Key Takeaways
- The new ACAS 2026 guidance on settlement agreements gives employees at risk of redundancy or dismissal stronger protection and more time to decide.
- A settlement agreement is only valid if you first get independent legal advice from a qualified solicitor—this is a strict statutory requirement.
- Your employer must pay the full cost of your independent legal advice for a settlement agreement, so our service is always free to employees.
- Under the ACAS 2026 settlement agreement guidance, you now have at least 10 days to consider any offer before signing.
- Signing a settlement agreement without legal advice makes it invalid, meaning your employment rights—such as unfair dismissal claims—are not lawfully waived.
- Our solicitors are SRA regulated and offer same-day remote appointments to guide you through your agreement, confirm your tax-free entitlement, and protect your legal position.
- Settlement Agreement Lawyers are rated Excellent on Trustpilot with 5-star reviews from employees nationwide.
New ACAS 2026 Guidance on Settlement Agreements: What Changes for Employees Facing Redundancy or Dismissal This Summer?
If you have received a settlement agreement due to redundancy or dismissal this summer, you are not alone—and it is essential to know where you stand. The new ACAS 2026 guidance on settlement agreements gives employees across England and Wales extra protections and more time to make crucial decisions. You must still obtain Independent Legal Advice from a qualified solicitor, but your employer is required to pay for it—making our service free to you.
This article explains what the 2026 ACAS updates mean if you are facing redundancy or dismissal: your rights, how the new minimum 10-day consideration period works, how to secure a better redundancy deal, and how our solicitors ensure your tax and future employment are protected. From start to finish, our solicitors will check every detail of your agreement—remotely, at your convenience, and always in your best interests.
Before you sign anything, let our solicitors protect your position. Book your same-day free consultation today for tailored advice on the new ACAS rules and your settlement pay-off this summer.
What Is a Settlement Agreement and When Is It Used?
A settlement agreement is a legally binding contract provided by your employer—often during redundancy or dismissal. When you sign, you waive your right to pursue certain legal claims (such as unfair dismissal, discrimination, or breach of contract) in return for agreed compensation. Pay-offs can include redundancy pay, an extra ex-gratia payment, and potentially an agreed reference.
2026 Update: The new ACAS 2026 guidance ensures all settlement agreements are offered transparently, with the right support and a genuine opportunity to consider your options.
- Common scenarios for settlement agreements include:
- Voluntary or compulsory redundancy
- Dismissal for conduct, capability, or restructuring
- Exiting by mutual agreement to resolve a dispute or grievance
Maria was made redundant in July 2026. After our solicitors reviewed her draft agreement, we secured a larger ex-gratia payment and arranged for a positive reference to help her future job search.
Have you been given a settlement agreement? Book your free review today to protect your rights and optimise your exit terms.
What Are the Key Changes in the ACAS 2026 Settlement Agreement Guidance?
The 2026 ACAS guidance has strengthened employee protections and clarity for those facing redundancy or dismissal.
ACAS Code of Practice 2026: Key Updates
- At least 10 days to consider any offer:
Every employee must have a minimum of 10 calendar days to review a settlement agreement before signing. This is mandatory—not merely a recommendation. - Ban on employer pressure:
The guidance prohibits rushing, threats, or undue pressure to sign. - New rules on confidentiality and references:
Confidentiality clauses must allow legitimate whistleblowing and legal disclosure. Reference wording should be discussed and formally agreed. - Support for remote and virtual settlements:
The 2026 Code recognises that settlement agreements are often handled by email or video. Digital processes must ensure clarity and fairness. - Extra support for employee wellbeing:
Where mental health or other issues affect your capacity to understand, you are entitled to longer timeframes and practical support.
Sam’s employer expected him to sign a draft agreement the next day. Our solicitors reminded them of the ACAS 2026 rules—giving Sam time and space to get a much improved deal.
Want to understand how the new guidance protects you? Book a confidential appointment with our team.
Why Do I Need Independent Legal Advice for My Settlement Agreement?
For a settlement agreement to be legally valid, you must first receive Independent Legal Advice (ILA) from a qualified adviser. This is a strict statutory requirement under Section 203 of the Employment Rights Act 1996, and the ACAS 2026 guidance confirms that your solicitor’s ILA certificate is required for enforceability.
Why is ILA essential?
- To ensure you fully understand what legal rights you are giving up.
- To verify you are signing voluntarily, without pressure or misinformation.
- For our solicitors to check for hidden risks, errors, or unfair terms.
- To provide your employer with an ILA certificate as proof of your advice.
Farah’s agreement included restrictive covenants that would have blocked her from her industry for a year. After our ILA review, these were reduced—protecting her career prospects.
For total peace of mind and legal protection, our employment law team will guide you through your settlement—at no cost to you.
Does My Employer Pay for My Legal Advice? Is Your Service Free to Me?
Yes—under both standard practice and the 2026 ACAS guidance, your employer must pay your legal fees for settlement agreement advice.
You pay nothing. The typical contribution (often £350–£750 + VAT) fully covers our detailed advice, negotiation, and the ILA certificate.
- How it works:
- Your employer pays us directly after the agreement is completed.
- Our fee includes robust negotiation on your behalf—usually to improve pay or secure a reference.
- All advice and signing can be handled remotely, often within 24 hours.
Michael assumed he would need to pay for legal help. Our solicitors confirmed that his employer would cover all legal costs—making the process entirely free for him.
Need a speedy, no-cost review? Book your free settlement agreement consultation now.
Is My Settlement Offer Fair? Reviewing and Negotiating a Redundancy Package in 2026
A settlement agreement is designed to fairly compensate you for loss of employment. The 2026 ACAS rules are there to help you negotiate or challenge unfair terms.
What to check in your settlement agreement
- Financial elements:
- Ex-gratia payments (potentially tax-free up to £30,000)
- Statutory redundancy pay (based on length of service and age)
- Notice pay or “Pay in Lieu of Notice” (PENP), taxed as income
- Payment for accrued untaken holiday
- Practical points:
- Reference wording—ideally attached as a schedule
- Clear list of claims you are waiving—don’t sign away unnecessary rights
- Restrictive covenants—must be reasonable
- Confidentiality—which must not block legal disclosures
Julie’s redundancy agreement left out two weeks of statutory redundancy and used unclear tax wording. Our review fixed both and secured her a written reference.
If your offer seems low or the terms appear unfair, our solicitors can negotiate better terms for you—at your employer’s expense.
Tax Implications of Your 2026 Settlement Payment
Settlement agreement tax can be complicated. The ACAS 2026 guidance now requires offers to spell out which payments are tax-free and which will be taxed.
What’s tax-free?
- Ex-gratia/non-contractual payments:
The first £30,000 is tax-free under HMRC rules. - Statutory redundancy payments:
Always tax-free.
What is taxable?
- Post-employment notice pay (PENP):
Taxed as salary—wrong calculations can result in tax liabilities. - Pay for untaken holiday, bonuses, or benefits:
All taxable as income.
Daniel’s first draft lumped redundancy and notice pay together. We required clearer drafting, protecting his £30,000 tax-free allowance.
Are you unclear about tax on your settlement? Book a free tax review with our specialist solicitors.
What Needs Reviewing Before Signing a Settlement Agreement?
Your settlement agreement must be properly reviewed before you sign. The ACAS 2026 checklist for solicitors includes:
- All payments (statutory, ex-gratia, holiday, notice) are correct and clearly stated
- Reference wording is attached or agreed
- Restrictive covenants (non-compete, non-solicit) are reasonable and not excessive
- Confidentiality and non-disparagement allow necessary legal or regulatory disclosures
- No clause prevents you from discussing terms with your spouse or as required by law
- Full 10-day review period offered and respected—more time if health and wellbeing require it
- All return of property (laptop, pass, etc.) arrangements are clear
Tom’s agreement included a lengthy non-compete clause that would have blocked future roles. Our solicitors persuaded his employer to remove it—protecting his career.
Not sure what needs to change? Ask our employment law team for an expert rapid review.
The Signing Process: How to Finalise Your 2026 Settlement Agreement Remotely and Quickly
Remote and digital settlement processes are now standard, protected by the 2026 ACAS protocols.
What happens step by step?
- You receive your draft settlement agreement—usually by email.
- Book a free solicitor review with us:
- We examine the terms, answer your questions, and suggest improvements.
- Hold a remote video or phone consultation with our solicitor to discuss everything in plain English.
- Receive our advice on all legal, financial, and practical points.
- Benefit from your mandatory 10-day consideration period.
- Lawyer Tip: Ask for extra time if you need it, especially for health or personal reasons.
- Sign electronically or by post—whichever works for you.
- Our solicitor issues your ILA certificate to your employer and helps complete payment and reference arrangements.
This process is secure, convenient, and usually completed within days—always at your pace.
Need urgent legal advice? Our settlement agreement solicitors can handle everything remotely, often same-day.
Why Choose Settlement Agreement Lawyers?
Settlement Agreement Lawyers are a specialist team of SRA-regulated employment solicitors with expertise in settlement agreements for employees in England and Wales.
- 100% free for employees—employer covers all your legal costs
- Same-day appointments via phone or video across the UK
- Expert negotiation for higher pay-outs and better terms
- Specialists in redundancy and summer exit settlements
- All advice, negotiation, and paperwork handled directly by our team
- Highly rated by clients—see our 5-star reviews on Trustpilot
In June 2026, we helped dozens of employees secure increased redundancy payments, removal of unfair clauses, and positive references—all at no personal cost.
Book your free, no-obligation settlement agreement review here today.
Frequently Asked Questions About the New ACAS 2026 Settlement Agreement Guidance
What is the new minimum period to consider a settlement agreement?
You are now entitled to at least 10 days to consider any settlement agreement under the ACAS 2026 guidance.
Can I sign sooner if I’m ready?
Yes—if you have already received independent legal advice, you can choose to sign earlier.
Can I negotiate a better deal under the new guidance?
Absolutely. Our solicitors frequently secure higher payments or improved terms for employees. Your employer cannot stop you from negotiating.
Will my settlement payment be tax-free?
The first £30,000 of ex-gratia and any statutory redundancy pay are tax-free. Notice pay and holiday pay are taxable.
Who pays my solicitor for the settlement agreement?
Your employer is required to cover your legal fees, so our service is always free for employees.
What if I need extra support or more time because I’m unwell?
The ACAS 2026 guidance mandates reasonable adjustments, such as more time or extra help for employees with health or capacity concerns. Our solicitors will ensure these needs are met.
Can I get legal advice and sign fully remotely?
Yes—all advice, review, and signature steps can be handled online or by phone, with secure document exchange.
Still have questions? Book your free, confidential consultation with our team.
Book Your Free Settlement Agreement Consultation
The new ACAS 2026 guidance has fundamentally improved the settlement agreement process for employees facing redundancy or dismissal, providing essential rights and safeguards when you need them most. Our solicitors will ensure you have full time, clarity, and independent legal protection at every step—so you never sign away your rights unfairly.
With our SRA-regulated specialists, you pay nothing—your employer covers our legal fee according to ACAS and Employment Law rules. Everything can be handled promptly and securely online, including negotiation and issuing of your ILA certificate.
Speak to the experts at Settlement Agreement Lawyers—call 0207 459 4037 or book your free, no-obligation consultation today.
This article is provided for expert information purposes only and should not be taken as legal advice for your individual circumstances. For tailored support and to secure the best possible outcome, contact Settlement Agreement Lawyers now.
