Employee Settlement And Release Agreement for the United Kingdom

Employee Settlement And Release Agreement Template for England and Wales

A legally binding agreement under English and Welsh law that formally settles potential employment claims between an employer and employee upon termination of employment. The agreement typically includes financial settlement terms, confidentiality provisions, and a comprehensive waiver of claims. It must comply with statutory requirements including the necessity for independent legal advice and proper execution to be valid.

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What is a Employee Settlement And Release Agreement?

The Employee Settlement And Release Agreement is a crucial document used when terminating employment relationships in England and Wales. It provides a clean break between employer and employee by settling all potential claims and clearly defining the terms of separation. This agreement must comply with specific statutory requirements under English law, including the Employment Rights Act 1996 and the Equality Act 2010. It typically includes settlement payments, tax provisions, confidentiality obligations, and comprehensive waivers. The document requires independent legal advice to be valid and is commonly used in redundancy situations, mutual separations, or resolving workplace disputes.

What sections should be included in a Employee Settlement And Release Agreement?

1. Parties: Identification of the employer and employee

2. Background: Context of the agreement and employment relationship

3. Definitions: Key terms used throughout the agreement

4. Termination Date: Specific date when employment ends

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

6. Tax Treatment: Tax implications of payments and indemnities

7. Waiver of Claims: List of claims being waived by the employee

8. Legal Advice: Confirmation of independent legal advice received

9. Confidentiality: Obligations regarding confidentiality of agreement and company information

10. Governing Law: Specification of English and Welsh law as governing law

What sections are optional to include in a Employee Settlement And Release Agreement?

1. Post-Termination Restrictions: Restrictive covenants applicable after employment termination, including non-compete and non-solicitation provisions

2. Reference Provision: Terms and conditions regarding the provision of employment references

3. Garden Leave: Terms and conditions of any garden leave period before final termination

4. Share Options: Treatment of existing share options or awards upon termination

5. Outplacement Support: Details of any career transition or outplacement support services provided

What schedules should be included in a Employee Settlement And Release Agreement?

1. Schedule 1: Payment Calculation: Detailed breakdown of settlement payment including statutory and ex-gratia amounts

2. Schedule 2: Claims Being Settled: Comprehensive list of statutory and contractual claims being waived by the employee

3. Schedule 3: Adviser's Certificate: Certification from independent legal adviser confirming advice given to employee

4. Appendix 1: Agreed Reference: Template of agreed employment reference to be provided

5. Appendix 2: Company Property: Itemized list of company property to be returned by the employee

Authors

Alex Denne

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

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Release Agreement

Cost

Free to use
Industries

Employment Rights Act 1996: Primary legislation governing employment rights, unfair dismissal provisions, and statutory redundancy payments. Section 203 specifically covers requirements for valid settlement agreements including need for written agreement and independent legal advice.

Equality Act 2010: Comprehensive legislation protecting against workplace discrimination based on protected characteristics and ensuring equal pay provisions.

Trade Union and Labour Relations (Consolidation) Act 1992: Legislation covering collective bargaining rights and protection of trade union membership in employment context.

Working Time Regulations 1998: Regulations governing holiday pay, working hours limitations, and mandatory rest break entitlements that may need to be settled.

National Minimum Wage Act 1998: Legislation ensuring minimum wage requirements and proper payment calculations are met in final settlements.

Employment Relations Act 1999: Act covering both individual employment rights and collective rights that need consideration in settlement agreements.

Data Protection Act 2018 and UK GDPR: Legislation governing employee data protection and privacy rights, crucial for confidentiality clauses in settlement agreements.

Companies Act 2006: Relevant for director duties and corporate governance aspects if the settlement involves company directors.

Limitation Act 1980: Sets out time limits for various types of employment claims that may be relevant to the settlement agreement.

ACAS Code of Practice on Settlement Agreements: Best practice guidance and procedural requirements for settlement agreements, including negotiation protocols.

Income Tax Act 2007: Legislation governing taxation of settlement payments and benefits, including distinction between taxable and non-taxable elements.

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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