Settlement Agreement Solicitor Checklist

The headline settlement figure is often the first thing employees look at, but it does not always show the full picture.

A solicitor should check whether the agreement clearly explains what is being paid and why.

The payment section may include salary owed up to the termination date, notice pay, holiday pay, redundancy pay where relevant, bonus or commission, benefits, expenses, pension contributions, compensation or ex-gratia payments, and the employer’s contribution towards legal advice costs.

This matters because some payments may be sums you were already entitled to receive under your contract.

A settlement package can look more generous than it really is if salary, notice, holiday or bonus payments have been rolled into one figure without a clear explanation.

Before signing, it is important to understand what is contractual, what is compensation, what may be taxed and when the money should be paid.

Understand how settlement agreement payments work, what you may be owed, which terms could be negotiable and how tax can affect the final amount.

Tax is one of the areas where settlement agreements can cause confusion.

You may have been told that part of the settlement payment can be paid tax-free. However, the position depends on what the payment is for and how the agreement is structured.

Salary, holiday pay and notice pay are usually treated differently from compensation for loss of employment.

A solicitor should help you understand whether the tax wording is clear, including which payments are being taxed, whether compensation is identified separately, whether the agreement includes tax indemnity wording, whether you may carry any HMRC risk, and whether specialist tax advice may be needed.

Your settlement agreement solicitor will not usually act as your accountant or tax adviser unless specifically agreed.



However, they can help you understand whether the wording raises any obvious questions before signing, especially where the payment structure is unclear or the settlement is more complex.

A settlement agreement usually asks you to give up the right to bring certain employment claims against your employer.

Even if you do not intend to bring a claim, you should still understand what you are being asked to waive.

Depending on the wording and your circumstances, this may include claims relating to unfair dismissal, discrimination, whistleblowing, breach of contract, unlawful deduction from wages, holiday pay, redundancy pay, notice pay or other employment rights.

You may feel that none of this applies to you. That may be right.

But if there has been a grievance, redundancy process, performance issue, sickness absence concern, discrimination issue or workplace dispute, the waiver section should be properly explained before you sign.



The aim is not to encourage a claim you do not want to bring. It is to make sure you understand what signing will prevent you from doing later.

Settlement agreements often include confidentiality clauses, non-disparagement wording and reference terms.

These clauses can affect what you can say about the agreement, the circumstances of your departure and what your employer may say about you in future.

A solicitor may check who you are allowed to tell about the agreement, whether you can discuss it with family, advisers or a new employer, whether the confidentiality clause is too wide, whether non-disparagement wording applies to both sides, and whether an agreed reference should be included or attached.

A reference clause can be especially important if you are moving into another role or applying for new jobs.

Without clear wording, there may be uncertainty about what your employer will say later.



A solicitor can help you understand whether these clauses are clear, workable and suitable for your situation before you agree to them.

Before signing a settlement agreement, it can help to understand what your solicitor is checking.

The review should help you understand whether the agreement is suitable to sign, or whether something should be clarified first.

Not every point needs negotiation.

Sometimes the agreement is suitable once it has been explained properly.



In other cases, a careful clarification around payment, tax, reference wording, confidentiality, restrictions or legal costs may make the agreement clearer, fairer or easier to comply with.

It is best to speak to a solicitor before you sign anything.

Once a settlement agreement has been signed and becomes binding, it may be difficult to reopen the terms.

You should consider getting advice promptly if your employer has given you a deadline, you do not understand the payment breakdown, tax treatment is unclear, you are unsure what claims you are giving up, there has been a workplace dispute or redundancy process, restrictions may affect your next role, or the reference wording has not been agreed.

Getting advice does not mean you are trying to make the process difficult.



It means you are checking the agreement carefully before making a final decision.

Ellis Hass & Co advise employees on settlement agreements across a wide range of workplace situations, including redundancy, exits by agreement, disputes, grievances, performance concerns, sickness absence issues and senior employee departures.

Where Ellis Hass advises you on a settlement agreement, we act for you.

Our role is to explain the terms clearly, check the key parts of the agreement and help you understand the effect of signing before you make your decision.

Ellis Hass can help you understand:

• Whether the payment structure is clear
• Whether salary, notice pay, holiday pay, bonus or commission need checking
• How the agreement deals with tax and legal costs
• What rights and claims you are being asked to waive
• Whether confidentiality, reference or announcement wording needs attention
• Whether restrictive covenants could affect your next role
• Whether anything should be clarified before signing

The aim is to give you clear, practical advice so you can decide whether to sign, clarify or negotiate.

Clients benefit from:

• Over 30 years’ experience advising clients on employment law and settlement agreements
• Practical, independent advice focused on your position
• Clear explanations of payments, rights and restrictions
• Measured guidance on whether to sign, clarify or negotiate

The aim is to help you understand what you are signing and whether anything needs to be checked before the agreement becomes final.

If you have been offered a settlement agreement, the first step does not need to feel like a big commitment.

An initial call with Ellis Hass is a chance to explain that you have received a settlement agreement, share any deadline and understand what the next step may involve.

It can help to have the settlement agreement, your employment contract, recent payslips, any bonus or benefits documents, relevant correspondence and details of any deadline available if you have them.

During an initial call, you can explain what you have received, share any deadline and get a clearer sense of how the settlement agreement advice process may work.

Ellis Hass can help you understand what documents may be useful, whether your agreement sounds like it may need a straightforward review or closer attention, and what the next step could be.

The call is designed to help you feel less uncertain about how to get started, without making the first step feel bigger than it needs to be.

Full legal advice would follow once the agreement and relevant documents have been reviewed.

A settlement agreement should not feel like a document you sign without understanding it.

With the right advice, you can move forward with clearer information, fewer doubts and more confidence before making your decision.