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Settlement Agreement – True or False?

Over the years we have heard many misconceptions about settlement agreements and the impact of them on you, the employee. Test your knowledge against our true or false section below!

1. I have been handed a settlement agreement by my employer. I can read through this agreement and if I am happy with it, I can sign it and hand it straight back to my employer.


It is a legal requirement for you to receive independent legal advice on your settlement agreement before it is legally binding. This advice can be provided by a solicitor who holds indemnity insurance and an up to date practicing certificate. The solicitor is then required to sign an adviser’s certificate to confirm they have provided you with this independent legal advice.

This advice is provided to ensure you are aware of the rights you are waiving in exchange for signing this agreement, and it will also make you aware of your obligations under the agreement. For example, the agreement is likely to contain a confidentiality clause and may even contain clauses about returning company property or withdrawing allegations you have made against the company.

By contacting a solicitor you may find that you have other potential employment tribunal claims which can increase the compensation you receive. You also may discover clauses which you are unhappy with and that you want changed ahead of signing the agreement.

At Kalra Legal Group we hold the necessary requirements to provide this independent legal advice and we have great experience in negotiating increased compensation.Contact our team of employment solicitors today for further advice on your settlement agreement.

2. By signing a settlement agreement I am giving up all my rights as an employee.


By signing a settlement agreement you are essentially agreeing to waive a number of employment law rights in exchange for monetary compensation. These waived rights are usually contained in a long list within the settlement agreement and may vary depending on the agreement itself. These waived rights are likely to include the right to bring a claim for unfair dismissal and various discrimination claims.

However, there are a few rights which cannot be waived as part of the settlement agreement, including the right to bring a claim for personal injury. This right is usually explicitly protected within the wording of the agreement.

3. By signing a settlement agreement I am losing out on thousand’s I would definitely get from bringing an employment tribunal claim.


There is no guarantee that you would be more successful and receive more compensation from bringing a claim in the employment tribunal. Although bringing a tribunal claim has its own advantages, such as the opportunity to have your day in front of a judge, it also has its drawbacks. For example, you are likely to incur substantial legal fees which would effectively reduce the compensation you receive. There is also no guarantee of success in the employment tribunal.

In comparison, once a settlement agreement has been signed by both yourself and your employer it is legally binding and enforceable. There will no doubt about the compensation you are entitled to.

4. If I do not accept and sign this settlement agreement right away it is off the table and I will be put on a performance plan.


Whilst it is important to note that every employer will act differently during settlement agreement negotiations, you are entitled to a reasonable time to consider a settlement agreement and you should not be forced to sign the agreement then and there. Guidance from ACAS states employees should be given at least 10 days to decide whether they wish to accept the settlement offer.

Most employers are open to reasonable requests for an extension to their imposed deadline. For example, you may request an extension if you need to time to obtain independent legal advice on the settlement agreement.

5. By signing the settlement agreement, I have been made redundant and unfairly dismissed.


It is not uncommon for the settlement agreement to be signed following an unfair dismissal or a sham redundancy. However, being made redundant, being dismissed and leaving a company via a settlement agreement are three separate things and should not be confused as being one and the same.

The settlement agreement will often contain the reason for your exit from the company. This may not necessarily reflect the reality of the situation, but it should be defined in such a way where both parties are happy with the wording. For example, it may state there has been a mutual breakdown in the trust and confidence between the parties.

You can also negotiate an agreed reference to help protect your interests going forward and your future employment prospects. This may be a short factual reference, or it may be a “glowing” reference where your successes with your now ex-employer are listed.

6. It does not matter if I reject this settlement agreement. I am going to go to the employment tribunal and use this as evidence.


Most settlement agreements are marked “without prejudice”. This “without prejudice” label is often included on negotiations with your employer. This typically means that neither you or the employer can rely on these documents or conversations in the tribunal.

However, this is not always the case and will depend on various factors. By labelling the document or conversation as “without prejudice” it does not automatically mean you cannot mention it in the tribunal. For example, if the “without prejudice” label has been used in a discriminatory manner, then the relevant conversation or document can be brought to the attention of the tribunal. For further advice on this,contact us.

Contact Us

Contact our specialist employment lawyers today on 0800 8321 554 or via e-mail on info@klglaw.co.uk to arrange for an employment solicitor to provide independent legal advice on your settlement agreement.

Disclaimer: The above information should not be taken as legal advice. For legal advice on employment law matters please contact a member of our team directly.

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