Why settlement agreements are on the rise in 2025

At Solidaire Solicitors, we’ve noticed a significant uptick in the use of these agreements, particularly in March. But what’s driving this trend, and why are settlement agreements being offered more frequently than ever before?

What Are Settlement Agreements?

For those unfamiliar, a settlement agreement is a legally binding contract between an employer and an employee, typically used to resolve workplace disputes or facilitate an amicable exit. In exchange for waiving their right to bring a claim against the employer, the employee receives a financial package, often including compensation, notice pay, and sometimes even a reference. These agreements are a practical way to avoid lengthy and costly tribunal proceedings, benefiting both parties.

Why the Surge in 2025?

Several factors are contributing to the rise in settlement agreements this year, with March emerging as a particularly busy month for such agreements. Here’s why:

Economic Uncertainty and Restructuring

The UK economy has faced ongoing challenges in 2025, with many businesses restructuring or downsizing to remain competitive. As companies finalise their end-of-year financial reports in March, difficult decisions about staffing levels often come to the fore. Settlement agreements provide a streamlined way to manage redundancies or role changes without resorting to contentious dismissals. This timing aligns with the end of the financial year, making March a natural point for employers to address workforce adjustments before the new tax year begins in April.

Changes in Employment Law

Recent updates to employment legislation have made settlement agreements an even more attractive option for employers. This is particularly relevant in March, as employers prepare for the new tax year and seek to resolve any lingering disputes. The timing allows them to start the new financial year with a clean slate.

The Post-Pandemic Workplace

The long-term effects of the pandemic continue to shape the workplace. Hybrid working models, shifts in employee expectations, and the rise of AI and automation have created friction in some organisations. Settlement agreements are often used to address these tensions, allowing employers to part ways with employees who may no longer fit the evolving business model. March, as a period of reflection and planning, is a common time for businesses to address these issues.

Focus on Mental Health and Wellbeing

Employers are increasingly aware of the impact of workplace disputes on mental health. In March, as businesses reflect on their performance and plan for the year ahead, many are opting for settlement agreements to resolve conflicts quickly and compassionately, reducing stress for all parties involved.

Bonus Season and Strategic Timing

March is also a strategic month for settlement agreements due to bonus season. Employees entitled to annual bonuses may find this an opportune time to negotiate a settlement, ensuring they receive their bonus as part of the agreement. Additionally, the “spring cleaning” mindset often leads employers to take stock of their workforce and address any unresolved issues, making March a peak time for settlements.

At Solidaire Solicitors, we specialise in providing expert advice on settlement agreements for both employers and employees. Whether you’re an employer looking to navigate the process smoothly or an employee seeking to understand your rights, our team is here to help. We ensure that every agreement is fair, legally sound, and tailored to your unique circumstances.