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Settlement Agreements - Common Terms

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Common Terms

Settlement agreements normally contain a number of “standard” provisions (but using different wording). Common terms are:

  • The employee is often required to indemnify the employer against any tax risk;
  • Confidentiality as to the terms of the agreement itself and / or any confidential information arising out of the employment itself;
  • The “waiver” clause will normally set out a long list of potential claims that the employee may have;
  • A clause requiring one or more of the parties not to speak detrimentally about the other party;
  • Typically the employer will agree a sum of money towards the legal fees of the employee;
  • A declaration for the employee’s solicitor to sign to confirm that the employee has been independently advised;
  • Confirmation that various statutory requirements have been complied with;
  • Terms relating to payment of the money;
  • A reference clause stating that the employer will respond to reference requests from potential new employers of the employee in accordance with agreed wording;
  • Compromise agreements often refer to “ex gratia” payments. These are payments which are gratuitous and can sometimes be paid gross without the deduction of tax;
  • A repayment clause if, despite the agreement, if the employee brings a claim or otherwise breaches the agreement; and
  • A warranty that the employee has not previously acted in breach of contract.

We can advise you on which terms are fair and appropriate. Our employment lawyers are specialists in their fields.

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