The email that lands just before close of play
It is a familiar scenario. An employee finishes their working day and, just before logging off, an email arrives. It is short, polite, and carries a tone of finality. Attached is a document – usually titled “Without prejudice and subject to contract”.
There is mention of a payment. There is a suggested deadline, and there is a request to “take independent legal advice”.
By the time clients call Magara Law, the questions are already forming:
“Do I actually need a solicitor for this?”
“Is this a good deal?”
“Should I just sign it and move on?”
These are entirely reasonable questions. But they all sit on top of a more important one. One that is often overlooked: “What am I giving up by signing this?”
What a settlement agreement really does
A settlement agreement is not simply a document confirming your departure. It is a legally binding contract that brings your employment – and any potential legal dispute – to an end on agreed terms.
In exchange for a payment (and sometimes additional terms such as a reference, company-wide announcement or outplacement counselling), you agree to waive your right to bring legal claims against your employer. That includes claims you may not yet have fully explored or even identified.
This is the critical point. You are not just accepting a payment, you are closing the door on your legal rights.
That is why these agreements are treated differently in law.
Why a solicitor is not optional
A settlement agreement is only legally valid if you receive independent legal advice from a qualified adviser, usually an Employment Solicitor. This is not a technicality. It is a statutory safeguard.
Without that advice:
- the agreement cannot lawfully waive your claims;
- your employer cannot rely on it; and
- in practical terms, the agreement will not proceed.
So yes – you do need a solicitor. But not merely to “tick a box”.
The requirement exists because you are being asked to give up statutory rights. The law insists that you understand the nature and consequences of that decision before it becomes binding.
The difference between “signing off” and advising
There is a misconception that the Solicitor’s role is simply to review the document and sign a certificate. That is the minimum requirement. It is not where the value lies.
A properly conducted review goes further. It involves stepping back from the document and looking at your situation as a whole. What has happened, what your legal position might be, and whether the offer reflects that position.
In practice, that means asking questions such as:
- Were you dismissed, or is this being presented as a mutual exit?
- Has a fair process been followed?
- Is there any indication of discrimination or whistleblowing?
- Are there contractual entitlements that have not been addressed?
Because until those questions are answered, it is not possible to assess whether the agreement is, in fact, a good deal.
Why you should not rush to sign
Settlement agreements are often accompanied by a sense of urgency. A deadline is given – sometimes reasonable, sometimes less so. The implication is that this is a straightforward administrative step.
It is not.
These agreements are voluntary. You cannot be compelled to sign one. If you choose not to sign:
- your legal rights remain intact;
- your employer may continue a process (disciplinary, redundancy, or otherwise); and/ or
- they may revisit the offer.
The key point is that you retain control at this stage. Signing is a decision, not an obligation.
The commercial reality: what is your claim worth?
The question most people ask is: “Is this a good settlement agreement?”
But that question only makes sense once you understand what you may be giving up.
A settlement agreement is, in essence, a commercial transaction. Your employer is seeking certainty. You are being asked to relinquish your right to pursue claims.
The value of the agreement should therefore reflect:
- the strength of any potential claims;
- the financial value of those claims; and
- the risk to the employer if those claims were pursued.
Without that analysis, it is difficult (if not impossible) to determine whether the figure being offered is appropriate.
If you want to understand more about how potential unfair dismissal claims are assessed, you may find it helpful to read our guide on unfair dismissal.
What a solicitor will actually assess
When advising on a settlement agreement, the document itself is only one part of the exercise. The broader legal and commercial context is what matters.
A structured review typically focuses on three core areas.
1. Potential legal claims
The starting point is whether you have viable claims. Amongst plenty of other claims, this could include unfair dismissal, discrimination, breach of contract, or whistleblowing.
Even the possibility of a claim can significantly affect your negotiating position. Employers usually do not offer settlement agreements in a vacuum. They do so to manage risk.
Understanding that risk is key.
2. The level of compensation
Once potential claims are identified, the next step is to assess whether the compensation reflects that risk.
This is not simply about headline figures. It involves looking at factors such as:
- loss of earnings;
- notice pay;
- statutory entitlements; and
- the potential value of tribunal compensation.
If you are unsure how discrimination claims are approached, our article on workplace discrimination provides useful context.
3. The non-financial terms
It is often the non-financial terms that are overlooked, despite having long-term consequences.
These may include:
- the wording of your reference;
- confidentiality obligations;
- restrictions on future employment; and
- the way your departure is described or communicated to third parties.
Each of these can affect your ability to move forward professionally. They should be considered carefully, not treated as standard wording.
Negotiation: the part many people miss
A common assumption is that settlement agreements are fixed. They are not.
They are, by their nature, open to negotiation. In many cases, there is scope to improve:
- the financial offer;
- the reference wording;
- the timing and structure of payments; and/or
- the effect of restrictive covenants on your future.
Employers will often expect some degree of negotiation. What matters is understanding your leverage and applying it in a measured, strategic way.
Legal fees and practicalities
Most employers will contribute towards your legal fees. This is not a gesture of goodwill. It reflects the fact that the agreement cannot be valid without independent advice.
That contribution will usually cover:
- reviewing the agreement;
- advising you on its implications; and
- completing the required legal certification.
The contribution virtually never covers negotiation fees. So, if additional work is required (for example, negotiating terms), that should be discussed clearly as soon as possible.
So, should you sign?
There is no single right answer that applies in every case, but the decision should be grounded in a clear understanding of your position.
You should only sign a settlement agreement if:
- you understand the rights you are giving up;
- the compensation reflects the value of those rights;
- the terms protect your future interests; and
- the agreement aligns with what you want to achieve.
Sometimes, signing is the right outcome. Sometimes, the agreement needs to be improved. In other cases, it may be better not to sign at all, and other avenues should be pursued.
A final perspective
Settlement agreements tend to arrive at moments of uncertainty, redundancy, disputes, or a breakdown in the working relationship. It is entirely natural to want a quick resolution. However, this is one of the few points in your employment where you have meaningful leverage.
Handled properly, it can result in a fair and orderly exit on favourable terms. Handled hastily, it can lead to undervaluing your position and closing off options that may have been available.
It is not simply a document to be signed. It is a decision to be made.
Before you sign anything – make the agreement work for you, not against you
A settlement agreement is often presented as the end of the process. In reality, it is the point where your position matters most.
By the time that document reaches your inbox, a decision has already been made on the employer’s side. The offer reflects what they believe the situation is worth, not necessarily what it is worth to you. Without proper legal scrutiny, it is easy to accept terms that fall short – financially, professionally, and legally.
This is where experienced legal advice changes the outcome.
At Magara Law, we do not simply “sign off” settlement agreements. We act for both employees and employers, which means we understand the pressures, risks, and strategies on both sides of the table.
For employees, that often means identifying what has been overlooked, strengthening your negotiating position, and securing improved terms. For employers, it means drafting and advising on agreements that are robust, enforceable, and commercially sound – reducing the risk of future disputes.
A settlement agreement should bring clarity, protection, and finality. But that only happens when it is properly assessed and, where necessary, negotiated.
If you have received a settlement agreement – or are considering offering one – now is the moment to take control of the situation.
Speak to Magara Law today for clear, strategic advice on settlement agreements. We will help you understand your position, strengthen it where needed, and ensure the outcome truly reflects your interests.
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