Settlement Agreements

It is very important to have a basic understanding of admissibility rules when raising the issue of possible settlement with an employee.  A failure to do this will mean a high risk of prejudice to any legal claim that may follow.

Without Prejudice – this rule only covers situations where there is an existing legal dispute

Section 111A Employment Rights Act 1996 – this provides a limited amount of protection but only engages if a monetary offer is actually conveyed and conduct is reasonable (i.e. no undue influence is brought to bear)

It is most advisable to appoint a suitably skilled advisor to conduct settlement negotiations.  

It will be essential to agree ‘heads of terms’ first, these usually include: 

  • termination date
  • compensation amount (excluding notice pay)
  • approach to accrued annual leave
  • referencing
  • statements about reason for leaving

When these essentials are in place, you will need a suitably drafted settlement agreement. 

The form below should be completed if you would like me to assist further:

* this must be a real person, a limited company, a public limited company, a group of real people (e.g. a trust or partnership), a company limited by guarantee or a limit liability partnership.
Note: this may be immediately (if there is to be a payment in lieu of notice), or at the end of the notice period.
If in doubt refer to
Note: annual leave year that operates, total annual entitlement (including bank holidays), less number of days taken in the current annual leave year.
Note: this should be worded so that it can be given by both the employer's management and the employee (in answer to a question from a third party).
Note: only compensation over and above notice pay can be paid tax and NIC free.
Note: months or weeks as per the contract, or statutory minimum - see
Amount of annual salary, or hourly rate of pay
Note: payment must be made within this number of days after settlement agreement executed and received.
Note: this is for the employer's benefit to make the settlement binding and is therefore payable by the employer.
Note: this is advisable for both parties.