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A Settlement Agreement is a legally binding contract made between an employee and employee.In its simplest form, a settlement agreement will provide for termination payments (which may include your notice, an tax free sum, redundancy, holiday, bonus, and other sums. There are, however, many other clauses (see below).

How to Negotiate the Best Deal on Your Settlement AgreementPrepare Well for the Settlement Agreement Negotiation.Decide which negotiation tactics to use.Ask for a Protected Conversation with your Employer.Don't ask for too much.Don't ask for too little.Find out how the settlement payments will be taxed.More items...

The rough 'rule of thumb' that is generally used to determine the value of a settlement agreement (in respect of compensation for termination of employment) is two to three months' gross salary.

Then a reasonable settlement agreement payment would be between 1 and 4 months' salary plus notice pay. If you have evidence of discrimination or whistleblowing, you may be able to get more, and the 2 years' service requirement doesn't apply.

What should the settlement agreement contain? The standard terms of the settlement agreement are the following: The outstanding balance of the salary, bonuses, commission and holiday pay of the employee; A termination payment that will be paid by the employer to the employee for agreeing to terminate the contract.

A general settlement agreement will include the following: Payments that you will receive e.g. a lump sum, several months' salary and pension contributions. An agreed reference. The option to communicate the reason for you leaving to your colleagues.

You should generally do all of the following:2714 Retain relevant documents.2714 Decide whether (and when) to make offer.2714 Evaluate the reasons for settling.2714 Assess motivating factors to settle.2714 Confirm client's ability to settle.2714 List all covered parties.2714 List all legal issues to be settled.Nov 2, 2018