The End of the Furlough Scheme

With the furlough scheme starting to wind down, sadly there is likely to be a renewed focus on redundancies and the employment market. For an employee or an employer, the termination of employment can be very stressful and take up a considerable amount of time.

The purpose of a Settlement Agreement

The purpose of a settlement agreement is to allow an employer and employee to terminate an employment relationship with certainty for all sides. This should avoid any potential costly disputes. It therefore makes sense, whether you are an employer or employee, to ensure that the settlement agreement is properly drafted to reflect the unique circumstances of the termination.

Settlement agreements are designed to stop claims emerging from either side further down the line after the employment term has come to an end. The risk remains that if a settlement agreement is not put into place correctly, there is an ongoing risk of potential liability that rolls on well after the active employment relationship has come to an apparent close.

What a Settlement Agreement needs to Contain

Settlement agreements need to meet certain standards to be legally enforceable. These are:

  • The settlement agreement must be in writing.
  • The settlement agreement must relate to ‘particular proceedings’ i.e reflect the individual situation rather than just be a generic document.
  • Independent legal advice. There must be a named independent legal adviser from whom the employee has received advice relating to the terms and effect of the proposed settlement agreement. This particularly focuses on the employee’s ability to pursue their rights before an employment tribunal.
  • The adviser of choice must be covered by professional indemnity insurance
  • The settlement agreement must state that the legal conditions regulating settlement agreements are satisfied for it to be valid.

If the settlement agreement fails to comply with these legal requirements, it will not be seen as being valid and an employee may still be able to pursue a claim against the employer.


rhw commercial solicitors, Guildford, Surrey.rhw’s employment team have the legal expertise to advise you and ensure your settlement agreement is legally binding. In these challenging times as employment support is withdrawn by the Government, we can advise you as an employee on both the settlement terms being offered and also on any potential claims you might have against your employer which you may not be initially aware of.

If you are an employer we can ensure what you are offering your employees in terms of a settlement agreement is legally acceptable. rhw’s employment team can help you through the process with efficiency and expertise and ensure that the best result is achieved.

Call rhw employment solicitors in Guildford on 01483 302000 or simply fill in the easy contact form or if you prefer you can email guildford@rhw.co.uk