Settlement Agreements contain a variety of provisions that vary depending on the reason the document is being drawn up. These provisions will also vary depending on whether the employee’s contract with the business has been terminated already. Nevertheless, there are a few key elements that should always be included in the document, which we will examine here.

Key Settlement Agreement Provisions

All Settlement Agreements should include some standard provisions, including:

Agreement to Waive Legal Action

A clause should be included to state that the employee agrees to waive their rights to take legal action against the business and to cancel any claim that has already been started.

Financial Details

An outline should be included of any outstanding monies still to be paid including salary, holiday pay, notice pay, commission, and bonuses. Details of the payment in respect of termination which will be tax-free and in addition to the payments outlined above should also be clearly detailed. Furthermore, the amount that is to be contributed towards the legal fees of the other party should be outlined within the Agreement.

Confidentiality Clauses

Non-disclosure or confidentiality clauses should be included to prevent both parties from discussing the terms of the Settlement Agreement with any other party save their legal adviser and partner.


A Settlement Agreement should be included that the business will provide, at the employee’s request, a good written reference, with the terms of the reference agreed upon during the drawing up of the Settlement. Furthermore, non-derogatory clauses will usually be added to prevent both parties from saying anything negative about the other.

Further Inclusions

As well as the above, all Settlement Agreements should contain a requirement that the employee will cooperate in the future should any proceedings be taken to tribunal involving another employee along with the solicitor’s signed certificate. It is important to note that if anything is missed out of the document accidentally, one of the parties may take legal action against the other at some future time, therefore, ensuring that all details are correct before signing the Settlement Agreement could not be more important.

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