settlement agreements

Settlement Agreements: Your Frequently Asked Questions

In the light of the recent Covid-19 Virus issues, Levi Solicitors LLP understands that staff issues are at the forefront of people’s minds.

A Settlement Agreement (formerly known as a compromise agreement) is a legally binding contract that employers use to set out terms and conditions agreed upon by an employee to end an employment relationship or resolve a dispute. They usually involve an employee receiving a payment in return for giving up their rights to bring about an employment rights claim and other claims against the employer.

Our Employment team specialises in helping employees and employers understand their rights and get the best outcome for both parties.

Frequently asked questions about Settlement Agreements

  1. Does an employee have to sign a Settlement Agreement?

No. If the employee does not agree to a Settlement Agreement, they can negotiate the terms. A specialist solicitor can help to secure the best agreement possible for the employee and the employer. If the employee decides to negotiate the issues they should consider the amount of compensation being offered; whether the terms will affect their ability to get a new job; and the further costs of instructing a solicitor to conduct those negotiations as that will be additional work not covered in the Agreement.

  1. Why has the employee been asked to sign a Settlement Agreement?

The employer will have asked the employee to sign it to record their agreement following an employment issue or the ending of the employment relationship. It clarifies what the parties have agreed: the amount of money that the employee will receive; and the agreement that the employee will not pursue legal action against the employer. It is a legally binding agreement.

  1. Does the employee need to obtain legal advice to make a Settlement Agreement?

Yes. Obtaining expert advice to make an employment Settlement Agreement is a legal requirement. A qualified lawyer must review and sign it before it is deemed They must be reviewed and signed by a qualified lawyer before they can be deemed lawful. The legal adviser must be identified and insured. At Levi Solicitors LLP, we have solicitors and legal executives who specialise in this service.

  1. Is a Settlement Agreement the same as redundancy?

You can use a Settlement Agreement in a redundancy situation. However, they are not the same. A Settlement Agreement documents that an employee agrees to waive their rights to bring any legal action against their employer. On the other hand, redundancy does not waive an employee’s rights.

In a redundancy situation, an employee may choose to sign a Settlement Agreement rather than take a redundancy package as they could get more money. However, by signing one they would give up their right to make a claim for unfair dismissal against their employer.

  1. What happens if either party breaches the Settlement Agreement?

Parties can breach a Settlement Agreement in a number of ways. For example, an employee bringing a claim against an employer despite agreeing not to in the terms of an agreement, or an employer failing to pay an agreed sum of money. As it is a legal document, once breached, a claim can be brought to the courts for breach of contract.

  1. How much will a Settlement Agreement cost?

Employees should not be charged for signing Settlement Agreements. The employer usually covers the cost. The Agreement will set this out.

We will not charge an employee more than the contribution set out in the Agreement, unless we are also instructed to negotiate with the employer to make amendments. In those circumstances, we will advise the employee of the likely additional costs involved and likely timescales. In relation to acting for employers, we can agree to conduct work on a fixed fee basis. For further information on our costs, please see our Employment pricing page.

  1. Are Settlement Agreements tax free?

The amount of Settlement Agreement compensation an employee receives will determine whether it is tax free. Typically, the first £30,000 of payments made is tax free. However, any payments made for wages and holiday pay will be taxable as usual under the employment contract.


Levi Solicitors LLP has a specialist Employment team, that offers advice to employers and employees on Settlement Agreements. We offer an online service so that you do not need to physically attend our offices. Contact us today on 0800 988 7756 or use the enquiry form.

social media

How can what you post on social media get you in trouble at work?

You may have read recently about ASDA dismissing an employee from ASDA in Bradford after he posted a link to an anti-religion video sketch by comedian Billy Connolly on his social media. This case has recently focused attention on how a social media post can get an employee into trouble with their employer.

What happened?

Mr Leach was employed by ASDA. He posted the video on his Facebook page and an ASDA colleague re-shared the video post. This then came to ASDA’s attention after a fellow employee complained about its content.

Mr Leach faced an internal disciplinary hearing and was dismissed without notice for breaching ASDA’s social media policy. ASDA insisted that the social media post was gross misconduct justifying dismissal. Mr Leach outlined points in his disciplinary hearing including the fact that he had been disabled after a brain injury caused by a car accident when he was three years old. Further that by the time of his dismissal, he had taken down the post and apologised to ASDA and his colleagues who his post had upset.

Following his dismissal, Mr Leach appealed and his case attracted media attention. At his appeal, Mr Leach was reinstated (and the penalty reduced to a final written warning). However, the appeal hearing ruled that he had committed an act of gross misconduct and had breached ASDA’s social media policy.

The case brings up some interesting issues about why an individual posting material on their own social media may breach their employer’s social media policy.

What would breach an employer’s social media policy?

The advent of social media has brought into focus why an employer should have a social media policy.

Employers must consider each alleged breach of policy on its merits and consider the content of any social media posting. Some general principles that arise from various cases have explored these issues include:

  1. Employers should have a written social media policy.

In Lerwill v Aston Villa FC (2010) a football club dismissed an historian for making comments on an online forum. He was reinstated in an Employment Tribunal hearing as the club did not have a social media policy. The Tribunal held that the dismissal was therefore unfair.

  1. There must be a direct link in some way to the employer.

In Smith v Trafford Housing (2012), an employer demoted a Christian employee who had posted comments on his personal Facebook page. The High Court had to decide whether the employer was in breach of contract in demoting the employee. The Judge considered the posts plus the employer’s policies. He decided that a reasonable reader would not have concluded that the postings were inappropriate or could be linked to the employer.

  1. A previous course of conduct, such as a warning to a staff member about a failure to follow social media policy of the employer, leaves an employee open to dismissal.

In the case of Richard Page v Lord Chancellor (2019) a Christian Magistrate who had a belief which opposed same sex couples and single parents adopting children lost an appeal about his dismissal. The employer had previously reprimanded him for making comments against policy. Further, the employer had requested he seek advice before making media comments and he failed to do so.

Freedom of expression

Article 10 of the European Convention on Human Rights (ECHR) allows everyone to have the right to freedom of expression. This includes the right to hold opinions and to receive and impart information and ideas without interference by public authorities. It also, however, includes a duty to behave responsibly and to respect other people’s rights.

Public authorities can restrict the right to freedom of expression if lawful, necessary and proportionate in order to protect other people’s rights and reputation. In many employment contracts, there will be a reference to abiding by an employer’s social media policy. This can arguably restrict a free expression of opinion on social media where the posting of inappropriate content may leave an employee open to disciplinary proceedings and even potential dismissal.

In an employment context, an employer has a business and good reputation to protect. Therefore, a social media post that may seem innocuous to some, may be to an employer a tweet too far.

If your company does not have a social media policy and you would like one drafting; or if you are an employee facing disciplinary action about a social media issue, our employment team can help. Call us today on 0800 988 7756 for a FREE initial discussion.