Jurisdiction(s):
United Kingdom

Employee-side settlement agreements: adviser’s checklist on negotiations, payments, tax (PENP/£30,000), pensions, shares, NDAs, post-termination restrictions, references, public-sector approvals and legal costs contributions

Published by a LexisNexis Employment expert

Checklists

The employee (and their adviser) should consider the following issues:

Preparatory steps

Gather:
- a copy of the employee’s most recent employment contract and any other documents setting out contractual terms (these might be found in a staff handbook)
- a P45 or the latest payslip
- details of the contractual benefits the employee receives
- relevant information about the employee’s pension benefits
- relevant details of any shares or share options held by the employee. Review the Articles of Association, any applicable shareholder agreement and share scheme documents. See also Shares and share options below
- copies of pertinent open correspondence and without prejudice communications between employer and employee
Define the scope of the advice and reflect this in the client care letter/terms of business, i.e.:
- is the advice limited to the terms and effect of the settlement agreement (to satisfy the relevant condition regulating settlement agreements)?
- is the employee also being advised on whether the settlement proposal amounts to a ‘good deal’?
The employee will typically want the settlement terms and payments to be arranged as tax-efficiently as possible.

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Web page updated on 20/05/2026

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