A settlement agreement is a legally binding contract in which you give up the right to bring listed employment claims, usually in return for a payment. The agreement is only valid if you have received advice from a relevant independent adviser, such as a qualified lawyer, who is named in the agreement and insured. Employers often contribute to the cost of this advice, but the law does not require them to.
Key facts
- Law
- Section 203(3), Employment Rights Act 1996
- Must be
- In writing, and must list the particular claims settled
- Advice
- From a relevant independent adviser: a qualified lawyer, or a certified trade union or advice centre adviser
- Adviser cover
- The adviser must hold insurance or professional indemnity and be named in the agreement
- Time to decide
- The Acas Code of Practice recommends at least 10 calendar days
- Advice fees
- Employers often contribute. No legal duty to pay.
What the agreement does
Settlement agreements often appear at the end of employment, after a grievance, during a disciplinary process or when an employer wants a quick exit. Either side can suggest one. In return for a payment or other terms, you agree not to take the listed claims to an employment tribunal or court. Once you sign a valid agreement, you usually cannot bring those claims later, even if you change your mind.
Conditions for a valid agreement
The Acas guide to settlement agreements (opens another website) and section 203 of the Employment Rights Act 1996 set the conditions. The agreement must:
- be in writing
- relate to particular complaints or proceedings, and list the claims covered
- follow advice to you from a relevant independent adviser on the terms, the effect and what you give up
- name the adviser, who must hold insurance or professional indemnity cover
- state the legal conditions have been met
Acas notes wording which settles "all claims" in general terms, without naming them, is not enough. A relevant independent adviser can be a qualified lawyer, or a trade union official or advice centre worker certified as competent and authorised to advise.
Settlement talks and confidentiality
Settlement discussions are usually confidential. Acas explains they cannot usually be used as evidence in a later tribunal claim. The protection has limits, for example where one side behaves improperly. The Acas page on making a formal offer (opens another website) says employers should consider offering to pay for independent advice, and the Acas Code of Practice recommends at least 10 calendar days to consider the terms. If you feel pushed to decide on the spot, read pressure to sign.
Clauses to check line by line
- Payment: the amount, the date, and which part covers notice pay. Ask your adviser how tax applies to each part.
- Claims waived: the list of claims, and whether the list includes claims you do not yet know about.
- Confidentiality: who you can still tell. A clause cannot stop a protected disclosure under section 43J. See NDAs in healthcare.
- Reference: an agreed wording attached as a schedule.
- Restrictive covenants: whether old restrictive covenants stay in force or new ones are added.
- Warranties: statements you confirm as true, for example having no other claims. A false warranty can lead to repayment.
- Repayment triggers: any clause which claws back money if you break a term.
Points for healthcare staff
Check how the agreement handles any concern you raised about patient safety. A settlement cannot stop you reporting to the GPhC, GMC, NMC or CQC as prescribed bodies. Ask whether the employer has made, or plans to make, a referral to your regulator, and whether the agreement mentions one. Check the agreed leaving date against notice periods, any pension effect, and any training repayment clause.
If an employment tribunal claim is possible, time limits still run during talks. Most claims about a problem on or after 1 October 2026 must start within six months less one day, after Acas early conciliation. Earlier problems keep three months less one day. Check your date on tribunal deadlines.
Questions to ask an adviser
- Which claims am I giving up, and what are they worth?
- How much of the payment is taxable?
- Will the employer contribute to your fee, and does the contribution cover the whole review?
- Who can I still talk to under the confidentiality clause?
- Does the agreement affect a regulator referral or a concern I have raised?
- What happens if the employer pays late or breaks the reference terms?
Where to get advice
- A solicitor: the usual relevant independent adviser. Ask the employer for a contribution to the fee in writing.
- Your union or professional body: certified officials from a union such as the PDA (opens another website), BMA (opens another website) or RCN (opens another website) may be able to advise members.
- Acas: 0300 123 1100 for general help with negotiation and conciliation. See our Acas guide.
- Citizens Advice: free first help. Some advice centres have certified advisers.
- Protect: 020 3117 2520 if the agreement touches on a whistleblowing concern.
- Northern Ireland: Labour Relations Agency, 03300 555 300.
Common questions
Do I need a solicitor for a settlement agreement?
You need advice from a relevant independent adviser for the agreement to be valid. This is usually a solicitor, but a certified trade union official or advice centre worker also qualifies.
Does my employer pay for legal advice on a settlement agreement?
Employers often contribute, and Acas says they should consider offering to pay. The law does not require a contribution, so ask for the amount in writing.
How long do I get to consider a settlement agreement?
The Acas Code of Practice recommends at least 10 calendar days. More time may be reasonable, for example where a disabled worker needs support.
Can a settlement agreement stop me reporting a safety concern?
No. A clause is void as far as the clause tries to stop a protected disclosure, such as a report to the GPhC, GMC, NMC or CQC.