Settlement agreements when AI changes or ends a job: UK rules

When automation removes a role or a dispute about an AI system turns sour, employers in Great Britain often offer a settlement agreement: a payment in return for the employee giving up claims. These agreements are common, but they only bind if strict conditions are met, and some promises in them are void. This page explains the rules for workers and employers. It covers England, Wales and Scotland.

The short answer: a term that tries to stop someone bringing employment tribunal claims is void unless the agreement is in writing, relates to the particular proceedings, and the worker got advice from a relevant independent adviser who is identified in it, among other conditions. Talks about ending employment can be kept out of an ordinary unfair dismissal claim, but not if there was improper behaviour. No agreement can stop a worker making a protected disclosure.

The conditions for a valid settlement agreement

Section 203 of the Employment Rights Act 1996 makes any provision in an agreement void in so far as it tries to exclude or limit the Act or stop a person bringing proceedings under it before a tribunal (ERA 1996, s203(1)). There are exceptions, including an agreement reached through Acas conciliation, and a settlement agreement that meets these conditions (s203(3)):

• it must be in writing;
• it must relate to the particular proceedings;
• the employee or worker must have received advice from a relevant independent adviser on its terms and effect, in particular on their ability to pursue their rights before a tribunal;
• the adviser must be covered by insurance or a professional indemnity for the risk of a claim about that advice;
• the agreement must identify the adviser; and
• it must state that the conditions regulating settlement agreements under the Act are satisfied.

A relevant independent adviser can be a qualified lawyer, a certified official or member of an independent trade union, or a certified worker at an advice centre (s203(3A)). An adviser acting for the employer is excluded, and so is advice from an advice centre that the worker pays for (s203(3B)). Equality Act claims have a matching rule: a term that limits the Act is unenforceable unless the contract settles a complaint through Acas or is a qualifying settlement agreement with the same kind of conditions (Equality Act 2010, s144, s147).

Protected conversations before the job ends

Section 111A says evidence of pre-termination negotiations, meaning offers or discussions before employment ends with a view to ending it on agreed terms, is inadmissible in an ordinary unfair dismissal complaint (s111A). It has limits:

• it does not apply where the claim is that the dismissal was automatically unfair, for example for making a protected disclosure (s111A(3));
• for anything said or done that the tribunal considers improper, or connected with improper behaviour, the protection applies only to the extent the tribunal considers just (s111A(4));
• it covers unfair dismissal complaints under s111, not discrimination claims.

The Acas Code of Practice on settlement agreements gives examples of improper behaviour, including harassment, bullying and intimidation, discrimination, and putting undue pressure on a party. One example is an employer saying, before any disciplinary process has begun, that the employee will be dismissed if they reject the offer (Acas Code, paras 17 to 19).

Time to consider, and meetings

The Acas Code says parties should be given a reasonable period to consider the proposed agreement and, as a general rule, a minimum of 10 calendar days to consider the formal written terms and get independent advice, unless they agree otherwise (para 12). It also says that, while not a legal requirement, employers should allow the employee to be accompanied at a meeting by a colleague or trade union official or representative (para 13).

What a settlement cannot stop

• Protected disclosures: any term in an agreement between a worker and employer is void in so far as it tries to stop the worker making a protected disclosure (s43J). A confidentiality clause covering an AI system or a restructuring cannot stop a lawful whistleblowing report; see UK whistleblowing law and AI.
• Harassment and discrimination: the Employment Rights Act 2025 inserted section 202A, which makes terms void so far as they stop a worker alleging or disclosing harassment or discrimination, subject to excepted agreements set by regulations. On 31 October 2026 legislation.gov.uk showed it commenced only for specified purposes, so check its status before relying on it (s202A).

Where AI fits

Settlements often follow a restructuring in which work is automated. Before signing, a worker should know what they would get without the agreement: statutory redundancy pay (see AI job losses and UK redundancy pay), whether the selection process was fair (see AI scoring in UK redundancy selection), and any possible discrimination claim. Ask what data and scores were used about you, which may be available through a data access request (see how to request the data AI systems hold on you). Employers should not use an automated score as the only basis for choosing who is offered a settlement, and should keep offers and reasons in writing. An agreed reference is often part of the deal; see AI and job references in the UK.

This page is general information, not legal advice. Independent advice is a legal condition of a valid settlement agreement, so take it.