Settlement agreement important clauses

Settlement Agreement Advice often get asked what are the most important clauses within a settlement agreement. The answer is that this depends on the circumstances of the individual case.

Waiver of future claims clause

One of the key clauses is the waiver that employees provide confirming that they will waive their right to pursue any claims against their employer. Clearly the clauses which defined the compensation payable to the individual when that compensation will be paid to the individual need to be examined carefully to ensure that they are drafted correctly.

Non financial clauses

Sometimes the non financial clauses are regarded as being equally or even more important than the clauses which set out details of the termination payments to be made to the employee.

Non financial clauses can include confidentiality and non derogatory statements
undertakings which prescribe what both parties can say about the circumstances leading up to the settlement agreement and about each other.

Clause regarding reference wording

It is also important for employees to consider carefully whether or not they need to negotiate on the wording of the reference to be provided to prospective employers.

It is not often individuals have the opportunity to negotiate with their employer on the wording about references to be provided templates and they should take the opportunity to do so when taking advice on their settlement agreement.

The waiver clause should not require an individual to waive any claims which on not relevant to the termination of their employment. For example employees should not be required to waive their rights to pursue any claims for accrued pension rights or any claims for latent personal injury. This means any personal injury in relation to which the individual is not currently aware.