Settlement Agreements During Redundancy: Expert Legal Advice to Protect Your Rights
Being told your role is at risk of redundancy can feel overwhelming. You may be worried about your income, your future and whether the agreement you’ve been handed is fair. Many employers offer a settlement agreement as part of the redundancy process, but signing it without the right guidance can cost you far more than you realise.
This page explains everything you need to know — in plain English — about how settlement agreements work, what you should be offered and how to protect your position. Whether you’re being encouraged to leave quickly or you’re simply unsure if the numbers add up, we’ll help you understand your rights so you can make confident decisions.
At Stephen Rimmer, our employment law team advises employees across Sussex and the South East every day on redundancy settlement agreements. We make sure you’re treated fairly, properly compensated and fully protected.
If you’ve been asked to sign a settlement agreement, this guide will show you what to look for — and when to get specialist legal support.
What Is a Settlement Agreement?
A settlement agreement is a legally binding contract between you and your employer.
Its purpose is simple: your employer offers a sum of money (or other terms) and, in return, you agree not to bring any future employment claims.
Common claims it covers include:
- Unfair dismissal
- Redundancy pay disputes
- Notice pay
- Discrimination
- Holiday pay
- Breach of contract
Once signed, you cannot go back later and claim anything else — which is why getting the terms right is essential.
Under UK law, a settlement agreement is only valid if you receive independent legal advice from a qualified solicitor, and your employer must contribute to the cost of that advice.
Consult our employment contracts solicitors in Eastbourne and Hastings
For clear, expert employment contract advice, please contact a member of our employment law team for a no obligation discussion:
- Call: 01323 434416
- Email: enquiries@stephenrimmer.com
- Or pay us a visit at 21 Lushington Road, Eastbourne BN21 4LG
For more information in respect of our services, see employment law for employers.
Why Do Employers Offer Settlement Agreements During Redundancy?
Employers use settlement agreements for several reasons, particularly during redundancy:
- Certainty and Closure
They want to avoid the risk of disputes or claims after you leave. A settlement agreement draws a clear legal line under the relationship.
- Speed and Efficiency
It allows the employer to move faster than the standard redundancy process, which can sometimes be lengthy.
- Reduced Risk of Claims
Even when redundancy is genuine, employers know that disputes about selection, procedure or discrimination can arise. Settlement agreements reduce those risks.
- Confidentiality
Many employers want reassurance that you won’t discuss the circumstances of your departure. Confidentiality clauses are common.
- Reputation Management
Businesses want to protect internal morale and external image. A well-managed settlement agreement supports that.
If you feel pressured to accept an agreement quickly, you should speak to an employment lawyer before signing anything.
What Should Be Included in Your Settlement Agreement?
A well-drafted agreement should set out all payments, benefits and obligations clearly. Key elements usually include:
Financial Terms
- Redundancy pay (statutory or enhanced)
- Payment in lieu of notice (PILON)
- Holiday pay for untaken leave
- Compensation payment (often tax-free up to £30,000)
- Bonus or commission payments owed
- Company benefits (pension, healthcare, car allowance)
Non-Financial Terms
- Confidentiality obligations
- Agreed reference wording
- Return of company property
- Non-disclosure provisions
- Waiver of employment rights
- Non-derogatory statements (mutual protection)
Practical Terms
- Termination date
- Payment dates
- Tax indemnities
- Employer’s legal fee contribution
You should always check that all verbal promises match what’s written down — if it’s not in the agreement, you can’t rely on it.
Your Rights and Protections
You have strong rights during redundancy and when being offered a settlement agreement:
You have the right to independent legal advice
This is not optional — the agreement isn’t valid without it.
You cannot be forced to sign
Pressure, threats or artificial deadlines are not acceptable.
You’re entitled to the correct redundancy pay
This includes statutory redundancy pay and notice rights unless an enhanced package is offered.
You can negotiate
Many employees don’t realise this, but settlement agreements are negotiable — including the financial package and the reference.
Your employer must pay towards your legal advice
Most contribute £350–£750 + VAT, sometimes more for senior roles.
You should be given enough time to consider the offer
Good practice suggests at least 10 days.
Why Independent Legal Advice Is Essential
Settlement agreements protect employers — not employees. Independent legal advice ensures the agreement is fair, lawful and genuinely in your best interests.
A specialist employment lawyer will:
- Review the terms and compensation
- Identify any missing pay you’re entitled to
- Protect you from restrictive clauses that limit future employment
- Negotiate a better financial package
- Ensure tax treatment is correct
- Confirm the agreement fully protects your rights
Without expert advice, you may sign away valuable claims or accept less compensation than you deserve. Once signed, you cannot undo the agreement.
Common Mistakes to Avoid
- Signing Too Quickly
Employers often create a sense of urgency. Take time to understand the implications.
- Assuming the Offer Is Final
Settlement agreements are almost always negotiable.
We regularly secure higher payments for clients who initially thought the offer was fixed.
- Not Checking All Payments
We often find missing:
- Bonuses
- Commission
- Holiday pay
- Overtime
- Contractual benefits
- Accepting a Standard Reference
You can negotiate the wording of your reference — it matters for your future career.
- Overlooking Restrictions
Post-termination restrictions (like non-compete clauses) can impact your next move.
We check that they’re fair and enforceable.
- Not Getting Advice Early Enough
Waiting until the last minute leaves less room for negotiation.
At Stephen Rimmer, our employment lawyers specialise in advising employees on redundancy and settlement agreements across Eastbourne, Hastings, Brighton and the wider South East.
What you can expect from us:
✔ Fast, clear advice
We understand the pressure you’re under — we respond quickly and explain everything in straightforward language.
✔ Full review of your settlement terms
We ensure every payment, benefit and clause is correct and in your favour.
✔ Skilled negotiation
If your offer is too low or the terms aren’t fair, we negotiate firmly and professionally to secure the best outcome.
✔ Fixed-fee transparency
Most employers cover our costs. Where extra negotiation is needed, we’ll always explain fees upfront.
✔ Practical, supportive guidance
You’ll get clear advice on your options, your rights and what a fair settlement looks like.
✔ Protection for your future
From references to restrictive covenants, we ensure your agreement supports your next career step — not hinders it.
Our goal is simple: to protect you, maximise your compensation and give you peace of mind at a difficult time.
Consult our employment contracts solicitors in Eastbourne and Hastings
For clear, expert employment contract advice, please contact a member of our employment law team for a no obligation discussion:
- Call: 01323 434416
- Email: enquiries@stephenrimmer.com
- Or pay us a visit at 21 Lushington Road, Eastbourne BN21 4LG
For more information in respect of our services, see employment law for employers.
How can we help you?
Call us today on 01323 644222 to get the specialist help you need.