Being offered a settlement agreement? Describe your situation and get instant plain English guidance on whether the offer is fair and what to do next.
Free to use: Run any checker and read your full results — no account needed. Register free to download your results as a PDF report and access the Letters generator.
Describe your situation and we'll check your settlement rights
Tip: Focus on one issue at a time for the clearest answer. If you have multiple issues, run them separately for a full picture on each one.
Include how long you have worked there, what happened, and what you need to know.
Free · No data stored · Guidance only, not legal advice
Analysing your situation...
Checking against current UK employment law
Generating...
What you need to know
A settlement agreement (formerly called a compromise agreement) is a legally binding contract between an employee and employer, usually made when employment ends. In exchange for a financial payment, the employee gives up their right to bring specified employment tribunal claims. It cannot be entered into without the employee receiving independent legal advice.
For a settlement agreement to be legally valid, you must receive advice from a qualified independent adviser — usually a solicitor — who is not acting for the employer. This adviser must sign the agreement confirming they have advised you. Employers typically contribute towards the cost of this advice, usually between £250 and £500 plus VAT.
There is no set formula for what a settlement agreement should be worth. Common components include notice pay, accrued holiday pay, an ex-gratia payment, and sometimes an enhanced amount. A solicitor can advise you on whether the offer reflects what you might receive at tribunal. Tactical considerations such as the stress and cost of litigation also matter.
The first £30,000 of a genuine compensation for loss of employment payment is usually tax-free. However, payment in lieu of notice (PILON) is fully taxable as earnings. Holiday pay, bonuses and commission owed are also taxable. Your solicitor can help you understand the tax treatment of each element of your package.
Your employer may open settlement discussions on a 'without prejudice' basis, meaning the conversation generally cannot be used as evidence in tribunal proceedings. Since 2013, employers can also initiate 'protected conversations' about ending employment even where there is no existing dispute, provided there is no improper behaviour.
You should be given a reasonable period to consider the offer and take advice — ACAS recommends at least 10 calendar days. You cannot be pressured into signing immediately. Once signed, a settlement agreement is final and binding, so take the time you need.
This guidance is for general information only and does not constitute legal advice. Always verify current figures and legislation on GOV.UK or seek professional advice for your specific situation.
Unfair dismissal occurs when your employer dismisses you without a fair reason or without following a fair procedure. You currently need 2 years of continuous service to claim — this reduces to 6 months from January 2027.
Fair reasons for dismissal include capability, conduct, redundancy or some other substantial reason. Even with a fair reason the procedure must be fair — including investigation, written notice, a disciplinary hearing, right to be accompanied and right of appeal.
Being made redundant is one of the most stressful things that can happen at work. Understanding your rights can make a real difference to the outcome and to what you receive.
Who qualifies for statutory redundancy pay? You must be an employee with at least 2 continuous years of service who has been genuinely made redundant.
How is redundancy pay calculated?
Your employer must consult you before making you redundant and give you a minimum notice period of 1 week per year of service, up to 12 weeks maximum.
Unfair dismissal occurs when your employer dismisses you without a fair reason or without following a fair procedure. You currently need 2 years of continuous service to claim — this reduces to 6 months from January 2027.
Fair reasons for dismissal include capability, conduct, redundancy or some other substantial reason. Even with a fair reason the procedure must be fair — including investigation, written notice, a disciplinary hearing, right to be accompanied and right of appeal.
Guidance sources & verification