How do I write a settlement agreement?

It is important to draft a settlement agreement correctly to ensure that the clauses within it are enforceable and that it properly waives individuals rights to pursue a claim in the courts or the employment tribunal.


It is not possible to simply print a template and complete the gaps because it is important to draft a settlement agreement tailored to the individual circumstances to ensure that it is enforceable. Seek legal advice from the best settlement agreement solicitors if you’re unsure.


A settlement agreement should include provisions relating to the payments to be made to the individual and when those payments fall due for payment.


The agreement should also typically include details of the reason for the termination and the termination date as well as details of any holiday pay which is owing to the individual entering into the agreement. 


A standard settlement agreement will include a lengthy waiver clause detailing all of the claims that are being waived by the individual upon the termination of his or her employment.


In addition the agreement would be expected to include a confidentiality undertaking ensuring that all parties keep the circumstances surrounding the agreement strictly confidential.


A non-derogatory undertakings provision should also be included ensuring the parties will not badmouth one another as well as details relating to references to be provided to prospective employers and announcements to be made internally or externally about the employees exit.


We would strongly recommend that all employers drafting a settlement agreement take legal advice on the circumstances surrounding the employee’s exit as well as the drafting of the agreement itself.