Understanding the legal jargon in your settlement agreement

The time you are given to think over the offer and take advice before deciding whether to sign — usually at least 10 calendar days, in line with the ACAS Code of Practice.

Also known as a pre-termination negotiation. A conversation about ending your employment on agreed terms, protected under section 111A of the Employment Rights Act 1996 even where no dispute yet exists. It only protects against a claim for ordinary unfair dismissal.

The settlement agreement is not intended to be legally binding until the final terms are agreed.

A phrase used to describe discussions, often about settling a dispute, that generally cannot be referred to or used as evidence in later legal proceedings. This protection only applies where certain conditions are met — see our quick answer on without prejudice conversations for more detail.

Non-salary benefits provided through employment, such as private medical insurance, a company car or life insurance and critical illness cover.

An extra payment above the statutory minimum redundancy pay you're legally entitled to.

An additional payment made by your employer as a gesture of goodwill, rather than something you were otherwise contractually entitled to. See our article on how figures are calculated for more detail.

A period when you are still employed and paid but told not to work. You generally still have to follow the terms of your employment contract during the garden leave period.

Your accrued right to paid annual leave. Any unused entitlement may be paid to you when employment ends, depending on the circumstances.

A payment made instead of requiring you to work out your notice period.

A statutory tax calculation used to determine how much of a termination payment is treated as taxable earnings.

The minimum redundancy payment required by law if you qualify for one. It is calculated using factors including age, length of service and weekly pay, subject to the statutory limits.

Certain payments, such as redundancy pay and some ex gratia payments, can generally be paid free of tax up to £30,000. Not every element of your settlement necessarily qualifies.

Money treated as normal employment income and therefore subject to the applicable income tax and National Insurance rules.

The overall financial amount your employer is paying you as part of the settlement, which may be made up of several different elements.

A clause restricting who you can discuss the settlement agreement, and sometimes the circumstances of your departure, with. It may also set out how you should handle confidential information you obtained during your employment.

You agree that the payment and terms of the settlement resolve the claims and disputes covered by the agreement, so you generally won't be able to bring those claims against your employer later.

A clause preventing you, and often your employer, from making negative comments about the other.

A clause restricting what you can do after you leave — for example, working for a competitor or contacting former clients — for a defined period.

The date your employment comes to an end.

The list of specific legal claims you are agreeing not to pursue against your employer, such as unfair dismissal or discrimination.

A statement you confirm to be true as part of signing the agreement — for example, that you are not aware of any other circumstances that would amount to a repudiatory breach of your employment contract that would entitle your employer to terminate your employment without notice or payment in lieu of notice.

A qualified lawyer, a certified officer, official, employee or member of a trade union or a certified advice centre worker who advises you on the terms and effect of the proposed settlement agreement and, in particular, its effect on your ability to pursue your rights before an employment tribunal.

The signed document confirming you have received independent advice on the terms and effect of your agreement, as the law requires.

Failing to do something the agreement legally requires — for example, not making a payment by the agreed date.

This is the law that will be used to interpret and enforce the settlement agreement, such as the law of England and Wales.

This is the country's or region's courts that have the authority to deal with a dispute about the settlement agreement, for example, the courts of England and Wales.

A serious or significant breach, rather than a minor technical breach.

A serious breach that can give the innocent party the right to end the agreement.

Whether someone who isn't a party to the settlement agreement can enforce any part of it.

Different ways an agreement, or part of it, might not be legally binding. Void generally means treated as if it never existed; voidable means valid unless a party entitled to do so cancels it; unenforceable means valid but a court will not enforce it.

A provision allowing the employer to recover some or all of a payment if you breach specified terms of the agreement.

Anything that belongs to your employer that you have in your possession or control, such as a company car, fuel card, company credit card, keys, security pass, identity badge, mobile phone or laptop etc. Items that are considered company property are usually set out in the settlement agreement.

A promise to cover another party's losses, costs or liabilities if a specified event occurs.

The tax document your employer gives you when your employment ends, showing your pay and tax deductions for the tax year.

A document you may be required to sign after the termination date confirming that certain promises and statements in the settlement agreement remain true.