed fee provided by Company.

If you require assistance with a settlement agreement please contact Nina Francis on 0203 831 2664 or email Nina on nina.francis@wellerslawgroup.com