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If you work in the NHS and have been offered a settlement agreement as part of an NHS voluntary redundancy or severance scheme or under the Mutual Agreed Resignation Scheme (MARS), it is a legal requirement that you have independent advice before you sign.

A settlement agreement is a legally binding agreement and involves you waiving your right to bring certain employment claims in return for a payment and agreed exit terms.

At Ward Hadaway, our team of settlement agreement specialists have many years’ experience in supporting NHS employees like you with the advice that they need to make confident decisions.

We live by our values of being straightforward, respectful and ambitious. The advice that you can expect to receive from us will be expert, practical and clear.

We understand that for many people, leaving employment is a life changing decision. Our solicitors’ approach is compassionate and sensitive.

Why you need legal advice

Under English law, a settlement agreement is only legally valid and binding if you receive advice from an independent adviser. This is usually a solicitor but can also be a recognised trade union representative.

Expert advice from Ward Hadaway

All our team of expert employment solicitors are experienced in providing advice on settlement agreements.

We typically advise on:

  • The terms and effect of the settlement agreement
  • The financial terms, including the impact of the timing of any payments and tax implications
  • Notice requirements, termination dates, holiday payments and benefits
  • References and agreed wording
  • Confidentiality and post-termination restrictions
  • The claims you would be waiving and what that means in practice

We understand the structure, pressures and timescales that often accompany these schemes, and we provide clear, practical advice to ensure our clients fully understand their position before signing.

Find out more about our Employment Law practice.

Has your employer recommended Ward Hadaway?

Ward Hadaway has been advising employees on their settlement agreements from NHS organisations throughout England.

We’d be happy to provide you with support.

Do I have to pay for the legal advice?

If you sign the settlement agreement, then usually your employer will pay your legal fees.

Make Ward Hadaway your independent legal advisor

To instruct us as your legal team and receive advice and support on your settlement agreement, you will need to:

  1. Provide your contact details in the form below.
  2. You will be asked to complete our client onboarding process through an app called Thirdfort.
  3. Watch out for an SMS from Thirdfort with instructions on how to download the app.
  4. Once you have downloaded the app you will be asked to complete an ID verification.
  5. Once you have uploaded your ID you will receive an email from our support team with your client engagement pack.
  6. Shortly after that an appointment will be arranged with one of our experienced solicitors who will advise you on the terms and effect of your settlement agreement.

    Provide your contact details here

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    If you need people or employment legal advice – as an employer or employee – explore the wide range of services our award-winning team can offer.

    Settlement agreements – FAQs for NHS employees

    If you have been offered an NHS settlement agreement, you may be wondering whether you have to accept it, how much compensation you should receive, and whether it affects your NHS pension or future NHS career.

    This guide explains everything NHS staff need to know about settlement agreements.

    What is a settlement agreement?

    A settlement agreement is a legally binding contract between an employer and an employee. It usually involves:

    • The employee leaving their role (or resolving a dispute)
    • The employee waiving their right to bring legal claims
    • The employer paying compensation in return
    • Both parties agreeing confidentiality

    Settlement agreements were previously known as “compromise agreements.”

    When do settlement agreements arise in the NHS?

    Typically in the private sector settlement agreements can arise where there is a dispute between the employer and employee for example during:

    • Disciplinary investigations
    • Capability processes
    • Redundancy or restructuring
    • Grievance disputes
    • Relationship breakdowns

    Settlement agreements in these situations are less frequent in the NHS. However, where settlement agreements are more common in the NHS are in situations such as:

    • Voluntary redundancy schemes
    • Voluntary severance schemes
    • Mutually agreed resignation schemes (known as MARS)
    Do I have to accept a settlement agreement from the NHS?

    No. Entering into a settlement agreement is entirely voluntary.

    Can I negotiate the terms of a settlement agreement from the NHS?

    Typically if you are accepting payment under a voluntary redundance/severance scheme or through MARS, there is no negotiation on the financial terms of the settlement agreement.

    Your specialist legal adviser from Ward Hadaway will be able to provide you with advice on negotiations and whether any of the terms are able to be negotiated.

    How much compensation is paid under an NHS settlement agreement?

    Typical payments may include:

    • Notice pay
    • Accrued but untaken annual leave
    • Ex-gratia compensation (usually tax-free up to £30,000)
    • Payment in lieu of notice (PILON)
    • Legal fees contribution

    For voluntary redundancy/severance schemes and MARS, there are prescribed formula for calculating the compensation payment and this depends on your reckonable service with the NHS. Your Ward Hadaway specialist solicitor will be able to advise you further.

    Are payments under a NHS settlement agreement taxable?

    Usually:

    • Notice pay is taxable
    • Holiday pay is taxable
    • An ex-gratia payment is tax-free up to the value of £30,000

    Tax treatment depends on how the agreement is drafted. Your Ward Hadaway specialist solicitor will be able to advise you on this. Ward Hadaway may recommend more specialist tax advice.

    Do I need a solicitor for an NHS settlement agreement?

    Yes. For a settlement agreement to be legally valid, you must receive independent legal advice on the terms and effect. This can be from a solicitor or a recognised trade union representative.

    Most NHS employers will contribute towards your legal fees.

    At Ward Hadaway, we have a team of specialist employment lawyers who can advise you on your settlement agreement.

    What will a solicitor at Ward Hadaway do to advise me on my NHS settlement agreement?

    Your Ward Hadaway solicitor will:

    • Explain the purpose of the settlement agreement
    • Explain your legal rights
    • Take you through the terms of the agreement and what they mean for you
    • Explain what it means when you sign the settlement agreement
    • Answer any questions that you may have on the agreement

    Depending on the agreed scope of your instructions, your Ward Hadaway solicitor may:

    • Assess whether the offer is reasonable
    • Negotiate improved terms
    Does an NHS settlement agreement affect my NHS pension?

    Your pension rights sit separately within the NHS Pension Scheme. An NHS settlement agreement will not be able to prevent you from enforcing your pension rights under the relevant pension scheme.

    However, accepting settlement terms may affect:

    • Early retirement access
    • Redundancy retirement options
    • Ill-health retirement applications

    Pension advice is strongly recommended before signing.

    Can I work in the NHS again after signing a settlement agreement?

    In most cases, yes. However some agreements restrict you from returning to the same NHS organisation. Some agreements may restrict you from returning to the NHS within a certain period or have clawback provisions so that if you do return to work in the NHS within a certain timeframe, you will be required to pay back some of your payment.

    Your Ward Hadaway specialist solicitor will be able to advise you on these terms and what they mean for you.

    What confidentiality clauses are included in NHS settlement agreements?

    Most settlement agreements include confidentiality clauses covering:

    • The financial settlement sum
    • Allegations or disputes

    However, confidentiality clauses cannot prevent you from:

    • Whistleblowing
    • Raising patient safety concerns
    • Reporting criminal conduct
    What reference will I receive from an NHS Trust?

    Most NHS settlement agreements for voluntary redundancy/severance schemes or MARS do not include a reference. However that does not mean that your NHS employer will not provide a reference if requested to do so by a new employer.

    Settlement agreements under other circumstances may include a reference as part of the negotiated terms.

    Securing a reference can be important for you. Your Ward Hadaway specialist solicitor will be able to advise you further.

    What happens if I refuse an NHS settlement agreement?

    Depending on the circumstances in which you have been offered a settlement agreement, if you choose not to sign:

    • Disciplinary or capability processes may continue
    • Redundancy consultation may proceed
    • The matter may go to employment tribunal

    Refusing a settlement agreement does not automatically lead to dismissal nor should you suffer any detriments for rejecting a settlement agreement.

    Need advice on an NHS settlement agreement?

    If you have been offered an NHS settlement agreement, early legal advice can significantly improve your position.

    Make Ward Hadaway your independent legal advisor