What makes a settlement agreement valid?
To waive employment tribunal claims, a settlement agreement must be in writing, relate to particular complaints or proceedings, and follow advice to the employee from an insured, relevant independent adviser who is named in the agreement. It must also state that the statutory conditions are satisfied. A general 'full and final settlement' clause is not enough.
The statutory conditions
Section 203 of the Employment Rights Act 1996 makes most agreements to contract out of employment rights void. A settlement agreement is an exception when it meets these conditions:
- It is in writing
- It relates to the particular complaint or proceedings, listing the claims it covers
- The employee or worker has received advice from a relevant independent adviser on its terms and effect
- The adviser has insurance or professional indemnity cover for that advice
- It identifies the adviser
- It states that the statutory conditions are satisfied
Who can advise
A relevant independent adviser can be a qualified lawyer, a certified and authorised trade union officer, official, employee or member, or a certified and authorised advice centre worker. Acas says the adviser must not be employed by or acting for the employer. Employers do not have to pay for the advice, but Acas suggests considering it.
Process and content
Settlement agreements are voluntary and can be proposed by either side. The Acas Code recommends, as a general rule, at least 10 calendar days to consider written terms and take advice. Acas advises setting out payments, their timing, and any tax and National Insurance deductions, and agreeing any reference wording.
Confidentiality clauses cannot stop a worker whistleblowing or reporting a crime to the police. Since 6 April 2026, a disclosure about sexual harassment can be a protected disclosure.
Changes ahead
The government's timeline lists regulations to prevent the misuse of non-disclosure agreements in cases of workplace harassment or discrimination, expected in September 2027 and subject to Parliament.
The law
“the agreement must relate to the particular proceedings…”
“the agreement must identify the adviser…”
“is void in so far as it purports to preclude the worker from making a protected disclosure…”
Sources
- Using settlement agreements - Settlement agreements · Acas
- Making a formal offer - Settlement agreements · Acas
- Confidentiality - Settlement agreements · Acas
- Settlement Agreements (under section 111A of the Employment Rights Act 1996) · Acas
- Plan to Make Work Pay and Employment Rights Act: timeline update · GOV.UK
General information for employers in Great Britain, not legal advice. Check the official sources for your situation.
- Sexual harassment became a category of qualifying disclosure for whistleblowing protection
- Regulations on misuse of NDAs in harassment and discrimination cases expected (subject to Parliament)
Future dates are expected dates and depend on Parliament.
What employers can do
- List the specific claims being settled rather than relying on general wording
- Confirm the employee's adviser, their insurance and name them in the agreement
- Allow at least 10 calendar days for consideration and advice
- Set out each payment, when it will be made and any deductions
- Draft confidentiality wording that preserves whistleblowing and reporting crime
- Agree reference wording if a reference is offered
Related answers
- When can an employer have a protected conversation? An employer can propose ending employment on agreed terms at any stage, even with no existing dispute. Under section 111A of the Employment Rights Act 1996, those pre-termination negotiations are generally inadmissible in an ordinary unfair dismissal claim, but not in discrimination or automatically unfair dismissal claims, and not where there has been improper behaviour.
- What protection do whistleblowers have? In Great Britain, workers who make a protected disclosure are protected from detriment from the start of employment, and employees dismissed mainly for whistleblowing are automatically unfairly dismissed, with no qualifying period and uncapped compensation. Since 6 April 2026, disclosures about sexual harassment can qualify. Contract terms that try to stop protected disclosures are void.