About to Sign an Employer Settlement Agreement In The UK?

Suppose you’re in the unfortunate situation of being offered a settlement agreement by your employer. In that case, there’s a little-known benefit you should be aware of: an employer in the UK usually covers the cost of your legal advice.

This isn’t some generous act on their part but rather a legal requirement under UK law. The employer must ensure the agreement is fair, and you need independent legal advice for it to be legally binding. So, if your employer pays, why not ensure you get the most out of it?

Why Do Employers Pay for Legal Advice in Settlement Agreements?

In the UK, it’s often a legal requirement to seek independent legal advice for a settlement agreement to be valid. The reason for this is simple: the agreement typically involves giving up your legal rights to sue the company (often in exchange for a financial settlement). Judges want to ensure you’re not signing away your rights without fully understanding your agreement.

Employers usually pay for this legal advice to ensure the agreement is legally enforceable. If they didn’t pay, there’s a risk the agreement could be challenged later, potentially leading to costly legal battles. This makes the whole process better for both you and the employer. The catch is that the employer usually has a cap on the amount they’ll pay for legal fees, typically in the range of £500 to £1,000.

So, on the surface, this might seem pretty straightforward, but there’s a lot of room for negotiation—if you play it right.

You’re Getting Free Legal Advice (Use It)

You’re getting free legal advice. Some people get sketched out by the idea of a lawyer being “paid for by the employer,” but that’s not how it works. The lawyer is there to make sure you’re not getting screwed over, not to do your employer any favours. They’ll review the terms with you, explain everything, and—more importantly—suggest changes that benefit you.

That’s key because many people just take whatever number they’re offered without realizing they could get more. What looks like a decent payout might be lowballing you. A good lawyer will flag this and help you push back.

Watch Out for Non-Compete Clauses

Al Vigier, the CEO of Caseway, says, “One of the biggest traps in these agreements is the non-compete clause. If you’re not careful, you could end up stuck in a situation where you can’t work in your industry for months (or even years).”

Sometimes, these clauses are unenforceable, but companies still throw them in because they know most people won’t fight them. A lawyer can help you narrow or remove it entirely so it doesn’t mess with your career.

If you’re wondering whether legal advice in these situations is worth taking, let me give you some real-life examples of how it has made an enormous difference.

Case 1: The Severance Package That Was Way Too Low

A buddy of mine was let go from his corporate job and handed a termination/settlement agreement. The company offered him two months’ pay and a generic reference letter. He wasn’t sure if that was decent, so he took it to the lawyer (paid for by the employer).

It turns out his company was lowballing him. He was entitled to at least four months’ pay based on his long tenure there. The lawyer also noticed they didn’t offer him any extended healthcare benefits, which would’ve cost him a ton if he had to pay for them.

After some back-and-forth negotiations, John ended up with an extra £5,000 in severance and six months of extended healthcare. He would’ve missed out on all that if he had just signed the original offer.

Case 2: The Non-Compete That Would Have Wrecked a Career

Sarah worked for a technology company in Kent and was given a settlement agreement with a 12-month non-compete clause. She figured she had no choice but to accept it, but when she showed it to a UK lawyer, they immediately flagged it as too restrictive.

Since her skills were highly transferable, being locked out of her industry for a year could ruin her career. The lawyer pushed back, arguing that the clause was unreasonable. After negotiations, they cut the non-compete to three months and secured a better exit package for her.

Sarah could find another job sooner instead of being in limbo for a year.

As Al Vigier says, “Signing the settlement agreement, getting it over with, and moving on is tempting. But don’t rush it. What looks like a fair offer at first glance might be missing key benefits or leaving money on the table. Your employer wants to wrap things up as smoothly (and cheaply) as possible. You should ensure you’re getting the best deal before signing anything.”

The legal advice you’re getting is a real chance to maximize your payout, protect your career, and make sure you’re not signing anything that could screw you over later. Always ask the lawyer to walk you through every detail. This is especially true for anything that limits your future, like non-compete clauses or confidentiality agreements.