5 Key Legal Considerations for Finance Employees Using Settlement Agreements

Working in the finance sector often means navigating high-pressure environments, demanding clients, and strict regulatory obligations. If your role is coming to an end—whether due to restructuring, performance concerns, or workplace disputes—you may need expert guidance to help you through the process.

While redundancy can be frustrating, settlement agreement solicitors Coventry can provide financial certainty, help you move on with dignity, and avoid the uncertainty of legal disputes.

In this article, we walk through the five most important legal factors finance employees need to consider when reviewing a settlement agreement—and how to make sure you get it right the first time.

Understanding What a Settlement Agreement Actually Is

A settlement agreement is a legally binding contract between you and your employer, typically used to end your employment on agreed terms. In most cases, you will receive a financial sum or benefits in exchange for giving up your right to bring certain claims in the employment tribunal.

These agreements are particularly common in the financial sector, where discretion, confidentiality, and reputation management are key. But the stakes are high. If the terms are unclear or drafted too broadly, the agreement could be challenged—or could unfairly restrict your future rights.

To be legally valid, the agreement must meet several conditions under the Employment Rights Act 1996. It must be in writing, relate to specific claims, and you must receive independent legal advice. Without these safeguards, it won’t be enforceable.

Timing Matters—And It Can Affect Your Options

The point at which a settlement agreement is offered is crucial. If your employer rushes you into signing before following proper processes, you could still have grounds for legal complaint.

For example, if you’re facing a performance issue, being pushed into signing before a fair performance improvement plan has run its course might leave you with potential discrimination or unfair dismissal claims. Similarly, if you’re under investigation for alleged misconduct, a settlement agreement cannot be used as a shortcut around disciplinary procedures.

Finance professionals must also be aware of the Senior Managers and Certification Regime (SMCR). If you hold a regulated role, the way your employment ends may trigger reporting obligations to the FCA. Importantly, settlement agreements cannot be used to conceal misconduct or bypass regulatory scrutiny.

Confidentiality Clauses: Know the Limits

Confidentiality clauses—sometimes called non-disclosure agreements (NDAs)—are standard in most settlement agreements. For finance employees, these clauses are particularly significant because reputational risks, market sensitivity, and client trust are at stake.

However, you should be clear about what can and cannot be restricted. In recent years, NDAs have faced scrutiny for being misused to silence employees. While it is reasonable for your employer to expect discretion over settlement terms or business information, an NDA cannot prevent you from whistleblowing or making disclosures protected under the Public Interest Disclosure Act 1998.

A fair confidentiality clause should strike a balance—protecting your employer’s business interests without restricting your legal rights. Make sure the wording specifies what is confidential and what falls outside the clause.

Tailoring the Terms to Financial Sector Realities

Unlike generic agreements, those in the financial sector must account for unique contractual and regulatory issues. When reviewing your settlement agreement, check whether it covers:

Bonus payments: Are you entitled to a pro-rated bonus for the part of the year you worked? How will clawback provisions be treated?
Share options or equity: What happens to your unvested shares or long-term incentive plans?
Client handovers: Are you expected to introduce your replacement or stay on to finalise a project?
Regulatory references: How will your reference be worded, and does it comply with FCA rules?

These terms are not optional extras. They can significantly impact your financial position, your reputation, and your future employability in the industry.

Independent Legal Advice—Your Essential Safeguard

For a settlement agreement to be valid, you must obtain independent legal advice. Employers usually contribute to the cost, often covering between £350 and £500. This requirement is in place to ensure that you fully understand the implications of what you’re signing.

Don’t treat this step as a formality. An experienced employment solicitor can:

Confirm that the agreement meets all legal requirements
Negotiate improved financial terms where possible
Tailor clauses to reflect the realities of the financial sector
Safeguard against future disputes or regulatory complications

It’s also important to handle discussions with care. Conversations labelled as “without prejudice” can only be used in certain circumstances. Misunderstanding these rules could create problems if you later wish to challenge your treatment.

Think Strategy, Not Shortcuts

Settlement agreements can be valuable tools for finance employees, offering financial protection and a dignified exit from a role. But they are not straightforward. Each agreement must be assessed against your personal circumstances, the timing of its offer, and the unique realities of the financial services industry.

Before signing, ask yourself: have all key issues been addressed? Do the terms protect my long-term interests? And have I received the right legal advice to make an informed choice?

By approaching the process strategically and seeking professional support, you can ensure your settlement agreement works for you—not just for your employer.

This article is intended for general information only and does not constitute legal advice. If you are considering a settlement agreement, seek guidance from a qualified employment solicitor with experience in the financial services sector.

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Adam Regan

Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.

Email Adam@MarkMeets.com