Settlement agreement after a disciplinary process

A disciplinary process can end in a settlement at any point: before the hearing, where the employer would rather the employee left than be dismissed; during it, where the employee proposes it; or after a dismissal, where the employee appeals or threatens a claim. The agreement has to reflect the strength of the employer's case, which decides the price, the position on notice where gross misconduct is alleged, the reference the employee can be given, and the matters that cannot be kept confidential where the police or a regulator is involved. I draft the agreement for the employer for a fixed fee of £795, delivered in three working days, with a note on the conversation; a version including negotiation with the employee's adviser is £995.

Who this is for

Employers in England and Wales with an employee suspended, facing a disciplinary hearing, dismissed and appealing, or threatening a claim after a dismissal, who want an agreed ending.

What matters in a settlement agreement after a disciplinary process

Settling before, during or after the disciplinary hearing

Before the hearing, the employer offers an exit as an alternative to a process that may end in dismissal, usually in a protected conversation under section 111A of the Employment Rights Act 1996 or without prejudice where the employee has disputed the allegations; during the process, the employee or their adviser often proposes settlement, which the employer considers against the strength of its case; after a dismissal, the settlement resolves the appeal or the threatened claim, with the agreement recording the dismissal date and the reason or substituting an agreed resignation; the agreement should state which, because the tax treatment, the reference and the narrative follow from it.

The allegations, the evidence and the strength of the employer's position

The price of a disciplinary settlement depends on how likely a dismissal would be fair: the seriousness of the allegations, the quality of the investigation, the evidence, the consistency with how others were treated, and the process followed so far, measured against the Acas Code of Practice on disciplinary and grievance procedures; an employer with a strong case pays little beyond notice and holiday for the certainty and the avoided process, and one with a weak case (a flawed investigation, a sanction out of line with precedent, a procedural failure) pays more; the note that comes with the agreement helps the employer assess which it is before it makes an offer.

Notice pay, gross misconduct and what the employer need not pay

Where the allegation is gross misconduct, the employer may dismiss without notice if it is established, and a settlement can be structured so that the employer pays no notice (the employee resigns or is dismissed summarily by agreement) with any compensation within the thirty thousand pound exemption under section 403 of the Income Tax (Earnings and Pensions) Act 2003; where notice is paid, post-employment notice pay is taxed as earnings under section 402B whatever the label; the agreement should state the termination date, the reason recorded, the sums and their treatment, the tax indemnity, and the position on any bonus or commission under the plan's terms, with the accountants confirming the treatment.

The reference, the narrative and regulated roles

The reference is the employee's main concern in a disciplinary settlement, and the agreement should attach an agreed factual reference (dates, role, no comment on the reason) where the employer can properly give one, with the employer's duty to future employers in mind: a reference that is misleading by omission exposes the employer to a claim by the recipient; in regulated roles (financial services, care, education, healthcare) the regulator may require a regulatory reference or a referral that an agreement cannot prevent, and the agreement should say so rather than promise a clean reference the employer cannot give; the internal narrative should be agreed and limited.

Confidentiality, the police and the regulator

Confidentiality in a disciplinary settlement cannot prevent the employer reporting a crime to the police, making a referral to a regulator or the disclosure and barring service where the law requires it, or responding to a court order, and cannot prevent the employee making a protected disclosure under section 43J of the Employment Rights Act 1996; where the allegation is harassment or discrimination, the Employment Rights Act 2025 limits non-disclosure terms on a timetable the regulations set; the agreement should contain confidentiality that is proportionate with the carve-outs stated, and the employer should decide before signing whether a report or referral is required, because a settlement does not discharge that duty.

The waiver, the warranties and the clawback

The agreement waives the claims under section 203 of the Employment Rights Act 1996 and section 147 of the Equality Act 2010 (unfair dismissal, wrongful dismissal, discrimination, unlawful deductions, breach of contract), listed specifically, with the employee's adviser certifying the advice and the employer contributing to the fees under section 413A of the Income Tax (Earnings and Pensions) Act 2003; it should contain the employee's warranties (no claims issued, no other misconduct the employer does not know about, no breach of the covenants), with repayment of the compensation if a warranty is untrue or a covenant is breached, the return of property and data, the resignation of any offices, and the reaffirmation of restrictive covenants where the role justifies them; the warranty about undisclosed misconduct is the clause that matters in a disciplinary settlement.

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

We have a strong gross misconduct case. Why settle at all?

For certainty and to avoid the process and the appeal. With a strong case the settlement costs little beyond holiday and perhaps a modest payment, and the employee leaves without a claim and without a dismissal on the record if that is agreed.

Do we have to pay notice if the allegation is gross misconduct?

Not if gross misconduct is established and the settlement provides for summary termination by agreement. Where notice is paid it is taxed as earnings. The agreement states which.

Can we agree to keep the allegation confidential?

Between the parties, within limits: a crime may still be reported to the police, a regulatory referral may be required, whistleblowing cannot be prevented, and harassment and discrimination allegations are subject to the 2025 Act limits. The agreement states the carve-outs.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Disciplinary and grievance policy
• Settlement agreement after a grievance

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.