A settlement agreement may arrive with a request to sign quickly, a proposed leaving date and an offer that sounds final. Before you make that decision, this guide to independent legal advice explains what the process is for, what your adviser should check and where there may be room to improve the terms. The aim is not to create conflict. It is to ensure you understand exactly what you are giving up and whether the agreement provides a fair basis for moving on.
When independent legal advice is required
In the UK, a settlement agreement is usually used to bring an employment relationship to an agreed end or to resolve a workplace dispute. In return for compensation or other agreed terms, an employee agrees not to bring specified employment claims against their employer.
For that waiver of rights to be legally valid, the employee must receive independent legal advice on the agreement and its effect. Your adviser must be independent of your employer and insured to provide the advice. They will normally sign a certificate confirming that advice has been given. Without this step, the agreement may not meet the statutory conditions needed to prevent claims.
Independent does not mean your employer cannot pay the legal fee. It is common for an employer to contribute a fixed sum towards the cost of advice. The solicitor is still acting for you, not for the employer. A proper adviser will carry out conflict checks, explain the document in plain English and advise you according to your interests, including where the proposed deal should be questioned or negotiated.
What independent legal advice should cover
A certificate is only one part of the process. The value of independent legal advice is in the review that happens before you decide whether to sign. Your adviser should understand the circumstances leading to the offer, your role, length of service, notice entitlement and any concerns you have about how you have been treated.
They should then check whether the agreement identifies the claims being waived clearly and whether the compensation reflects the rights and potential claims you may be giving up. This does not mean every agreement must result in a negotiation. Sometimes the offer is sensible and the priority is a prompt, clean departure. In other cases, the figures or wording do not properly reflect the employee’s position.
The review should also consider practical terms that can matter as much as the payment. A good agreement can protect your reputation, support your next role and prevent unwelcome surprises after you leave.
The terms worth checking before you sign
Every settlement agreement is different, but the following areas often need close attention:
- Compensation and notice pay: Check the termination payment, pay in lieu of notice, holiday pay, bonus, commission, benefits and any share arrangements. The headline figure is not always the full financial picture.
- Tax treatment: Some termination payments may be paid tax-free up to the relevant statutory limit, but notice pay, accrued holiday, bonuses and certain other sums are normally taxable. The agreement should set out the intended treatment carefully.
- Reference: If a reference is agreed, it should usually be attached to the agreement or described precisely. An assurance that a reference will be “appropriate” can leave too much open to interpretation.
- Restrictive covenants: Clauses concerning clients, competitors, colleagues or confidential information may continue after employment ends. An agreement can sometimes restate existing restrictions, but it should not quietly introduce broader obligations without proper consideration.
- Confidentiality and announcements: These clauses should protect legitimate business interests without preventing you from speaking to your partner, close family, professional advisers, medical advisers or relevant authorities where appropriate.
Your adviser should also check the leaving date, return of company property, legal costs contribution, agreed wording for internal or external announcements, and whether you will receive any outstanding expenses. Small drafting points can have a real effect on how straightforward your exit feels.
How the advice process usually works
Start by sending the proposed agreement and any relevant documents, such as your contract of employment, bonus scheme, correspondence about redundancy or a grievance, and details of the offer made. You do not need to assemble every document before seeking advice, but the more context your adviser has, the more specific their recommendations can be.
The adviser will review the agreement and speak with you, usually by telephone or video call, about the background and your priorities. You may simply want certainty and an agreed reference. You may be concerned that the payment does not reflect notice, discrimination concerns, a flawed redundancy process or a dispute about commission. These details affect the advice.
You should receive clear guidance on whether the agreement is suitable to sign as drafted, which terms warrant amendment and what negotiation approach is proportionate. If changes are needed, they can often be raised professionally through your adviser or directly with your employer, depending on the circumstances. Once wording is agreed, you sign the document and your adviser completes the required certificate.
Who pays for the legal advice?
Employers commonly offer a contribution towards the cost of independent legal advice, often stated in the settlement agreement. This is intended to allow the employee to obtain the advice needed for a valid agreement. Ask whether the contribution covers the full cost of an initial review, advice call and certificate, or whether additional work such as negotiations will be charged separately.
If negotiations become more involved, the employer may agree to increase its contribution, particularly where amendments are needed to reach a workable deal. That is not guaranteed. Your adviser should be transparent about fees and discuss the likely cost before undertaking work outside the employer-funded allowance.
When it may be sensible to negotiate
A proposed agreement should not be assessed by the compensation figure alone. A modest payment may be reasonable where there is a genuine redundancy situation, full notice and holiday payments are separately provided, and there are limited prospects of a claim. A higher payment may be justified where the process has been mishandled, you have significant contractual entitlements or there are credible concerns about discrimination, whistleblowing, unpaid remuneration or unfair dismissal.
Timing also matters. If you are being asked to sign before receiving key information, such as redundancy scoring, a bonus calculation or details of a new role, it may be sensible to ask for time or clarification. There is usually no benefit in signing before you understand the terms. At the same time, delaying without a clear purpose can make an amicable resolution harder, so the right approach depends on the facts and your objectives.
For employers, properly funded independent advice and carefully drafted terms are not merely formalities. They help create certainty, reduce the risk of later disputes and demonstrate that the agreement was entered into fairly.
Common questions about independent legal advice
Can my employer choose my solicitor?
Your employer may suggest a firm or provide details of advisers who can assist, but the adviser must act independently for you. You are entitled to choose an appropriate adviser, provided they are qualified to give the required advice and willing to act.
Does receiving advice mean I have to sign?
No. Advice gives you the information needed to make an informed decision. You may decide to sign, seek changes, reject the offer or continue discussions. The decision remains yours.
Is my discussion with the adviser confidential?
Yes. Communications with your solicitor are confidential and legally privileged, subject to the usual legal exceptions. Your adviser cannot report your instructions or concerns to your employer without your authority.
A settlement agreement can bring welcome certainty, but only when its terms match what you need next. Take the time to obtain clear, independent advice, ask the questions that matter to you and make a decision you can feel confident about.