A settlement agreement is a legally binding contract where an employee agrees to leave on agreed terms and to waive specific claims, in return for an agreed package. It gives both sides certainty and a clean break, and termination payments can often be paid tax-free up to a long-standing threshold.
They must be approached in the right way, at the right time, with the correct legal protections, and the employee has to take independent legal advice for the agreement to be valid. Handled well, they are one of the most effective tools an employer has.
Every situation has its own details, and those details change the right answer. For a read on yours, take the free Employee Situation Check or book a call.
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General guidance to help you decide your next step, not legal advice. Employment law changes, so always check the current position for your own situation.