Taking the pain out of settlement agreements – tips for employers and employees

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Whether you are the employer or employee, negotiating a settlement agreement can be difficult. The process is much quicker, cheaper and less stressful for everyone if you can remain as objective as possible and focus on agreeing a resolution.

Walker Morris’ employment team has many years of experience of advising both employers and employees on settlement agreements. Our approach is to try and achieve the best outcome for you, to enable everyone to move forwards.

Key points for employers and employees:
  • Get hold of the right employment documents – your adviser will normally need up to date copies of any contracts of employment or service agreements and key benefits documents.
  • Make sure the draft agreement accurately reflects your discussions – using standard form agreements often prolongs negotiations if they have not been tailored to the situation.
  • Break down the settlement figures and be clear about the timing and the tax treatment of any payments or arrangements.
  • Don’t forget about benefits such as bonus or share options, medical and life insurance and company cars.
  • Think about what will happen after the employment has ended – do you need to deal with any restrictive covenants, confidentiality requirements or assistance with ongoing litigation? Will you agree a reference or announcement?
  • Keep an eye on legal fees – most employers will make a contribution towards legal fees, however, it’s easy to lose control if you don’t ask for updates.
  • Respond to any questions raised as quickly as possible. Too often agreements falter or drag on because the right person is not around to make a decision.
  • Agree a timescale for finalising the agreement and try to stick to it. The longer negotiations take, the greater the frustrations are for everyone involved.
  • Finally, if you don’t understand ask! Settlement agreements often contain complex legal language and it is vital that you understand what you are agreeing to before it’s too late.


Walker Morris’s employment team regularly advise employer and employee clients on settlement agreements and on the processes leading up to settlement agreements. If you would like to speak to us about anything in this article please contact David Smedley or Andrew Rayment.