Settlement Agreements in Ireland: Expert Advice from Orpen Franks
Settlement agreements (often called severance agreements, compromise agreements or termination agreements) are legally binding contracts that set out the terms on which an employee’s employment ends and, crucially, what claims the employee agrees to waive in return for an agreed payment or package. In Ireland, settlement agreements are widely used to resolve unfair dismissal, redundancy, bullying and harassment, discrimination, and other employment disputes without going to the Workplace Relations Commission (WRC) or the courts.
Typically, a settlement agreement will deal with:
- A tax‑efficient ex‑gratia severance payment or enhanced redundancy payment
- Notice pay and holiday pay
- The waiver of statutory and contractual claims (e.g. unfair dismissal, discrimination, equality, wages claims)
- Confidentiality and non‑disparagement clauses
- The return of company property and information
- Any agreed employment reference or announcement
- Post‑termination restrictions (non‑compete, non‑solicitation, confidentiality)
Because you are usually signing away your rights to bring future employment law claims, it is vital to obtain independent legal advice from an experienced employment law solicitor before signing. Once a settlement agreement is signed, it is very difficult, often impossible, to undo.
Why Choose Orpen Franks for Settlement Agreements?
At Orpen Franks Solicitors LLP, we act for both employees and employers in negotiating and drafting settlement agreements. This balanced perspective gives us a clear understanding of what is “standard”, what is negotiable, and where the real risks lie.
For employees, we:
- Review the proposed settlement agreement in detail
- Explain, in plain English, what rights you are waiving
- Check the severance payment against your potential claims (unfair dismissal, redundancy, discrimination, bullying, whistleblowing)
- Negotiate improved terms – higher compensation, better reference, narrower confidentiality and post‑termination restrictions
For employers, we ensure that settlement agreements are robust, enforceable and compliant with Irish employment law, effectively closing off future claims while preserving reputation, confidentiality and business relationships where possible. This is the cost efficient solution for most businesses.
Orpen Franks has a proven track record of securing favourable exit packages and resolving workplace disputes through well‑drafted settlement agreements. If you have been offered a settlement agreement, or are considering proposing one, contact Orpen Franks Solicitors LLP to speak with a leading employment law solicitor and ensure your rights and interests are fully protected.
Settlement Agreements in Ireland FAQ's
A settlement agreement (also known as a compromise agreement or severance agreement) is a legally binding contract between an employer and an employee. It usually involves the employee agreeing to waive their right to bring any future employment law claims (such as unfair dismissal or discrimination) in exchange for a financial payment, often called an ex-gratia payment. These agreements are a common way to resolve workplace disputes or manage a clean exit during a redundancy or disciplinary process without going to the Workplace Relations Commission (WRC).
Yes. For a settlement agreement in Ireland to be robust and enforceable, it is standard practice, and often a requirement within the agreement itself, that the employee receives independent legal advice. A solicitor ensures you understand exactly which rights you are signing away and whether the severance package offered is fair based on the strength of any potential claims you may have. For an employer, it is important that the employee obtains independent legal advice. At Orpen Franks, our employment law solicitors specialise in reviewing these contracts to ensure our clients are fully protected.
In many cases, yes. A settlement agreement is a negotiation. If you have a potential claim for constructive dismissal, bullying at work, or discrimination, the value of that claim should be reflected in the offer. We often negotiate for higher financial compensation, a better employment reference, the removal of restrictive covenants (non-compete clauses), or the payment of your legal fees by the employer. Our team uses a balanced perspective to identify leverage and secure the best possible outcome for your career transition.
While statutory redundancy is tax-free, ex-gratia payments in a settlement agreement are subject to tax, though there are significant tax exemptions available (such as the Basic Exemption, Increased Exemption, or SCSB). Notice pay and holiday pay are always taxed as normal income. Understanding the tax treatment of your exit package is vital to knowing exactly how much you will receive in your bank account. Whilst we do not give tax advise, we work to ensure your agreement is structured as tax-efficiently as possible under Irish Revenue rules.
