What claims do I waive when I sign a settlement agreement?

Key Takeaways

1. When you sign a settlement agreement, you usually waive your rights to bring most employment claims, including unfair dismissal, redundancy, discrimination, breach of contract, and unpaid wages.
2. Some claims cannot be waived in any settlement agreement, such as claims for future personal injury not yet known and certain statutory rights like pension entitlements.
3. What claims you waive when you sign a settlement agreement is defined very specifically in your document, so you should always check which claims are listed and which are excluded.
4. Waivers often cover both known and unknown claims arising out of your employment, meaning you cannot pursue new issues you discover later that relate to your time with the employer.
5. Under s.203 Employment Rights Act 1996, the waiver is only legally valid if you receive independent legal advice, which our solicitors provide as part of our service.
6. Your employer usually pays all legal fees for settlement agreement advice, making our solicitor’s guidance free for you and ensuring you fully understand what you are signing.
7. Our solicitors can advise on extra factors such as tax-free elements, ex gratia payments, and whether your settlement agreement includes all redundancy rights.
8. Settlement Agreement Lawyers have over 1,400 five-star reviews on Trustpilot, Google and other platforms, reflecting our expertise, remote service, and commitment to employee protection.

What claims do I waive when I sign a settlement agreement?

If you are being asked to sign a settlement agreement, you should know that it will usually mean waiving your right to bring most employment-related claims against your employer—such as unfair dismissal, redundancy, discrimination, breach of contract, and unpaid wages. However, some rights cannot be waived under any settlement agreement, including future personal injury not yet known and certain statutory rights like pension entitlements. The exact claims you give up will be shown in your own settlement agreement, so it is essential to review these details carefully.

By law, your settlement agreement is only valid if you receive independent legal advice—which is where our solicitors can help. The good news is that your employer nearly always covers the cost of this advice, so our support is usually free to you. Before you sign, our solicitors make sure you fully understand the claims you are waiving, any rights you keep, and how tax might affect your settlement.

In this article, we explain what claims are typically covered by a settlement agreement, which rights cannot be waived, how redundancy settlements work, and what you should always check before agreeing to sign. For clear, expert guidance, you can call our solicitors on 0800 054 1144 or book your settlement agreement advice online.

What claims do I waive when I sign a settlement agreement?

When you sign a settlement agreement in England & Wales, you agree to waive almost all statutory and contractual employment claims against your employer in exchange for financial compensation or other benefits. This waiver is typically very wide, covering claims like unfair dismissal, redundancy pay, unlawful deduction of wages, breach of contract, and most forms of discrimination and whistleblowing. Once signed, you usually cannot bring these claims in the employment tribunal or court.

The list of claims you waive will be set out in the agreement, often both as a general waiver and by listing specific relevant laws (such as those in the Equality Act 2010, the Employment Rights Act 1996, and others). You may also be asked to waive unknown or future claims, though not all such waivers are enforceable by law.

It is critical that you read the agreement carefully and understand exactly which rights you are giving up before signing, as a valid waiver generally means you lose the right to pursue those claims forever. Our solicitors always review your situation and the agreement wording to ensure you understand the risks and that no valid claims are missed or undervalued.

What is a settlement agreement and how does the waiver of claims work?

A settlement agreement is a legally binding contract between an employee and employer to settle actual or potential employment claims, usually when employment is ending. In return for a financial payment or other benefits, the employee waives the right to pursue certain claims in a tribunal or court. This creates a “clean break”—both parties know the matter is resolved.

The waiver operates by being clearly set out in the agreement. Normally, the document will:

• List the specific types of claims being waived (e.g., unfair dismissal, breach of contract, discrimination)
• Refer to relevant statutes or cite them by name/section
• Include a “general waiver” of all claims arising out of employment
• Sometimes reference unknown or future claims

It is not enough for a settlement agreement to simply state that all claims are settled—the waiver must be clear, specific to employment laws, and meet strict legal requirements. If these are not met, the settlement may not be enforceable.

For a detailed overview of how settlement agreements work in redundancy, see our guide to redundancy settlement agreements.

Why is independent legal advice required for a valid settlement agreement? (s.203 Employment Rights Act 1996)

Independent legal advice is a legal requirement for any settlement agreement to be valid, under s.203 Employment Rights Act 1996. Without this, the waiver of statutory claims has no effect—the agreement cannot prevent you from bringing employment tribunal claims.

For a settlement agreement to be effective:

• You must receive advice from a qualified independent solicitor, adviser, or trade union official
• The adviser must have professional indemnity insurance
• The adviser must not be acting for your employer
• The agreement must identify the adviser and confirm the conditions are met

The role of our solicitors is to explain the meaning, scope, and effect of the agreement, particularly the waiver. We also check you are not giving up any rights unintentionally and that the financial offer is appropriate.

The ILA process is mandatory; employees do not pay, as the employer covers our capped fee. For more, see guidance on the legal advice requirement under the Employment Rights Act 1996.

Which settlement agreement claims are typically waived?

Most valid settlement agreements are drafted to waive a wide range of statutory and contractual employment claims. The most commonly waived claims include:

• Unfair dismissal (including constructive dismissal) under the Employment Rights Act 1996
• Wrongful dismissal, i.e., breach of contract claims
• Redundancy payment claims under the Employment Rights Act 1996
• Unlawful deduction of wages
• Holiday pay not paid under the Working Time Regulations 1998
• Discrimination and harassment under the Equality Act 2010 (e.g., sex, race, disability)
• Any claims arising under the contract of employment

If the agreement is properly drafted, an employee generally cannot later claim for any issue arising from their employment or its termination, provided it falls within the listed categories.

Some agreements also aim to cover personal injury claims arising from employment and all known or unknown claims up to the signing date, subject to legal limits.

For practical examples of what typically gets waived, see our comprehensive settlement agreement advice page.

Which claims cannot be waived by a settlement agreement?

Not all rights and claims can be lawfully waived by settlement agreement, no matter how the document is worded. Some claims are “non-waivable” as a matter of law or public policy. These include:

• Claims for accrued pension rights
• Rights to enforce the agreement itself
• Claims for personal injury not known about when signing
• Certain statutory rights, such as those relating to future injury, and (in rare cases) statutory maternity, paternity, or adoption leave pay not yet due

The waiver in a settlement agreement cannot legally prevent you from pursuing criminal complaints or reporting to regulatory authorities (such as whistleblowing to the Health and Safety Executive).

Here’s a simple table showing common waivable vs. non-waivable claims:

See Acas’s settlement agreements guidance for more detail.

Are future or unknown claims included in my settlement agreement waiver?

Most settlement agreements try to include “unknown” or “future” claims—those that arise before the signing date but are not yet known to you. However, the law restricts the effectiveness of such waivers. The agreement cannot generally waive claims for events, injuries, or breaches occurring after you sign. It also cannot waive personal injury claims you are genuinely unaware of at signing.

To be enforceable, the claims you waive must be clearly identified by type or statute in the agreement. Blanket waivers (“all possible claims, whether known or unknown”) are unlikely to be effective if challenged, except for claims known or reasonably anticipated on signing.

For more support in understanding what is and isn’t covered by your waiver, see our Settlement Agreement Calculator to estimate the value of claims potentially being signed away.

Is my settlement agreement financial offer fair and does it cover redundancy, notice, and unpaid wages?

Assessing whether an offer is fair involves more than just considering the lump sum. You should check if the settlement covers your full statutory redundancy pay, paid or worked notice, unpaid holiday pay, and any additional contractual entitlements. Offers often bundle these amounts together with an “ex gratia” (goodwill) payment, which may be tax-free up to £30,000 under current rules.

Key areas to check:

• Your statutory redundancy pay (use our Redundancy Calculator to check your entitlement)
• Payment in lieu of notice (PILON) or pay for working your notice
• Unpaid salary, bonus, or benefits accrued up to leaving date
• Outstanding holiday and expenses
• Compensation for waiving specific claims (especially if those claims are strong)

If these elements are not separately itemised, clarify with our solicitor before agreeing.

Guidance on fairness and calculations is available at GOV.UK.

Will I pay tax on my settlement agreement? Understanding tax-free payments, PENP and deductions

How your settlement payment is taxed depends on the nature of each amount. Under UK law, the first £30,000 of compensation for loss of employment can be paid tax-free, provided it is a genuine ex gratia payment and not earnings (see HMRC’s guidance). However, payments in lieu of notice (PILON), holiday pay, or bonuses are taxable as income, and statutory redundancy pay is tax-free.

Payments are categorised as follows:

• Tax-free (up to £30,000): Ex gratia compensation for loss of office
• Taxable: PILON payments, outstanding wages, holiday pay, bonuses, contractual benefits

PENP rules (Post-Employment Notice Pay) mean notice pay is usually always taxed, regardless of whether you work your notice or not.

Here’s a table clarifying:

More details can be found on GOV.UK – tax on termination payments.

What other key clauses and risks should I check before signing a settlement agreement?

Before you sign, make sure you fully understand—and are comfortable with—all the agreement’s key clauses, not just the waiver and financial terms.

Restrictive covenants and post-termination restrictions

These clauses may limit where, when, or for whom you can work after leaving. Typical restrictions ban you from joining competitors, soliciting clients, or poaching staff. Check how long and broad they are, and if they are new (these can go further than contract restrictions).

Confidentiality and non-disclosure terms

Settlement agreements usually require you to keep the terms and background confidential. Check:

• Are there exceptions for family, legal, or financial advisers?
• Are mutual confidentiality terms included for both sides?
• Can you still discuss the circumstances of your departure with future employers?

Reference clauses and future employment

Some agreements include a reference—either attached as a template or by promising a factual reference. Make sure what is written is accurate and will not harm your prospects.

Tax indemnities and legal warranties

Employers often include clauses making you responsible for extra tax HMRC considers owed later, or requiring you to confirm you have no other claims. Understand your ongoing liabilities.

For further reading, see our insights into settlement agreement advice.

Step-by-step: What is the process for reviewing and signing a settlement agreement with a solicitor?

Getting your settlement agreement finalised involves several clear steps. Here’s how our process works:

1. Contact our solicitors and send us the draft agreement (usually via secure email)
2. Book a same-day appointment—usually remote via video or phone
3. We review the draft and your situation, checking the waiver, financial terms, tax, covenants, and risks
4. Our solicitor explains your rights, answers your questions, and advises if amendments or negotiations are needed
5. If requested, we negotiate with your employer for improved terms, clarification, or extra safeguards
6. Sign-off: Once you agree, you sign the agreement and our solicitor issues the mandatory Independent Legal Advice (ILA) certificate
7. Employer pays the settlement sum—normally within 7-14 days
8. Your legal fees are paid directly by the employer; you pay nothing

A full step-by-step on this process is available on our Settlement Agreement Advice page.

Why Choose Settlement Agreement Lawyers?

Free to the employee – employer pays your legal fees, fee capped at employer contribution

With our service, you do not pay for legal advice—your employer pays our fees, and we work within their capped contribution. This ensures independent, expert advice is accessible to every employee, regardless of the offer size.

Full details on our funding arrangements for employees.

Fast, same-day remote service for quick resolution

We understand settlement agreements are urgent. Most appointments are available same day, with remote meetings and document review via secure channels—no need for in-person meetings or lengthy delays.

SRA-regulated specialist solicitors for peace of mind

Our specialist employment solicitors are SRA-regulated, experienced, and up to date on the latest employment law—giving you confidence that your agreement and your rights are fully protected.

Track record: over 1,400 five-star reviews/negotiation expertise

We have a proven history of helping employees secure improved terms, clarify risk, and achieve fair outcomes—evidenced by our client success stories.

Frequently Asked Questions About What Claims Do I Waive When I Sign a Settlement Agreement?

What types of employment claims do I usually waive by signing a settlement agreement?

You typically waive statutory claims like unfair dismissal, redundancy pay, breach of contract, discrimination, and unpaid wages. These are set out in detail in your agreement, covering rights under the Employment Rights Act 1996, Equality Act 2010, and other laws.

Can any claims be excluded from the waiver in my settlement agreement?

Yes, specific claims can be excluded by negotiation, such as personal injury claims not known when you sign. If you want to keep rights (for example, for an existing grievance), ask for exclusion before signing.

Is a settlement agreement the same as redundancy settlement?

Not always. Redundancy settlements use settlement agreements to waive claims and pay compensation, but settlement agreements can be used for other exits, disputes, or dismissals. The principle—waiver of claims for compensation—remains the same.

What happens if I discover a new claim after signing?

You usually cannot pursue any waived claims if they arose before signing. However, if the claim relates to something unknown at signing (like unforeseen injury), you may still have legal options—seek advice promptly.

Can claims under the Equality Act or for discrimination be waived?

Yes, discrimination claims under the Equality Act 2010 can be waived by settlement agreement if identified in the waiver. The agreement must make clear which discrimination rights are being released.

Does waiving claims in a settlement agreement affect future pensions or statutory rights?

Waiving claims does not affect accrued pension rights or statutory rights that arise after signing. The agreement cannot prevent you from enforcing the settlement terms or participating in a pension you’re already entitled to.

What does “release of claims” mean in an employment settlement agreement?

“Release of claims” means you give up your right to pursue certain legal claims against your employer in exchange for compensation. The agreement lists which claims are released and is enforceable once signed and advised upon.

Can I change my mind after signing a settlement agreement?

Once you and your employer sign, and you have received independent legal advice, the agreement is binding. You cannot usually change your mind unless both parties agree or there is a serious misrepresentation—so always seek legal advice before signing.

Speak to a Settlement Agreement Solicitor About the Claims You Waive