Free Settlement Agreement Template (UK, Acas)
This Settlement Agreement is a template designed for an employer and an employee to formally terminate employment. Its primary purpose is to settle any existing or potential claims the employee may have against the employer, often without an admission of liability. The document includes provisions for the termination date, final payments, withdrawal of legal proceedings, confidentiality, and the requirement for independent legal advice.
Template Settlement Agreement
As this is a template for a legal contract, you must always follow our guidance on how to use this template. It's important for both parties that your agreement achieves the settlement you want and is legally accurate. If you're not sure about anything, you should get legal advice.
Cover Page
Settlement Agreement
Subject to contract
Without prejudice or Covered by section 111A of the Employment Rights Act 1996
This Settlement Agreement (‘the Agreement’) is made between [employer name] (‘the Employer’) and [employee name] (‘the Employee’).
This Agreement is dated [effective date].
Background
The Employee has been employed by the Employer as [job title] since [employment start date].
The Employer and Employee have agreed to settle the Particular Claims on the terms set out in this Agreement.
The Employer enters into this Agreement without any admission of liability.
Definitions and interpretations
In this Agreement:
‘Claims’ means any claim, claims or causes of action that the Employee has or may have against the Employer
‘Particular Claims’ are those claims which the Employee and Employer intend to be settled by this Agreement, arising out of the Employee’s employment or the termination of employment, as set out in Annex A if the Agreement is being used in Scotland, add: which is hereby incorporated into this Agreement
‘Termination Date’ means the date on which the employment has ended or will end, as set out in clause 3.1
References to the singular in this Agreement shall include references to the plural and vice versa and words in the masculine include the feminine and vice versa.
The headings in this Agreement are for ease of reference and shall not affect interpretation.
Termination Date and notice
The Employee’s employment with the Employer will terminate on [termination date] (‘the Termination Date’). The Employer and Employee will continue to be bound by the terms and conditions of employment until the Termination Date.
option 1
Provided that the Employee continues to comply with the terms and conditions of their employment, the Employer will pay the Employee’s usual wages or salary and bonus and commission (less tax and National Insurance contributions) up to and including the Termination Date. Along with the final wages or salary and bonus or commission payment, the Employer will also pay a sum in respect of [number of holiday days] days of accrued but untaken holidays (less tax and National Insurance contributions).
option 2
The Employer will pay the Employee [number of] weeks’ payment in lieu of notice (PILON), which will be paid less tax and National Insurance contributions. This PILON comprises [pilon amount composition]. The amount of post-employment notice pay (PENP) for HMRC purposes is [penp amount].
Except as set out in this Agreement, the Employee will have no right to any benefits under the terms and conditions of employment after the Termination Date.
Withdrawal of proceedings and waiver
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England & Wales note
This version is drafted for England & Wales. Scotland and Northern Ireland differ on some points — for example notice periods and tribunal procedure. Tell GitLaw where you hire and it adjusts the draft.
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