Settlement agreements (3): negotiating the contents

by Practical Law Employment

A Practice Note that gives an overview of the key clauses and common discussion points when negotiating settlement agreements. This Practice Note examines crucial elements such as the employee's entitlements on termination, including notice and payments in lieu of notice (PILON), issues arising in connection with termination payments (including the post-employment notice pay (PENP) rules under the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)), and other negotiation points relating to benefits. It briefly explores common issues relating to waivers of claims, the mechanics of withdrawing employment tribunal proceedings and the use of two-stage settlements and reaffirmation letters where there is a gap between signing and termination. It also addresses the role of the independent adviser, inclusion of confidentiality clauses and non-disclosure agreements (NDAs) within the current legal and regulatory framework, employee warranties and indemnities, and how to vary a settlement agreement.