If a role is ending and a settlement agreement has arrived, it is tempting to start applying and treat the paperwork as a formality. The terms you sign now can shape the reference you take with you, where you are allowed to work next and what you can say about the exit, which is why settlement agreement solicitors deal with the document before interviews get under way. Employee-only firms such as Settlement Advice review these agreements for people across England and Wales, often remotely, with the cost frequently covered by a contribution from your employer.
In England and Wales, a settlement agreement is a contract. In return for a payment and any other promised terms, you typically agree not to bring employment tribunal claims, such as unfair dismissal or discrimination. That waiver only works if you take independent legal advice on the terms and on how they affect your right to claim. The adviser has to be independent of your employer and insured. You do not have to use a firm your employer names. The choice of adviser is yours.
The reference is often the clause that matters most once you start applying. Many drafts offer only a short factual statement, or they leave the wording vague. If a manager has promised a more useful reference, that should appear in the agreement. GOV.UK explains what an employer can say in a job reference, including that a reference must be accurate and not misleading. Agreed wording, and a named person who will provide it, can stop a later application being held up by a delayed or unexpected reply.
Then come the clauses that can follow you into the next role. Restrictive covenants may limit the employers you can join, the clients you can approach or the area in which you can work, sometimes for months after you leave. Some of those limits are reasonable. Others go further than the job you actually did. If you already have interviews in the same sector, those sentences are worth reading slowly. A restriction that looks tidy on the page can delay your next salary if it forces you to turn work down.
Confidentiality and non-disparagement clauses sit beside that. They should be wide enough to protect genuine business information and narrow enough that you can still get advice, talk honestly to a future employer about your experience, and report wrongdoing if you need to. Interviewers often ask why you left. It helps to know, before you sign, what you are allowed to say and whether an agreed announcement or leaving statement has been written down.
The money still needs a careful look, even if your attention has moved to the next vacancy. Statutory redundancy pay, notice pay, holiday pay, bonuses and any extra ex-gratia sum are calculated on different rules and are not all taxed in the same way. If a large slice of the package has been labelled as compensation when it is really notice, the amount that reaches your account may be lower than the headline figure. Outstanding expenses, commission or share awards are easy to miss if you only read the front page.
The long schedule of claims you would be waiving is not legal clutter. Unfair dismissal usually needs two years’ continuous employment. Unpaid wages, holiday pay, notice and discrimination do not work on the same clock. If the ending of the role is tied to a health issue, pregnancy, a complaint you raised, or how you were selected, those facts belong in the advice even if you have only been in the job a short time. Signing too quickly to “get it over with” is how people give up claims they did not realise they had.
You should be given a reasonable time to consider written terms and get advice. As a general rule, that means at least ten calendar days unless you agree a shorter period. Use the time to send your contract, payslips, any letters about the process and, if you have them, details of roles you are already applying for. An adviser cannot check a restriction against a job they have not been told about.
You remain free not to sign. If you refuse, the underlying process continues, whether that is a redundancy consultation, a performance procedure or a dispute. Some people go ahead once they understand the trade-off. Others ask for a usable reference, a narrower restriction or a clearer breakdown of the pay before they start interviewing. The value of the review is that those choices are made with the whole document in view, not just the number on page one and the hope of a new start.
