What are the typical clauses in a settlement agreement?

Each agreement is different but there are certain clauses you can expect to see in a settlement agreement although the wording can differ quite wildly from one to another. The sorts of clauses you would expect to see include:

  • · A full and final settlement clause;
  • · A clause saying that you will return all company property by a set date;
  • · A clause setting out when your employment will end and what happens to your salary and benefits until then;
  • · A clause setting out what will happen to any benefits after the termination date;
  • · A clause covering holiday pay or holiday entitlement;
  • · A tax indemnity (see FAQ link below);
  • · A clause setting out that the statutory requirements for settlement agreements have been satisfied;
  • · A clause setting out who has given you advice and that the advice has covered certain things;
  • · A reference or announcement (unless the role is an FCA regulated role);
  • · Whether any restrictions will apply after you leave;
  • · The all important settlement sum and how it is broken down or taxed;
  • · Arrangements between the signing of the agreement and your leaving date;
  • · Clauses around confidentiality;

Other clauses may be applicable depending on whether for example you hold shares or are being provided with any other benefits.

More FAQs on Settlement Agreements