Settlement agreement

A valid agreement must settle named claims

A settlement agreement must be in writing and relate to a particular complaint or proceedings. A bare promise to waive every possible claim is not enough. The worker must receive advice from a relevant independent adviser on the agreement and its effect, the adviser must be identified and insured or indemnified, and the other statutory conditions must be met.

The process is voluntary. The Acas settlement-agreement Code says a reasonable period to consider written terms will usually be at least ten calendar days unless the parties agree otherwise. Pressure, threats or a false deadline can undermine a sensible discussion.

Protected conversations have firm limits

Section 111A protection applies in Great Britain, principally to pre-termination discussions about ordinary unfair dismissal where there is no existing dispute. It does not generally protect conversations about discrimination, automatically unfair dismissal, wrongful dismissal or wages. Improper behaviour can also remove the protection.

The separate without-prejudice rule usually needs an existing dispute and a genuine attempt to settle it. Unambiguous impropriety can defeat that protection. Do not label every exit conversation “off the record” and assume the words make it so.

Confidentiality is optional and bounded

Confidentiality should be specific, voluntary and no wider than the parties need. It is not a compulsory ingredient of settlement.

A 2027 change is expected to void clauses that prevent workers alleging or disclosing work-related harassment or discrimination, including an employer's response. The commencement date and any excepted-agreement regulations are not yet confirmed, so this future rule must not be presented as current law.

Write the whole exit, not only the payment

Cover the termination date, notice or garden leave, payment breakdown, holiday, benefits, reference, property, fees, tax treatment, specified released claims and any duties that continue. Avoid wording that implies wrongdoing or suggests settlement is mandatory.

One complete document should let both sides understand what ends, what is paid, what claims are settled and what remains permitted. Independent advice is part of validity, not a substitute for clear drafting.