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Employment / The briefing

Settlement agreements explained

Before signing away employment claims, understand what you are agreeing to.

By Priya Desai · · 4 min read

What does the agreement do?

A settlement agreement records agreed terms, often connected with the end of employment, and can waive specified legal claims. It should explain the payments, termination arrangements and any continuing obligations. The detail matters more than the headline payment.

Independent advice is essential

For a statutory settlement agreement to validly waive relevant employment claims, the employee must receive advice from a relevant independent adviser on its terms and effect, including the effect on their ability to pursue those claims. Other statutory conditions must also be met; a signature alone is not enough.

Review the whole package

Check notice pay, holiday pay, references, confidentiality, restrictions and the treatment of individual payments for tax. Do not assume that every payment is tax-free. Ask whether the employer contributes to advice costs and allow enough time to consider the terms.

General information for England and Wales, reviewed October 2026. This is not advice on your individual circumstances. Rules and guidance may change.

02 / Further reading

A little more perspective.

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