Frequently asked questions.

Frequently asked questions.

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What are the advantages of a settlement agreement?

The main advantages of an employment settlement agreement are as follows:

  • You can use them to obtain a financial sum to compensate you for poor treatment that you have experienced at work (for example, if you have been discriminated against or have had your contract breached) without both sides having to go to the cost, stress, time and uncertainty of an Employment Tribunal claim
  • Settlement agreements are quite tax-efficient, in that you can receive the first £30,000 of the settlement amount tax-free
  • You can negotiate into the settlement agreement non-financial terms that are important to you (such as, for example, a reference that you are happy with, an internal or external announcement, or appropriate confidentiality clauses)
  • You can use a settlement agreement to negotiate a higher sum upon termination of your employment than you may have otherwise been entitled to receive (i.e. beyond your notice pay, holiday pay, and statutory redundancy pay (if applicable))
  • To allow unhappy employees an exit from potentially stressful and unpleasant situations without having to resort to litigation