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Termination Settlement Agreement Template for England and Wales

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Key Requirements PROMPT example:

Termination Settlement Agreement

"I need a Termination Settlement Agreement for a senior software engineer who is leaving voluntarily, with a settlement payment of £50,000 and agreement to waive all claims, plus we need to include specific provisions about ongoing confidentiality of our proprietary technology."

Document background
A Termination Settlement Agreement is used when an employer and employee agree to end their employment relationship on mutually agreed terms. This document, governed by English and Welsh law, provides legal certainty by settling any potential claims and clearly defining the financial and practical arrangements of the separation. It must meet specific statutory requirements to be valid, including independent legal advice for the employee. The agreement typically covers settlement payments, tax treatment, confidentiality obligations, and post-termination restrictions.
Suggested Sections

1. Parties: Identification of the employer and employee

2. Background: Context of employment and circumstances leading to termination

3. Definitions: Key terms used throughout the agreement

4. Termination Date: Specific date employment ends and final working day if different

5. Settlement Payments: Details of all payments to be made including statutory and ex-gratia amounts

6. Tax Treatment: Tax status of payments and related indemnities

7. Waiver of Claims: Employee's waiver of employment-related claims

8. Confidentiality: Obligations regarding confidentiality of agreement terms

Optional Sections

1. Post-Termination Restrictions: Restatement or variation of existing restrictive covenants - use when existing restrictions need to be preserved or modified

2. Company Property: Return of company property provisions - use when employee has company equipment or documents

3. Reference: Terms of employment reference - use when agreed form of reference is part of settlement

4. Share Options: Treatment of existing share options or awards - use when employee has share-based incentives

Suggested Schedules

1. Schedule 1: Claims: List of statutory claims being settled

2. Schedule 2: Adviser's Certificate: Independent legal adviser's certification

3. Schedule 3: Agreed Reference: Form of reference to be provided when reference terms are agreed

4. Schedule 4: Company Property: List of items to be returned when detailed inventory needed

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Industries

Employment Rights Act 1996: Primary legislation governing employment rights, including unfair dismissal provisions, statutory notice periods, and redundancy payment calculations

Equality Act 2010: Legislation protecting against discrimination and setting requirements for valid waivers of discrimination claims in settlement agreements

Companies Act 2006: Legislation relevant for share-related matters in settlements and director duties if applicable to the termination

Trade Union and Labour Relations (Consolidation) Act 1992: Covers collective agreement considerations and trade union consultation requirements in termination settlements

Working Time Regulations 1998: Regulations governing holiday pay calculations and accrued leave settlements

Pensions Act 2004: Legislation covering pension-related provisions and transfer of pension rights in settlement agreements

Income Tax (Earnings and Pensions) Act 2003: Determines tax treatment of settlement payments and requirements for tax indemnities

National Insurance Contributions Act 2014: Governs the National Insurance Contributions treatment of settlement payments

ACAS Code of Practice on Settlement Agreements: Regulatory guidance providing procedural requirements and best practice for settlement agreements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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