Settlement Agreement Drafting

Settlement agreements are a very common way to end the employment relationship, whether the employee is leaving on good terms, for example, under a reorganisation, or leaving under a cloud. The settlement agreement needs to cleanly end the employment, waive the right to statutory claims, deal with tax in the right way, handle outstanding entitlements, and impose any post-termination obligations the employer wants.

What a clean settlement agreement does

Done well, the agreement closes the matter. Done badly, it leaves loose ends that can resurface, including, in some cases, in a tribunal. The drafting matters.

Specific points: the right specificity in the claim waivers (too-general waivers will not be effective); correct use of the £30,000 termination payment exemption where available; clean handling of bonus, equity, and notice; and a reasonable contribution to the employee's legal fees, which is the standard practice and helps the matter close.

This service covers a standard settlement involving a termination payment, a waiver of claims, a reference, and confidentiality. For a single departing employee.

Example: a typical scope and fixed fee

For an employer agreeing terms with a single departing employee, the typical scope looks like this.

What's included

• A consultation to understand the circumstances, the proposed terms, and any specific risks
• Drafting of a settlement agreement covering termination date, payments (including any tax-free element), waiver of claims, return of property, confidentiality, non-derogatory statements, reference, and post-termination restrictions
• A template cover letter for issuing the agreement to the employee
• One round of revisions based on your feedback
• Final version ready to issue

What's outside this scope

• Settlement agreements involving complex discrimination, whistleblowing, or group claims
• Advice on the employee's potential claims prior to drafting
• Negotiation with the employee or their solicitor
• Employment tribunal proceedings
• Tax advice

Fixed fee: £650, no VAT.

How I will approach your matter

Once you have instructed me, I will arrange a consultation to understand the circumstances, the proposed terms, and any specific risks before drafting. You will receive the settlement agreement together with a template cover letter for issuing it to the employee.