Settlement agreements
Editor's message: Exiting an employee from your organisation can be a lengthy and uncertain process. However, a settlement agreement can offer an easier and potentially more cost-effective route to terminating the employment relationship.
A settlement agreement is a legally binding document that offers the employee a financial settlement in return for a clearly expressed waiver of any potential claims. It should contain a thorough breakdown of the payments being offered and commonly sets out what references will be provided, confidentiality, and a “non-disparagement clause”.
The statutory requirements include that the agreement be in writing and that the employee has obtained independent legal advice before signing it.
Stephen Simpson, principal employment law editor
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HR and legal information and guidance relating to settlement agreements.
Settlement agreements: key resources
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Employment law guide: Alternative methods of dispute resolution > Settlement agreements (and pre-termination negotiations)
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Settlement agreement
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Podcast: Negotiating successful settlement agreements
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How to use a settlement agreement to resolve an employment issue
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How to approach pre-termination negotiations about a settlement agreement