A settlement agreement (formerly compromise agreement) is the only way to validly waive an employee's statutory employment rights including unfair dismissal and discrimination claims. The employee MUST receive independent legal advice from a qualified adviser (usually a solicitor) and that adviser must sign a certificate.

• Employee must receive independent legal advice — this is a legal requirement
• Adviser's certificate required — agreement is void without it
• Ex gratia payments up to £30,000 are tax-free
• Full and final settlement of all claims — listed specifically
• Contribution to employee's legal fees is standard (usually £250–500+VAT)
• Reference: agree exact wording to avoid future defamation issues

Legal reference: Employment Rights Act 1996 s.203; Equality Act 2010 s.147; HMRC EIM13000