Exit Agreement Template for England and Wales

When your employment comes to an end, whether through redundancy, mutual agreement, or other circumstances, you need a comprehensive Exit Agreement to protect your interests and ensure legal compliance. This legally binding document, also known as a Settlement Agreement, provides certainty for both you and your employer while documenting all aspects of your departure under England and Wales law.

When do you need this document?

You need an Exit Agreement when your employment is ending and you want to avoid potential disputes or litigation. This document is essential if you're a senior executive leaving your role, if there are concerns about potential discrimination or unfair dismissal claims, or if your employer is offering enhanced termination payments beyond statutory minimums. You'll also need this agreement when you're being made redundant with a settlement package, when there are restrictive covenants to enforce or modify, or when both parties want clean legal closure with mutual release of claims.

Key legal considerations

Your Exit Agreement must comply with strict legal requirements to be enforceable. The agreement should clearly specify all financial payments, including salary, holiday pay, pension contributions, and any ex-gratia settlement sums, along with their tax treatment under current HMRC rules. You need to include comprehensive release clauses that waive potential employment tribunal claims while preserving your rights to personal injury claims and accrued pension rights. The document should address confidentiality obligations, restrictive covenants such as non-compete and non-solicitation clauses, and return of company property. Post-employment obligations regarding data protection, intellectual property, and customer relationships must be clearly defined. Consider including garden leave provisions, reference terms, and announcement protocols to manage your departure professionally.

Legal requirements in England and Wales

Under Section 203 of the Employment Rights Act 1996, your Exit Agreement must meet specific statutory conditions to be legally valid. You must receive independent legal advice from a qualified advisor, and this must be confirmed in writing within the agreement. The advisor must be covered by professional indemnity insurance, and their details must be included in the document. The agreement must identify the particular complaint or proceedings it covers and confirm that you understand the effect of the settlement terms. You have a minimum cooling-off period, and the agreement cannot prevent you from making protected disclosures or pursuing personal injury claims. The document must comply with the Equality Act 2010 to ensure non-discriminatory terms and may need to address pension transfer rights under current pension legislation. For agreements involving substantial payments, consider the tax implications under the Income Tax (Earnings and Pensions) Act 2003, particularly the £30,000 threshold for tax-free termination payments.