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15 Sep 23
The Benefits of Settlement Agreements: A Quick, Cost-free, and Risk-free Resolution to Employment Disputes


In the realm of employment law, disputes between employers and employees are not uncommon. Whilst some opt for a formal and time-consuming process like filing a claim with the Employment Tribunal, there exists a quicker, more cost-effective alternative: the Settlement Agreement. This article aims to shed light on the multiple benefits of opting for a Settlement Agreement over other dispute resolution methods.

What is a Settlement Agreement?

A Settlement Agreement is a legally binding contract between an employer and an employee that serves to resolve an employment dispute. It often entails the employee agreeing not to pursue any claims in an Employment Tribunal or a court, in return for a severance package or other benefits.

Risk-Free Resolution

One of the biggest advantages of a Settlement Agreement is the absence of risk for both parties involved. Unlike an Employment Tribunal, where the outcome is uncertain and could result in financial or reputational damage for either party, a Settlement Agreement ensures a negotiated outcome that both parties agree to.

Cost-Free for the Employee

A significant benefit for the employee is that the Settlement Agreement is typically cost-free. The employer usually covers the legal fees involved, including the cost of the employee seeking independent legal advice, which is a statutory requirement before signing a Settlement Agreement.

Speed and Efficiency

Settlement Agreements are designed to be swift and efficient. At Watkins & Gunn, we offer remote consultations and same-day service, making the process even more convenient. This efficiency stands in stark contrast to the lengthy process involved in taking a case to the Employment Tribunal, which can be both mentally and emotionally draining.

Stress-Free Process

The emotional toll of an employment dispute can be considerable for both parties. Settlement Agreements offer a less confrontational way to resolve the conflict, avoiding the stress that comes with a court or tribunal case.


Settlement Agreements often include confidentiality clauses, protecting both the employer’s business interests and the employee’s professional reputation. This feature is generally not available in Employment Tribunal proceedings, which are public and could potentially harm both parties’ reputations.


Settlement Agreements offer a great deal of flexibility in terms of the conditions set forth. Both parties can negotiate terms that are mutually beneficial, which is often not possible in the rigid structure of an Employment Tribunal.


Whilst the Employment Tribunal serves an important function in resolving employment disputes, it’s not always the most practical or beneficial route for either party. Settlement Agreements offer a quicker, cost-free, and risk-free alternative that can bring about a satisfactory resolution for both the employer and the employee.

By considering a Settlement Agreement as a viable option for resolving employment disputes, parties can save time, money, and emotional energy, making it a win-win solution in many cases. Contact us today if you would like to arrange an appointment.

This article is for general information only and does not constitute legal or professional advice. For further information and bespoke specialist advice contact our employment law team at or call 01495768932

Contact us today 0300 1240 400