Resolution
Settlement agreements and COT3
Understand how a settlement agreement uk works, what terms matter, and how to negotiate safely with a settlement agreement acas brokered deal.
Last updated 5 April 2026
Overview
A settlement agreement uk is a legally binding contract that ends an employment dispute, often involving a payout in exchange for waiving your rights to claim.
Many employers use a settlement agreement plc or acas standard as a starting point for negotiations.
A settlement agreement redundancy deal often includes enhanced pay above the statutory minimum.
Key terms to review
- Compensation amount and payment date
- Notice pay, holiday pay, and bonuses
- Reference wording and announcements
- Confidentiality and non disparagement clauses
- Waiver of claims and legal fees contribution
Negotiation approach
- 01
Know your objectives
Decide what matters most: money, reference, or timing. Use a settlement agreement calculator to set your baseline.
- 02
Check the numbers
Separate taxable pay from compensation. A settlement agreement template uk can help you see common phrasing for pay.
- 03
Ask for a draft
Review the wording and mark changes in writing, ensuring it follows acas guidance.
- 04
Get settlement agreement legal advice
Independent legal advice is a legal requirement for any settlement agreement to be valid.
Tax basics
- Notice pay and wages are taxable as normal income.
- Is a settlement agreement tax free? Usually, the first £30,000 of a genuine redundancy or compensatory payment is tax-free.
- Always confirm how the payment will be reported to HMRC and ensure the tax indemnity clause is fair.
Common questions
Where can I find a settlement agreement template uk?
You can find a settlement agreement template on the ACAS website, though most employers provide their own starting draft from their solicitors.
Do I need a settlement agreement calculator?
While we don't host a standalone settlement agreement calculator, you should calculate your notice, holiday pay, and potential tribunal value to judge any offer.
Why do I need settlement agreement legal advice?
To ensure you understand the rights you are waiving, the law requires an independent solicitor or adviser to sign off on the deal.
Next steps
Keep your facts organised and protect your time limits with the tools below.
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