Settlement agreements can be one of the trickiest conversations HR professionals have to navigate. They’re often perceived as purely a legal process, a way to draw a line under a situation and move on. But at the heart of every settlement agreement is a person—someone whose career, livelihood, and future are being impacted by this decision. And how we approach these conversations matters just as much as the agreement itself.
Handled poorly, a settlement agreement can feel like a cold, impersonal transaction. Handled well, it can be a dignified, respectful, and even amicable way for both parties to move forward. So, how do we ensure these discussions are conducted with empathy?
What is a settlement agreement and when is it appropriate?
A settlement agreement is a legally binding contract where an employee agrees to waive certain rights—usually in exchange for a financial settlement and agreed terms. It’s often used to resolve workplace disputes or facilitate a smooth exit when remaining in the organisation isn’t a viable option.
But just because it’s a legal tool doesn’t mean it should be the go-to solution. It should only be used in situations where it genuinely benefits both the organisation and the employee. It can be appropriate in cases where a working relationship has broken down, where redundancy is on the table but alternative options have been explored, or where a managed exit is the best way forward. The key is ensuring the agreement is positioned as an option—not an ultimatum.
Approaching the conversation with empathy
For an HR professional, a settlement agreement might be just another part of the job. But for the employee on the other side of the table, it can be life-changing. That’s why it’s crucial to approach the conversation with empathy.
It starts with mindset. This isn’t just a case of presenting an offer and waiting for a signature. It’s about acknowledging the human impact and ensuring the person feels heard, respected, and supported throughout the process.
Active listening is key. Give the employee space to process what’s being said. If they have concerns, don’t brush them aside. If they need clarification, provide it in a way that doesn’t feel transactional. And most importantly, allow them to ask questions without feeling rushed or pressured.
Language also plays a huge role. Using overly formal or legalistic terms can create a sense of distance and mistrust. Keeping the conversation clear, straightforward, and free from unnecessary jargon helps the employee feel like they’re being spoken to—not at.
Defusing difficult reactions
Not everyone will take the news well. Some employees may react with frustration, shock, or even relief, but whatever the response, the way HR manages it can make all the difference.
If an employee is upset or defensive, acknowledge their emotions without trying to shut them down. A simple “I understand this must be difficult to hear” can go a long way in defusing tension. Staying calm, patient, and open throughout the conversation helps keep things constructive.
It’s also important to remind the employee that they’re not expected to make an immediate decision. They have the right to seek independent legal advice before signing anything, and giving them the space to do so reinforces that this isn’t a coercive process. If emotions are running high, sometimes the best approach is to suggest taking a break and reconvening later.
Moving forward with dignity
A settlement agreement shouldn’t feel like an abrupt ending—it should feel like a transition. And the way an organisation handles this period says a lot about its culture.
HR can support this process by offering practical help, whether that’s providing a fair reference, signposting career support, or ensuring that the employee’s final weeks (if they’re staying on for a notice period) are handled with professionalism and respect.
Framing the agreement as a fresh start rather than a forced exit can also make a difference. Helping the employee see the opportunity rather than just the ending can shift the tone of the discussion from one of loss to one of possibility.
And finally, treating the employee with courtesy and respect—right up until their final day—ensures they leave on the best possible terms. A badly handled exit can damage morale for remaining employees, while a respectful and dignified departure maintains goodwill on both sides.
Final thoughts
Settlement agreements aren’t just about legal clauses and financial settlements. They’re about people. The way these conversations are handled can make all the difference between a bitter departure and an amicable one.
By leading with empathy, active listening, and a focus on dignity, HR professionals can ensure that settlement agreements aren’t just legally sound, but human-centred too. Because ultimately, how someone leaves an organisation is just as important as how they joined.
If your organisation is navigating difficult settlement conversations, Tell Jane can help you create a people-first approach that prioritises fairness, respect, and positive outcomes for all parties. Get in touch to find out more.
