Don’t just sign it: getting proper value from a redundancy settlement
- Sian Jarratt
- 10 hours ago
- 7 min read
A redundancy settlement agreement is often presented as a final offer, ready to be signed and put behind you. In practice, it is rarely the end of the conversation. A careful legal review can lead to meaningful changes - from improved financial terms to clearer references and more balanced restrictions - ensuring the outcome properly reflects your position.
Redundancy often arrives with a mixture of urgency and uncertainty. There may be relief that an offer has been made, concern about what comes next, and a natural desire to bring the situation to a close. In that moment, a settlement agreement can appear straightforward: a document to be reviewed, signed, and put behind you.
In reality, it is one of the most important documents you are likely to sign in your working life.
A settlement agreement is not simply an administrative step. It is a legally binding contract that will usually bring your employment to an end on agreed terms and, crucially, require you to give up the right to bring claims against your employer. Once signed, it is intended to draw a clear line under the relationship.
Understanding what you are agreeing to - and whether the terms properly reflect your position - is therefore essential.
Why independent legal advice is required
Under UK law, a settlement agreement is only valid if the employee receives advice from an independent legal adviser. This is not a technicality. It reflects the seriousness and finality of what is being agreed.
The adviser’s role is to explain:
the effect of the agreement
the rights you are giving up
whether the terms are clear and workable
Employers will usually contribute towards the cost of this advice.
For many people, this requirement can give the impression that the process is largely procedural - that the agreement is effectively fixed, and the solicitor’s role is limited to confirming that everything is in order. That is often not the full picture.
The common misconception: “it’s just a formality”
It is very common for employees to approach a settlement agreement with the assumption that:
the terms are non-negotiable
the figures have already been finalised
legal advice is simply a box to tick before signing
This assumption is understandable, particularly where the situation has been handled quickly or where the employee is keen to move on. However, in many cases, settlement agreements are not drafted as final positions. They are drafted as offers. And offers can be discussed.
What a solicitor is actually assessing
A proper review goes beyond reading the document. It involves stepping back and considering the broader legal and practical context.
Your legal position
This includes looking at:
whether the redundancy process appears fair
whether there may be potential claims (for example, unfair dismissal, discrimination, or whistleblowing)
how strong those claims might be in practice
This is not about encouraging litigation. It is about understanding leverage. Employers are often seeking certainty. Where there is risk, that certainty has value.
The financial terms
A settlement agreement will typically include several financial components, such as:
a termination payment (often referred to as an ex gratia payment)
notice pay
accrued but untaken holiday
bonus or commission, where relevant
Each element needs to be checked carefully. In some cases, the overall figure may not fully reflect the underlying position once these components are properly analysed.
The non-financial terms
Some of the most important provisions are not financial at all. These can include:
the wording of any reference
confidentiality obligations
restrictions on future work
how your departure will be communicated internally or externally
These points can have a lasting impact on your future career and reputation.
Tax treatment
Settlement agreements often involve a mixture of taxable and non-taxable payments. Understanding how payments are structured - and whether that structure is appropriate - can make a material difference to what you ultimately receive.
The negotiation reality
Once a solicitor is involved, the dynamic often changes.
Employers generally use settlement agreements to achieve certainty. They want to bring the employment relationship to a close in a way that reduces the risk of future disputes. That objective means there is often some room for discussion once a considered response is provided.
It is not unusual for terms to be refined after legal advice has been taken. This may involve:
an increase in the termination payment
clarification or improvement of reference wording
adjustments to restrictive covenants
refinement of confidentiality provisions
This is not about creating conflict. In many cases, the process remains constructive and measured. It is about ensuring that the agreement properly reflects both the legal position and the practical realities of the situation.
Why people sign too quickly
There are understandable reasons why employees may be inclined to accept the first version of an agreement:
a desire to avoid further stress
concern about damaging relationships
relief that an offer has been made
uncertainty about what is “reasonable” to ask for
There can also be a more subtle psychological pull: the wish to close the chapter as quickly as possible, particularly where the experience has been difficult or unsettling. While that instinct is entirely human, it can lead to decisions being made before the full position has been explored.
Independent advice introduces a degree of distance at a point where perspective can be limited. It allows the situation to be assessed more objectively, with a clearer understanding of what is at stake.
When legal advice is likely to make the greatest difference
While every situation is different, there are some circumstances where a more detailed review and potential negotiation can be particularly important:
where you have significant length of service
where you hold a senior or specialist role
where the redundancy process has been unclear or rushed
where performance concerns have been raised shortly before redundancy
where there may be issues of discrimination or unfair treatment
where your remuneration includes bonus, commission, or other variable elements
In these situations, the initial offer may not fully reflect the legal and commercial context.
Cost and value
Employers will usually make a contribution towards the cost of independent legal advice. That contribution is often intended to cover a straightforward review of the agreement. If further work is required - for example, where negotiations are more involved - there may be additional costs to consider.
However, where the terms of an agreement are improved, even modestly, the value of that work can quickly outweigh the cost. Just as importantly, the process can result in clearer and more balanced terms, reducing the risk of issues arising later.
A more considered approach
The purpose of legal advice in this context is not to create difficulty or delay. It is to ensure that a binding agreement is entered into with a proper understanding of its effect, and that the terms reached are appropriate in light of the circumstances.
Settlement agreements are intended to provide finality. Taking the time to review them carefully - and, where appropriate, to engage constructively on the terms - helps ensure that finality is achieved on a sound footing.
Frequently Asked Questions
Do I need a solicitor for a settlement agreement in the UK?
Yes. For a settlement agreement to be legally valid, you must receive advice from an independent legal adviser, usually a solicitor. Without this, the agreement cannot be enforced.
Can I negotiate a redundancy settlement agreement?
In many cases, yes. While agreements are often presented as final, they are frequently an opening position. Once legal advice is taken, there may be scope to discuss financial terms, references, and other provisions.
Is the first redundancy settlement offer usually negotiable?
Not always, but often. The initial offer may reflect a starting point rather than a final position. A proper legal review can help identify whether there is scope for refinement.
What can a solicitor change in a settlement agreement?
A solicitor may be able to help refine:
the termination payment
notice pay or bonus arrangements
reference wording
confidentiality terms
post-employment restrictions
The extent of any changes will depend on the circumstances and the underlying legal position.
Who pays for a solicitor to review a settlement agreement?
In most cases, the employer contributes towards the cost of legal advice. This is typically intended to cover a standard review, although additional fees may arise if more detailed work or negotiation is required.
Will negotiating a settlement agreement delay payment?
A short period of discussion is common and does not usually cause significant delay. Employers often expect some engagement once legal advice has been taken and will usually proceed constructively.
What happens if I sign a settlement agreement without legal advice?
Without independent legal advice, the agreement is unlikely to be legally binding. However, signing prematurely without proper review can still create uncertainty, so it is important to take advice before signing.
How long do I have to consider a settlement agreement?
Most agreements include a timeframe for consideration, and this is usually reasonable. You should have sufficient time to take legal advice and understand the terms before deciding whether to sign.
Discussing your situation
Every redundancy situation has its own context, and the appropriate approach will depend on the particular facts, including the role, the process followed, and the terms offered. Eddison Cogan Lawyers advise individuals on settlement agreements and redundancy arrangements, with a focus on achieving clear, practical outcomes through careful analysis and measured negotiation.
Where appropriate, this can include engaging constructively with employers to refine the terms of a settlement agreement, drawing on experience in negotiation and advocacy to ensure that both the legal position and the practical realities are properly reflected.
About the author
Sian Jarratt
Employment Advisor, Eddison Cogan Lawyers
Sian advises on a broad range of employment matters, including redundancy, workplace disputes and settlement agreements. She works closely with individuals navigating periods of change, helping them to understand their position and approach decisions with clarity and confidence. Her work focuses on practical outcomes, combining careful review of legal rights with a measured and constructive approach to resolving issues.
The following note is included for clarity and completeness:
This article is provided for general information purposes only and does not constitute legal advice. The law relating to employment and settlement agreements in England and Wales may change over time, and the application of the law will depend on the specific circumstances of each case. Reading this article does not create a solicitor-client relationship.
If you require advice on your particular situation, you should seek independent legal advice.
