Settlement Agreements and Mental Health: What You Need to Know

Mental Health Claims in Employment Law

Mental health issues caused or exacerbated by employment can form the basis of legal claims. These might include:

• Stress-related illness claims: If your employer caused or failed to prevent stress that damaged your mental health
• Harassment claims: If harassment or bullying damaged your mental wellbeing
• Discrimination claims: If discrimination (based on disability, sex, race, etc.) caused psychological harm
• Health and safety breaches: If your employer breached duties to protect your mental health
• Constructive dismissal: If the working environment was so toxic it caused mental health deterioration

Mental health claims are increasingly recognised by employment tribunals. Awards for psychological injury are not uncommon, particularly when backed by medical evidence.

Settlement Provisions for Mental Health

If you have mental health claims, these should be specifically addressed in your settlement agreement. Key provisions should include:

Payment for Psychological Injury: Settlement agreements should separately itemise compensation for any psychological harm you've suffered. This isn't taxable, unlike wages. The amount should reflect the severity of the harm, duration, and prognosis. Medical evidence is crucial here—your solicitor should ensure any medical reports are considered in valuing this element.

Ongoing Support: Consider negotiating for continued mental health support after employment ends. This might include:

• Continuation of health insurance that covers mental health treatment
• Employee Assistance Programme (EAP) access after departure
• Employer-funded counselling for a specified period

Disability-Related Adjustments: If you have a disability that affects mental health, your settlement might address:

• Your rights under the Equality Act if your disability continues
• Any ongoing adjustments during the notice period
• Reference protocols that don't disadvantage you due to disability

Medical Evidence and Valuation

The value of mental health claims depends significantly on medical evidence. Before settling, consider obtaining:

GP Records: Request your medical records from your GP. These document when you first reported mental health issues, their severity, and treatment.

Specialist Opinion: If you've seen a psychiatrist, psychologist, or mental health professional, their assessment is valuable. Expert medical evidence significantly increases the value of mental health claims.

Prognosis: Medical evidence about whether the condition is permanent, likely to recur, or expected to resolve is crucial. Long-term psychological injuries are worth more.

Your solicitor should ensure any medical evidence is properly considered when valuing your settlement. Don't accept a global settlement figure without understanding how much of it reflects mental health compensation versus other claims.

Protecting Future Mental Health

Settlement agreements should be drafted in ways that protect rather than harm your mental health prospects:

Reference Provisions: A negative or lukewarm reference can severely damage mental health, particularly if you're struggling with confidence. Negotiate a positive, supportive reference that won't undermine future employment prospects. This isn't just about morale—it's about your long-term mental wellbeing.

Restrictive Covenants: Non-compete or non-solicitation clauses that prevent you from working in your field can be psychologically damaging, particularly if they extend for months. Push back on these. If they're unavoidable, negotiate for retraining support or career counselling to transition to alternative work.

Garden Leave: Extended garden leave with nothing to do can harm mental health. If this is part of your settlement, negotiate for permitted activities—voluntary work, professional development, business planning—that keep you engaged and purposeful.

Confidentiality and Mental Health

Standard confidentiality clauses in settlement agreements must not be used to silence you about mental health issues or disability. You have protected rights to:

• Discuss mistreatment or harassment that harmed your mental health
• Disclose your mental health condition to medical professionals, family, or advisors
• Claim benefits related to your mental health condition
• Make reasonable adjustments requests in future employment based on your condition

Your settlement agreement should explicitly acknowledge these rights. If it doesn't, push back. You shouldn't be silenced about genuine harm to your mental health.

Personal Considerations Before Settlement

If you're dealing with mental health issues, take particular care when negotiating your settlement:

Don't Rush: Mental health challenges can create pressure to settle quickly. But rushing can lead to accepting inadequate terms. Use your full seven-day reflection period. Take time to think clearly.

Get Support: Have a solicitor, trusted advisor, or counsellor review the agreement with you. Don't make this decision alone.

Future-Proof the Agreement: Think carefully about terms that affect your future. A restrictive covenant might seem acceptable now but could harm you when you're ready to work again. Negotiate for maximum flexibility.

Address Ongoing Needs: If you're likely to need ongoing mental health support, ensure the settlement addresses this. Don't assume you'll be able to afford private treatment if your employer-provided support ends.

After the Settlement

Once you've settled, you still have rights:

• You can access and use the mental health support negotiated as part of your settlement
• You can claim any benefits or support you're entitled to due to mental health conditions
• You can seek future medical treatment for conditions caused by employment (though you've waived the right to sue for them)
• You can request reasonable adjustments in future employment based on your disability

The settlement resolves the employment dispute, but it doesn't eliminate the need for ongoing support. Use negotiated support fully and seek additional help if needed.