What Does a Solicitor Actually Check in a Settlement Agreement?

You've been offered a settlement agreement. Before you sign, you need to see a solicitor—it's a legal requirement for the agreement to be valid. But what exactly do they do? Are they just rubber-stamping the document? Or are they actually protecting you? This guide pulls back the curtain on the solicitor's review process and shows you what a thorough check actually looks like.

Why a Solicitor Is Required

Settlement agreements require a solicitor's independent legal advice. This is a legal requirement under employment law (specifically, section 203(3) of the Employment Rights Act 1996). Without it, the agreement is not legally binding. You can't waive your tribunal rights without a solicitor sign-off.

The requirement exists because settlement agreements usually ask you to release all potential claims. This is a significant waiver—you're giving up your right to pursue unfair dismissal, discrimination, breach of contract, and other claims. The law wants to ensure you've had independent advice before doing this.

The 15 Things a Good Solicitor Reviews

1. Your potential tribunal claims

A solicitor doesn't just read the agreement—they assess what claims you could bring. Do you have:

• An unfair dismissal claim (if dismissed and you have 2+ years' service)?
• A discrimination claim (based on protected characteristics)?
• A harassment or victimisation claim?
• A breach of contract claim?
• A wages claim (unpaid bonuses, commissions, etc.)?
• A Working Time Regulations claim?

Your solicitor quantifies these. What would a tribunal likely award? That's the baseline against which the settlement offer is assessed.

2. The adequacy of the payment

Is the payment fair? Your solicitor compares it to:

• The value of your potential claims
• Your notice period (what you'd be owed if dismissed properly)
• Your salary history and future earning potential
• Comparable settlements for similar situations
• Your time to find a new role

If the payment is low relative to your claims, a good solicitor will flag this and suggest renegotiation.

3. The release clause

This is the clause where you agree not to pursue any claims. Your solicitor checks:

• Is the release broad or narrow? Does it cover everything?
• Are there any carve-outs (things not released)? Statutory claims? Protected disclosures?
• Does it prevent you from making complaints to regulators or trade unions?
• Is the language clear or vague?

A good solicitor will ensure the release doesn't extend further than necessary.

4. Confidentiality and non-disparagement

Settlement agreements usually include clauses saying you can't disclose the terms or speak negatively about the employer. Your solicitor checks:

• What does "confidential" cover? Just the payment amount?
• Can you discuss with family, friends, a therapist?
• Can you tell potential employers what happened?
• Does non-disparagement prevent truthful statements?
• Are there carve-outs for legal proceedings or complaints to authorities?

Overly broad confidentiality clauses can prevent you from even explaining your departure to others.

5. The reference clause

What will your employer say about you to future employers? Your solicitor checks:

• Is the reference agreed in advance (attached to the agreement)?
• Is it positive or neutral?
• Does it mention the reason for leaving? (It shouldn't.)
• Will the employer stick to it, or can they add details later?

A poor reference clause can undermine your job search. A good solicitor ensures the reference is locked down.

6. Tax implications

This is critical. Your solicitor checks:

• Will the payment be taxed? (Section 403 ITEPA 2003 provides some tax relief.)
• Is the allocation of the payment tax-efficient? (Some should be allocated to notice, some to damages, etc.)
• Are any payments in lieu of notice subject to National Insurance?
• What are the client's tax obligations after settlement?

A tax-inefficient settlement can cost you thousands. This is non-negotiable.

7. Pension and benefits

Your solicitor checks what happens to:

• Your accrued pension rights
• Bonus entitlements (do you lose them?)
• Health insurance (does it continue post-departure?)
• Paid leave accrual (do you get paid out?)
• Company perks (car, phone, memberships)

Many agreements are silent on these, creating uncertainty.

8. Warranties and representations

Settlement agreements typically include warranties—statements you confirm are true. Your solicitor checks:

• Are you warranting that you've told the truth (e.g., about grievances)?
• Are you confirming you've no outstanding claims?
• Are you confirming you haven't been discriminated against or harassed?
• Could these warranties be used against you if challenged later?

Warranties can be tricky—they're essentially admissions.

9. Post-employment obligations

Does the agreement bind you after departure? Your solicitor checks:

• Restrictions on competing (non-compete clauses)
• Client confidentiality (how long?)
• Non-solicitation of clients or staff
• Disclosure of trade secrets
• Are these restrictions reasonable and enforceable?

Overly broad post-employment restrictions can prevent you from working in your field.

10. Indemnity and insurance

Some agreements include indemnity clauses (you agree to compensate the employer if they're sued). Your solicitor checks:

• Are you indemnifying the employer for something that's actually their liability?
• Is there a cap on your indemnity exposure?
• Are you covered by insurance if a claim arises?

Broad indemnity clauses can expose you to unexpected costs post-departure.

11. Payment terms and conditions

Your solicitor checks the fine print:

• When is the payment made? (Before or after signing?)
• Is it conditional on something (e.g., cooperation with an investigation)?
• Can the employer claw it back?
• Is the payment net (you get £50k) or gross (you net £50k after tax)?

Payment timing and conditions matter. You want certainty that you'll be paid.

12. Dispute resolution and jurisdiction

If there's a dispute about the agreement (e.g., the employer doesn't pay), how is it resolved?

• Can either party take the other to court?
• Is there a requirement for mediation first?
• Which court has jurisdiction?
• Are there time limits for raising disputes?

This clause protects you if the employer breaches the agreement.

13. Termination and notice requirements

What happens during the notice period between signing and departure?

• Do you work out your notice or leave immediately?
• Are you paid in lieu of notice?
• What are your obligations during notice?
• Can you be placed on garden leave?

Working notice after a settlement can be awkward; clarity helps.

14. Entire agreement and amendment

Does the agreement say it's the entire agreement between you and the employer?

• Does it supersede your employment contract?
• Can it only be amended in writing?
• Are there any side agreements or conversations that contradict the written agreement?

Clarity here prevents future disputes.

15. Legality and enforceability

Finally, is the agreement legal and enforceable?

• Does it violate any statutory rights that can't be waived?
• Are any clauses unenforceable (e.g., unreasonable restraints)?
• Has the employer complied with discrimination law (e.g., equal pay)?
• Are both parties in genuine agreement?

Beyond the Agreement: Advising You

A good solicitor doesn't just review the agreement mechanically. They advise you on:

• Whether to negotiate specific terms and what to push for
• Whether the settlement is good value (or you should explore tribunal)
• Your tax position and financial planning post-departure
• References and your next steps for job hunting
• Any underlying claims (discrimination, harassment) and whether they're properly addressed

This is legal advice, not just a document review.

Red Flags That Trigger Deeper Review

Your solicitor pays special attention if:

• You've raised a grievance or discrimination complaint
• You've been off sick or have a disability
• You're over 40 (age discrimination issues)
• You're female and have concerns about equal pay
• You've reported a breach of law (whistleblowing)
• The payment is unusually low or high
• There are unexplained gaps in your employment record

These scenarios often hide additional legal risks or opportunities.

What a Poor Review Looks Like

Some "solicitors" just sign off on agreements without proper analysis. Red flags include:

• No questions about your circumstances or potential claims
• Signing off within hours of receiving the agreement
• No discussion of whether the payment is fair
• No negotiation or suggestions for improvement
• No explanation of what you're giving up
• Using a standard template letter without tailoring to your situation

This isn't real legal advice. You deserve better.

Key Takeaways

• A solicitor's review goes far beyond just reading the agreement
• They assess your potential tribunal claims and whether the settlement is fair value
• They check 15+ specific clauses and risk areas
• They advise on tax implications, references, and negotiation strategy
• They flag red flags that suggest additional legal risks
• A thorough review takes time—expect at least a consultation call or two
• A quick sign-off without questions is not proper legal advice

Settlement agreements are binding and permanent. The solicitor's review is your only chance to catch problems before you sign. At Nexa Law, we take this seriously and provide thorough, practical advice. If you're offered a settlement, get in touch for a detailed review.