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Standard Settlement Agreement

Standard Settlement Agreement


This Standard Settlement Agreement has been updated to reflect legal changes brought about by the Equality Act 2010 (Amendment) Order 2012.

For more information on Settlement Agreements (previously called Compromise Agreements) please read our useful Information Page entitled Settlement Agreements .

The aim of a Settlement Agreement is to settle a dispute in the workplace with an employee or ex-employee. The employee agrees not to pursue claims against the employer, in return for a financial settlement. The objective for the employer is to avoid the cost of lengthy or divisive litigation arising out of an employment tribunal, as well as avoiding any reputational damage.

A Settlement Agreement contract is legally binding on the parties.

This particular agreement is designed to be used for clerical and administrative staff, factory workers and other "junior staff", where ‘post termination restrictions’ (or restrictive covenants) are not required.

A Settlement Agreement must specify the statutory claims being settled in order to be a binding waiver of those claims. Case law has shown that a ‘brief factual and legal description’ of the claim which has been raised by the employee (whether or not it is already the subject of legal proceedings) should be set out in the settlement agreement. Space has been provided for this purpose in the Schedule.

The Settlement Agreement contains a standard confidentiality clause requiring the employee to refrain from releasing details of the agreement. The agreement is compliant with the Employment Rights Act 1996, the Employment Act 2002 and the Equality Act 2010 (as amended), and is designed in accordance with current best practice.

The Settlement Agreement is stated to be "Without Prejudice". Clauses can be extended or deleted in accordance with Employer-Employee negotiation over employment termination.

This agreement does not contain clauses relating to a Company Car and does not set out any restrictive covenants. Alternative compromise contracts for other levels of staff are available.

This Standard Settlement Agreement template is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.

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