Settlement agreement for an employee in probation

An employer can usually end a probationer's employment on short notice, which is why it asks whether a settlement agreement is worth paying for; the answer depends on the claims that do not need service (discrimination, whistleblowing, automatic unfair dismissal, breach of contract) and on the changes the 2025 Act makes to unfair dismissal in the early months. Where those claims are in play, a short agreement with a modest payment buys certainty; where they are not, the process may be enough. The agreement has to be proportionate to a short employment and offered properly. For £795, fixed, delivered in three working days, I draft the agreement for the employer with a note on the conversation; the £995 version adds the negotiation with the employee's adviser.

Who this is for

Employers in England and Wales with a recent hire who is not working out, where the circumstances (a complaint raised, a protected characteristic, a disputed account of events) make a clean dismissal uncertain.

What matters in a probation settlement agreement

Why an employer settles with someone it could dismiss in probation

A probationer with a few months' service can be dismissed on the contractual notice (not less than the statutory minimum under section 86 of the Employment Rights Act 1996 after a month), and for most short-service dismissals that is the end of it; a settlement is worth considering where the employee has raised a complaint, where a protected characteristic may be connected to the decision, where the employee disputes the employer's account, where the employer has not followed its own probation process, or where the employee is senior enough that a dispute would be expensive, because in those cases the claims that follow do not depend on service and a short agreement with a modest payment buys certainty the dismissal does not.

The claims that do not depend on service

Discrimination, harassment and victimisation under the Equality Act 2010, detriment and dismissal for whistleblowing under the Employment Rights Act 1996, automatically unfair dismissal for the reasons the Act lists (pregnancy, family leave, health and safety, asserting a statutory right, trade union membership), breach of contract (notice, bonus, benefits), unlawful deductions, and claims under the written particulars provisions can all be brought from the first day, and the agreement should waive them specifically as section 203 of the Employment Rights Act 1996 and section 147 of the Equality Act 2010 demand; a probation dismissal for 'fit' that follows a complaint about a manager is the discrimination or whistleblowing claim the settlement is for.

The statutory initial period of employment and what it changes

The Employment Rights Act 2025 removes the two-year qualifying period for ordinary unfair dismissal and introduces a statutory initial period of employment during which a lighter dismissal process applies for conduct, capability and similar reasons, with the length of the period, the process and the compensation regime set by regulations on a timetable the regulations set; once in force, a probation dismissal that does not follow the lighter process is an unfair dismissal claim, which changes the calculation, and the agreement and the note are drafted to reflect the position as it stands at the time, with the employer told what the process requires before it decides whether to settle or dismiss.

The package for a short-service exit

A probationer's package is modest: pay in lieu of notice or notice worked (post-employment notice pay being taxed as earnings under section 402B of the Income Tax (Earnings and Pensions) Act 2003), the holiday accrued, and a compensation payment reflecting the claims in play rather than length of service (a few weeks' pay where the risk is low, more where a discrimination allegation has substance), within the thirty thousand pound exemption under section 403 of that Act, with the employer's contribution to the adviser's fees under section 413A and the tax indemnity; an employer that offers a probationer six months' pay has priced the exit as if the employee had six years' service.

The protected conversation and the process in probation

The offer can be made in a protected conversation under section 111A of the Employment Rights Act 1996 where the only claim in prospect is ordinary unfair dismissal, but where a complaint or a protected characteristic is in play the offer should be without prejudice on the basis of the dispute, and in either case the employer should have followed its probation process (reviews, feedback, the chance to improve) far enough that the alternative to settlement is a dismissal the employer can defend; the note explains how to open the conversation and how to run the probation process alongside it, because an offer made at the first review with no feedback given is an offer the employee's adviser will treat as an admission.

The reference and the terms that let both sides move on

A probationer leaving after a few months needs a reference that does not label the departure (dates and title, with the ending described neutrally), an announcement that is brief, and confidentiality that is proportionate within the limits the law sets (section 43J of the Employment Rights Act 1996, under which no term can stop a protected disclosure and the Employment Rights Act 2025 provisions voiding non-disclosure terms about harassment and discrimination, on the timetable the regulations set), and the agreement should contain each, with the return of property, the waiver of any training repayment, and no restrictive covenants beyond confidentiality unless the role had client contact; the agreement for a short employment should be short.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

Can we just dismiss someone in probation rather than paying them to go?

Usually, on notice, where no claim that needs no service is in play. Where a complaint, a protected characteristic or a disputed account is involved, a modest settlement buys the certainty the dismissal does not. The note helps the employer judge which.

How much should we pay a probationer to settle?

A sum reflecting the claims in play rather than service: notice, holiday and a few weeks' compensation where the risk is low, more where a discrimination or whistleblowing allegation has substance.

Does the 2025 Act change probation dismissals?

It does, once the provisions are in force: the qualifying period goes and a statutory initial period with a lighter process applies, so that a dismissal that skips the process is an unfair dismissal claim. The note states the position at the time.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Employment contract with a probation period
• Settlement agreement for an employee with under two years' service

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.