Getting an AI-drafted settlement agreement checked

A settlement agreement for an employee's exit produced with an AI drafting tool may be a US-style separation agreement and general release: a release of all claims, a payment, confidentiality, non-disparagement and a governing law clause. Under English law a waiver of statutory employment claims is valid only if the agreement meets conditions the statute sets, and a draft that meets none of them leaves the employer paying for a waiver it does not have. I review the agreement against the Employment Rights Act 1996, the Equality Act 2010 and the tax rules, and return it marked up with tracked changes, a clean copy and a written explanation of the changes, for a fixed fee of £495 in three working days.

Who this is for

Employers in England and Wales that have drafted a settlement agreement using an AI tool to end an employee's employment with a payment and a waiver of claims, whether after a dispute, a redundancy or a negotiated exit, and want it checked and corrected before it is offered. The review is of the client's own document; the employee must take independent advice on the agreement from their own adviser.

What the review checks in an AI-drafted settlement agreement

The statutory conditions without which the waiver is void

A settlement agreement waiving claims under the Employment Rights Act 1996 is valid only if it meets the conditions in section 203 of the Employment Rights Act 1996: it must be in writing, relate to the particular proceedings, and the employee must have received advice from a relevant independent adviser, a solicitor, a certified union adviser or an advice centre adviser covered by insurance, on the terms and effect of the agreement and its effect on the ability to pursue a tribunal claim, with the adviser identified and the agreement stating that the conditions are satisfied. Section 147 of the Equality Act 2010 sets the equivalent conditions for discrimination claims. An AI draft written as a general release meets none of those, and the review adds each.

The claims that must be listed, and the ones that cannot be waived

The agreement must relate to the particular complaints, so the waiver has to list the claims the employee is giving up: unfair dismissal, discrimination under each protected characteristic, unlawful deductions, holiday pay, whistleblowing detriment and the rest, by statute and section. A general release of 'all claims' does not do it. Some claims cannot be waived: unknown future claims, accrued pension rights, and personal injury claims the employee is unaware of, which are carved out. The review drafts the list and the carve-outs.

The tax treatment of the payments

Payments under the agreement fall into different categories: salary, holiday pay and bonus are earnings and taxed as such; a payment in lieu of notice is taxable as earnings under the post-employment notice pay rules in section 402D of the Income Tax (Earnings and Pensions) Act 2003; and a termination payment that is not earnings can be paid free of income tax up to £30,000 under sections 401 and 403. An AI draft may describe the whole payment as tax-free or as compensation without allocating it. The review allocates the payments, drafts the tax indemnity, and states the treatment the employer will apply, with the detail of the calculation for the employer's accountant or payroll.

The adviser's certificate and the employee's advice costs

The agreement needs a certificate from the employee's adviser confirming that the advice was given and that the adviser is a relevant independent adviser with insurance in force, attached as a schedule, and the employer commonly contributes to the employee's advice costs. The review adds the certificate and the contribution provision, and checks the timetable: the employee needs enough time to take advice, and the ACAS Code of Practice on settlement agreements suggests a reasonable period, which the review reflects.

Confidentiality, non-disparagement, references and the disclosures that cannot be prevented

The confidentiality and non-disparagement provisions cannot prevent a protected disclosure under Part IVA of the Employment Rights Act 1996, a disclosure required by law or a regulator, a victim's disclosure of criminal conduct under section 17 of the Victims and Prisoners Act 2024, or, as section 24 of the Employment Rights Act 2025 is phased in, confidentiality relating to harassment and discrimination. The review adds the carve-outs, drafts the agreed reference and the announcement, and checks the return of property, the restrictive covenants that continue, and the employer's obligations that survive.

Pre-termination negotiations and the offer itself

Discussions before the agreement is signed can be kept out of an ordinary unfair dismissal claim under section 111A of the Employment Rights Act 1996, provided there is no improper behaviour, but not out of discrimination or whistleblowing claims, for which the common law without prejudice rule applies only where there is an existing dispute. The review checks how the offer is being made, drafts the covering letter, and checks the agreement's own mechanics: the termination date, the payment dates with interest under the Late Payment of Commercial Debts (Interest) Act 1998 where a sum is a commercial debt, the employee's warranties, and the ACAS conciliation alternative under section 18 of the Employment Tribunals Act 1996 where a claim has been started.

What it costs

Review of an AI-drafted contract, £495. One contract, returned as a marked-up Word document with my amendments as tracked changes, a clean version with the changes accepted, and a written explanation of the changes. Three working days from payment.

Buying online forms the engagement on payment. The scope is what the review of an ai-drafted contract page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own Word document returned with every amendment I consider necessary shown as a tracked change, so you can see exactly what I changed and accept or reject each one
• A clean version with every change accepted, ready to send
• Corrections to anything that is wrong as a matter of English law, unenforceable as drafted, or internally inconsistent
• Missing provisions added where the document has left a gap that matters: usually liability, termination, payment, intellectual property or data
• Comments in the margin where a clause is a commercial choice rather than a legal one, so the decision stays yours
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, with anything you should think about before sending it out
• Follow-up questions on the mark-up answered by email, included

What is not included

• A full rewrite. This is a review and amendment of your document, not a replacement for it. If the draft is structurally unsuitable for the deal, I will say so and quote separately for drafting it properly
• A second round of amendments after you have changed the document again, which I can quote for
• Negotiating with the other side
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Reviewing a document the other side drafted, which is the contract review service, at the same price

Questions I am often asked

Our AI-drafted agreement releases all claims. Is that enough?

Not for statutory employment claims: the waiver is valid only if the agreement meets the conditions in section 203 of the Employment Rights Act 1996, including a list of the particular claims and advice from a relevant independent adviser identified in the agreement. The review adds each condition.

Can the whole payment be tax-free up to £30,000?

Only the part that is a termination payment and not earnings: salary, holiday pay, bonus and post-employment notice pay are taxable. The review allocates the payments and states the treatment, with the calculation for your payroll or accountant.

Does the employee have to see a solicitor?

The employee must receive advice from a relevant independent adviser, who may be a solicitor, a certified union adviser or an advice centre adviser with insurance, and the adviser must sign a certificate. Without that the waiver is void. The review adds the certificate and the contribution to the employee's costs.

Related guidance and services

• Review of an AI-drafted contract, £495, the service this page describes
• Settlement agreements for employers, £795
• Getting an AI-drafted employment contract checked
• Reviewing a settlement or compromise offer from a supplier

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.