This template settlement agreement (used to be called a compromise agreement) is an agreement between an employer and employee for the purpose of settling an employee’s termination of employment. The settlement agreement template allows an employer to bind the employee to a confidential, full and final settlement in respect of their employment and prevents the employee from bringing any legal claims against the employer. This detailed 11-page template, which is instantly downloadable (no need to sign up), is designed to be expandable and easily edited for additional or specific requirements.
Settlement agreements are recognised by statute and are the only valid way of ‘contracting out’ of employment law rights. They are typically used to remove an employee for poor performance, to avoid legal challenges in redundancy situations, or to make it easier to remove senior staff without embarrassment. This template settlement agreement covers a comprehensive range of details relating to the termination of employment including all standard terms, for example final payment and compensation, leave and holiday, and a detailed waiver of all possible claims, as well as a number of ‘good practice’ clauses, such as a sample job reference, a number of post-termination restrictions for the employee for example a gagging clause, and a provision for the employee to confirm they have received their own legal advice.
Contents of the Settlement Agreement Template
- Title, date, parties, recitals
- Definitions and interpretation, including defining in detail the relevant legislation
- Termination of agreement, containing a statement of termination and date
- Gardening leave, giving the employer the right to require the employee to stay at home
- Pay and compensation, for example the various final amounts to be paid, and payment for untaken holidays
- Tax, detailing the employee’s liability for all tax arising from their employment and final payments
- Restrictions and obligations, restricting the employee for example non-solicitation, confidentiality, speaking negatively about the employer, and actions required on termination day
- Reference, making a provision for what reference the employer will provide
- Full and final settlement, contains a very detailed section on what the settlement covers, all the relevant possible claims and legislation, and preventing any legal action by the employee
- Reaffirmation, requiring the employee to reaffirm their waivers and warranties upon the termination date
- Miscellaneous, for example legal costs, methods of notice, statement of entire understanding, waiver, enforceability, and jurisdiction
- Schedule – Advisor’s certificate
- Schedule – Employee reaffirmation certificate
- Schedule – Wording of sample employer reference
FREE Sample of the Settlement Agreement Template
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