Employment Law – Settlement Agreements

Settlement agreements are widely used to resolve employment disputes and to record agreed terms when an employment relationship is ending.

They can arise in situations involving:

• Redundancy
• Poor performance
• Disciplinary proceedings
• Grievances
• Discrimination complaints
• Whistleblowing disputes
• Long-term sickness or capability
• Negotiated departures
• Senior executive exits

A settlement agreement can have significant legal and financial consequences because, in return for the agreed terms, you will normally waive specified claims against your employer.

It is therefore important to understand not only the amount being offered, but also the effect of the other provisions contained in the agreement.

For further guidance on related issues, see Senior Executives, Redundancy, Poor Performance and Performance Improvement Plans and Dismissal and Disciplinary Process.

Settlement Agreement FAQs

What is a Settlement Agreement?

A settlement agreement is a legally binding written agreement between an employer and an employee, worker, former worker or, in appropriate circumstances, another person such as a job applicant.

Settlement agreements were previously known as compromise agreements.

They are commonly used where employment is ending, although they can also settle a dispute while employment continues.

A settlement agreement may provide for matters such as:

• Termination date
• Notice arrangements
• Compensation
• Redundancy pay
• Outstanding holiday
• Bonus or commission
• Shares or stock options
• Pension arrangements
• Reference wording
• Confidentiality
• Restrictive covenants

In return, you will normally agree not to pursue specified claims against your employer.

These might include claims relating to:

• Unfair dismissal
• Discrimination
• Breach of contract
• Unlawful deductions
• Holiday pay
• Other employment rights

A settlement agreement cannot validly waive statutory claims merely by stating that it settles "all claims".

The particular complaints or claims being settled must be properly identified.

What Makes a Settlement Agreement Legally Valid?

For a statutory settlement agreement to be legally effective, a number of conditions must be satisfied.

These include that:

• The Agreement is in writing
• It relates to particular complaints or proceedings
• You receive advice from a relevant independent adviser
• The Adviser has appropriate insurance or professional indemnity cover
• The Agreement identifies the adviser
• The Agreement states that the relevant statutory conditions have been satisfied

The independent adviser must advise you on the terms and effect of the agreement and, in particular, how it affects your ability to pursue the relevant claims.

An adviser can include:

• A Qualified lawyer
• An Authorised trade union adviser
• An Authorised advice centre worker

The adviser must be genuinely independent of the employer.

Do I Have to Accept a Settlement Agreement?

No.

Settlement agreements are voluntary.

You are not required to:

• Enter settlement discussions
• Accept the first offer
• Accept any offer
• Sign an agreement simply because your employer has presented one

You can:

• Accept the proposal
• Reject it
• Make a counter-offer
• Negotiate particular terms

If no agreement is reached, the underlying employment situation normally continues to be dealt with through the appropriate process.

For example, your employer may continue with:

• Performance management
• Disciplinary proceedings
• Redundancy consultation
• Capability procedures

The fact that settlement was discussed does not automatically determine the outcome of those procedures.

Is a Settlement Agreement the Same as an NDA?

No.

A settlement agreement and a Non-Disclosure Agreement, or NDA, are not the same thing.

A settlement agreement is the wider legal contract that settles specified employment claims.

An NDA is a confidentiality obligation.

A settlement agreement may contain an NDA or confidentiality clause dealing with matters such as:

• The Terms of the settlement
• The Amount paid
• The Circumstances leading to departure
• Confidential employer information

An NDA can also appear separately in:

• Employment contracts
• COT3 agreements
• Standalone confidentiality agreements

It is therefore more accurate to say that a settlement agreement may contain an NDA, rather than describing the entire settlement agreement as an NDA.

What Are the Benefits of a Settlement Agreement?

A settlement agreement can provide certainty for both parties.

From an employee's perspective, it may provide certainty concerning:

• Employment termination
• Financial compensation
• Notice
• Holiday
• Bonus
• Reference wording
• Confidentiality
• Restrictive covenants
• Outstanding benefits

It can also avoid the cost, delay and uncertainty of litigation.

From the employer's perspective, the agreement can provide a legally binding settlement of specified potential claims.

A settlement agreement can therefore provide a structured and relatively clean way of bringing an employment dispute or employment relationship to an end.

When Might a Settlement Agreement Be Offered?

Settlement agreements can be proposed in many circumstances.

An employer may offer one where it wishes to avoid a lengthy:

• Performance process
• Disciplinary process
• Redundancy procedure
• Capability process
• Employment dispute

An agreement may also be proposed after a dispute has already arisen.

For example, you may have raised:

• A Grievance
• A Discrimination complaint
• A Whistleblowing concern
• A Contractual dispute

The settlement agreement can then document the negotiated resolution.

Either the employer or employee can propose settlement.

What Does "Without Prejudice and Subject to Contract" Mean?

These words are commonly used during settlement negotiations, but they have separate meanings.

Without Prejudice

The without prejudice rule can protect genuine settlement negotiations from being used as evidence in later legal proceedings.

For the traditional without prejudice rule normally to apply, there needs to be:

• An Existing dispute
• A Genuine attempt to settle that dispute

Simply putting the words "without prejudice" at the top of an email does not automatically create protection if these requirements are not satisfied.

Equally, settlement discussions may be protected even if the parties fail to use the label, provided the legal conditions are met.

Without prejudice protection can potentially apply across a wider range of claims than section 111A protected conversations.

Subject to Contract

"Subject to contract" generally indicates that the parties do not intend the proposed terms to become binding until a final agreement has been concluded.

In England and Wales, this will normally mean the settlement does not become contractually binding until the final agreement is signed in accordance with the parties' intentions.

The position under Scots contract law can differ, particularly if the parties have already reached agreement on all essential terms.

The exact communications and governing law should therefore be considered.

What is a Protected Conversation?

Section 111A of the Employment Rights Act 1996 allows certain pre-termination settlement negotiations to take place confidentially even where there is no existing dispute.

This is commonly referred to as a protected conversation.

For example, an employer might tell an employee that:

• It has performance concerns
• It could begin a formal process
• It would instead consider an agreed departure

The employer may then make a settlement offer.

Section 111A is narrower than the without prejudice rule.

It principally applies to qualifying pre-termination negotiations in ordinary unfair dismissal and certain constructive dismissal proceedings.

It does not generally provide the same protection for claims involving:

• Discrimination
• Whistleblowing
• Automatically unfair dismissal
• Breach of contract
• Wrongful dismissal
• Unlawful deductions from wages

For further guidance, see Protected Conversations.

Can a Protected Conversation Be Used as Evidence?

Potentially.

Section 111A protection is not absolute.

Where there has been improper behaviour, the Employment Tribunal can permit evidence of the negotiations to be used to the extent it considers just.

Improper behaviour can potentially include:

• Bullying
• Harassment
• Intimidation
• Discrimination
• Physical threats
• Other criminal conduct
• Victimisation
• Undue pressure

For example, it may be improper for an employer to state, before any disciplinary process has begun, that the employee will definitely be dismissed if they reject the settlement offer.

It is different for an employer simply to explain factually that disciplinary proceedings could follow and that dismissal is a possible outcome.

What if There is Already an Employment Dispute?

Where a genuine dispute already exists, settlement communications may potentially receive protection under both:

• The Without prejudice rule
• Section 111A

The two protections operate differently.

Without prejudice protection can potentially apply to claims such as:

• Discrimination
• Contract
• Wages
• Unfair dismissal

provided there is an existing dispute and a genuine settlement attempt.

However, the protection may be lost in sufficiently serious circumstances involving unambiguous impropriety.

The admissibility of settlement communications can therefore depend on:

• The Claim being brought
• Whether a dispute already existed
• What was said
• How the negotiations were conducted

How Long Should I Be Given to Consider a Settlement Agreement?

The Acas Code of Practice recommends that, as a general rule, an employee should be given at least 10 calendar days to consider the formal written terms and obtain independent advice.

This is sometimes incorrectly referred to as a statutory "10-day cooling-off period".

It is not an absolute statutory minimum.

The appropriate period depends on the circumstances and can be:

• Longer
• Shorter by agreement

For example, more time may be necessary if:

• The Agreement is complex
• Significant financial information is missing
• Advice is required on share schemes
• A Disability means a reasonable adjustment is required

An unreasonably short deadline combined with pressure or threats can potentially contribute to a finding of improper behaviour.

What Should I Do if I Receive an Unexpected Settlement Offer?

You do not have to make an immediate decision.

Before agreeing the financial package, you should consider:

• Why the offer has been made
• What happens if you reject it
• What claims you may have
• Your Notice entitlement
• Your Potential redundancy entitlement
• Your Bonus
• Your Shares or options
• Your Pension
• Your Reference
• Your Restrictive covenants

Although a final settlement agreement will not validly waive statutory employment claims without the required independent advice, agreeing important commercial terms too early can still make later negotiations more difficult.

It is usually sensible to understand the overall position before committing yourself to a figure.

What is an Ex-Gratia Payment?

The expression ex-gratia payment is commonly used to describe compensation paid in addition to sums to which you are already contractually entitled.

For example, it would ordinarily be distinguished from:

• Salary
• Accrued holiday pay
• Contractual bonus
• Commission
• Notice pay

However, describing a payment as "ex-gratia" does not itself determine its tax treatment.

The tax position depends on the true nature of the payment and the applicable tax legislation.

For further guidance, see Ex-Gratia Payments.

What Terms Are Usually Included in a Settlement Agreement?

Settlement agreements can vary considerably, but the following provisions are commonly included.

Termination Date

The agreement should clearly state when your employment:

• Ended
• Will end

The date is important because it can affect:

• Salary
• Benefits
• Holiday entitlement
• Bonus
• Shares
• Notice
• Tribunal limitation periods

The proposed termination date may be:

• Immediate
• Several weeks away
• Several months away

It should be considered alongside your contractual notice entitlement.

Reason for Termination

The agreement may state a reason for termination.

Examples can include:

• Redundancy
• Mutual agreement
• Another agreed reason

The wording can be important for:

• References
• Insurance
• Regulatory matters
• Future employment
• Share-plan treatment

Where the reason is commercially or professionally significant, it should be agreed carefully.

Compensation Payment

The agreement will normally specify any compensation being paid in consideration for settling claims and ending the employment relationship.

The amount may depend on matters such as:

• Length of service
• Salary
• Potential claims
• Strength of those claims
• Future loss
• Notice
• Redundancy
• Commercial risk
• Negotiating position

The agreement should state when the payment will be made.

For example:

• In the next payroll
• Within a specified number of days after signing
• After the termination date

The tax treatment should also be addressed.

Tax Treatment of Compensation

It is incorrect to assume that the first £30,000 of every settlement agreement is automatically tax-free.

Payments representing normal earnings are generally taxable.

These can include:

• Salary
• Holiday pay
• Bonus
• Commission
• Contractual notice pay
• Payment in lieu of notice
• Post-Employment Notice Pay
• Payments for agreeing restrictive covenants

Qualifying termination payments may benefit from the separate £30,000 termination-payment threshold.

Broadly, the first combined £30,000 of qualifying statutory redundancy and relevant termination compensation can normally be paid without employee Income Tax.

Income Tax is generally due on qualifying termination payments above £30,000.

Employer Class 1A National Insurance can also apply to the excess over the £30,000 threshold.

The correct treatment depends on the individual components of the settlement package.

What is Post-Employment Notice Pay?

The tax legislation contains specific rules concerning Post-Employment Notice Pay, commonly called PENP.

Where you do not work all of the notice to which you are entitled, the rules can identify an amount corresponding broadly to the basic pay you would have received during that notice period.

That amount is treated as taxable employment income.

This means an employer cannot simply describe a payment that is effectively notice pay as tax-free compensation.

For further guidance, see Notice.

Tax Indemnity

Settlement agreements commonly contain a tax indemnity.

This may state that the employer will make the deductions it believes are required but that you may have responsibility for certain additional tax liabilities if HMRC subsequently challenges the agreed treatment.

The wording should be considered carefully.

The indemnity should not be treated as removing the employer's own statutory PAYE obligations.

It is also common to negotiate appropriate exclusions where additional liability arises because of:

• Employer error
• Employer default
• Incorrect employer information

Notice and PILON

The agreement should explain what will happen to your notice entitlement.

You may:

• Work your notice
• Spend notice on garden leave
• Receive a payment in lieu of notice
• Receive a combination of these

A Payment in Lieu of Notice is commonly known as PILON.

PILON and PENP amounts are generally subject to Income Tax and National Insurance in the same way as employment earnings.

If employment ends immediately, your termination date will normally be earlier than it would have been if you had worked your full notice.

Garden Leave

Instead of ending employment immediately, your employer may place you on garden leave during some or all of your notice period.

During garden leave you normally:

• Remain employed
• Continue to receive salary
• Continue to receive contractual benefits
• Remain subject to contractual obligations

You may be required not to:

• Attend work
• Deal with customers
• Contact particular colleagues
• Access company systems
• Work for another organisation

Salary, Holiday and Benefits up to Termination

The agreement should deal with payments due up to the termination date.

These can include:

• Salary
• Accrued holiday
• Expenses
• Contractual benefits
• Bonus
• Commission

Any statutory holiday remaining when employment ends must generally be paid in lieu.

Benefits such as:

• Private medical insurance
• Life assurance
• Company car

will often cease when employment terminates unless otherwise agreed.

Bonus and Commission

Bonus and commission provisions should be checked against the relevant:

• Employment contract
• Bonus scheme
• Commission plan
• Award documentation

You should establish whether entitlement depends on:

• Remaining employed on a payment date
• Not being under notice
• Meeting performance criteria
• Employer discretion

Where a payment has been agreed as part of the settlement, the agreement should record it clearly.

For further guidance, see Bonuses.

Shares, Stock Options and Deferred Awards

For senior employees, equity can sometimes be more valuable than the cash compensation.

You should review:

• Share options
• Restricted Stock Units
• Long-term incentive plans
• Deferred bonuses
• Good-leaver provisions
• Bad-leaver provisions

The settlement agreement should accurately reflect any agreed treatment.

For example, it may be important to specify:

• Vesting
• Exercise periods
• Continued eligibility
• Leaver status
• Deferred payment dates

For further guidance, see Shares and Stock Options.

Pension

Pension treatment may also need to be addressed.

Normal employer and employee pension arrangements will generally continue until the termination date while employment continues, subject to the scheme and contract.

If a PILON is paid after employment ends, there is no automatic rule requiring pension contributions to continue for the entire notice period. The position depends on the contractual and scheme provisions.

Part of a settlement may sometimes be paid as an employer contribution into a registered pension scheme.

This can have tax advantages but is subject to:

• Pension scheme rules
• Annual allowance rules
• Other applicable tax requirements

Any pension arrangement should be agreed before the settlement payment is made.

Return of Employer Property

The agreement will usually require you to return employer property.

This can include:

• Laptop
• Mobile phone
• Security passes
• Documents
• Keys
• Credit cards
• Storage devices

The agreement should specify:

• What must be returned
• When it must be returned
• How it should be returned

If you are allowed to retain particular equipment or property, this should also be expressly recorded.

Waiver of Claims

One of the most important parts of the agreement is the waiver of claims.

Your employer will usually list a significant number of potential statutory and contractual claims.

The agreement may cover claims involving:

• Unfair dismissal
• Discrimination
• Whistleblowing detriment
• Wages
• Holiday
• Contract
• Redundancy
• Working time
• Other statutory rights

The fact that the list is long is not unusual.

However, the statutory settlement requirements mean the relevant claims must be appropriately identified.

A blanket statement that you waive "all claims whatsoever" is not, by itself, sufficient to satisfy the statutory settlement requirements.

Are Any Claims Usually Excluded From the Waiver?

Settlement agreements commonly preserve rights such as:

• Rights to enforce the settlement agreement itself
• Accrued pension rights
• Certain personal injury claims not known about at the time

The precise treatment of personal injury claims depends on the drafting and circumstances.

Known personal injury claims can potentially be expressly settled.

You should therefore not assume that every personal injury claim is automatically preserved.

Employee Warranties

Settlement agreements commonly require you to make contractual promises or warranties.

For example, you might warrant that you are not aware of conduct that would have entitled the employer to dismiss you summarily for gross misconduct.

Other warranties can relate to:

• Return of property
• Confidential information
• Previous breaches
• Other employment

The wording is important because breaching a warranty can potentially affect your entitlement to the settlement payment or expose you to a contractual claim.

New Job Offers

Some agreements ask you to confirm whether you:

• Already have another job
• Have received another offer
• Expect to receive another offer

This can be relevant where the settlement amount has been negotiated partly by reference to expected future loss of earnings.

There is no universal requirement to volunteer details of every future employment opportunity.

However, if the agreement contains an express warranty, it must be considered carefully before signing.

You should not make a statement that you know is inaccurate.

Job Reference

A reference is frequently negotiated as part of a settlement.

The agreed reference can be:

• Included in the agreement
• Attached as a schedule

Many employers prefer a factual reference stating:

• Job title
• Dates of employment

More detailed wording may sometimes be negotiated.

The agreement can also deal with:

• Who will provide the reference
• Oral references
• Regulatory references
• Responses to future enquiries

For further guidance, see Job References.

Regulatory References

Special rules apply in certain regulated sectors, particularly financial services.

An FCA or PRA-regulated employer cannot agree to withhold information that it is legally or regulatorily required to provide in a regulatory reference.

An agreed ordinary reference should therefore contain appropriate wording preserving the employer's regulatory obligations where necessary.

Confidentiality and NDAs

Settlement agreements frequently contain confidentiality clauses.

The clause may cover:

• The Existence of the agreement
• The Financial terms
• Other settlement terms
• Circumstances surrounding the dispute

Confidentiality clauses are voluntary.

Current Acas guidance states that they should be used where appropriate rather than automatically inserted into every settlement agreement.

If confidentiality is agreed, the clause should clearly explain:

• What is confidential
• Who you can speak to
• Which disclosures remain permitted

Common permitted recipients include:

• Immediate family
• Legal advisers
• Tax advisers
• Medical professionals

The wording should also preserve disclosures that cannot lawfully be prohibited.

Can an NDA Prevent Whistleblowing?

No.

A settlement agreement cannot validly prevent you from making a qualifying protected disclosure under whistleblowing legislation.

For further guidance, see Whistleblowing.

From 6 April 2026, sexual harassment is expressly included as a type of relevant failure capable of forming the subject of whistleblowing protection, provided the statutory conditions for a protected disclosure are satisfied.

Can an NDA Stop You Reporting a Crime?

No.

A confidentiality clause cannot lawfully prevent you from reporting a crime to the police.

In England and Wales, statutory protection also applies to certain disclosures made by victims of crime in order to obtain advice and support.

An NDA should not be drafted or used in a way that suggests otherwise.

Can You Report Matters to a Regulator?

A settlement agreement should not prevent disclosures that:

• The Law protects
• The Law requires
• A Regulatory regime requires

For example, regulated workers may have duties or protected routes for reporting matters to an appropriate regulator.

Whether a particular disclosure qualifies for statutory whistleblowing protection will depend on the relevant legal requirements.

Is There Mandatory Wording That Every Settlement Agreement Must Use?

There is no single universal statutory paragraph that must be copied word-for-word into every settlement agreement to preserve whistleblowing rights.

However, any confidentiality wording must not unlawfully restrict protected disclosures.

Modern settlement agreements commonly include an express carve-out making clear that nothing prevents lawful disclosures such as:

• Protected disclosures
• Reporting crime
• Complying with legal obligations
• Reporting to appropriate regulators

Clear wording reduces the risk of an employee being incorrectly led to believe that lawful reporting is prohibited.

Are NDA Rules Changing?

Yes.

The Employment Rights Act 2025 contains provisions designed to prevent employers from using confidentiality terms to silence workers about relevant workplace harassment and discrimination.

The legislation provides for confidentiality provisions to be void to the extent that they improperly prevent specified allegations or disclosures about:

• Harassment
• Discrimination
• Employer responses to such allegations

However, as at 10 September 2026, those broader NDA reforms have not yet taken effect.

The government's current implementation timetable places the relevant regulations in 2027.

The detailed rules, including the circumstances in which an agreement may qualify as an permitted or excepted agreement, remain subject to the implementation process.

Settlement agreements entered into in 2026 should therefore be assessed according to the law currently in force while also taking account of forthcoming reforms where relevant.

Can a Settlement Agreement Stop Me From Reporting Sexual Harassment to the Police?

No, where the conduct may amount to a criminal offence.

For example, conduct involving:

• Sexual assault
• Another criminal offence

can be reported to the police regardless of an NDA purporting to prevent such reporting.

Separate whistleblowing protection may also apply where a qualifying disclosure about sexual harassment satisfies the statutory requirements.

A settlement agreement does not provide immunity from criminal investigation.

Can I Tell My Family About the Agreement?

This depends on the confidentiality clause.

Many agreements permit disclosure to:

• A Spouse or partner
• Immediate family

provided they also agree to keep the information confidential.

You should not assume this exception exists.

The wording should be checked and negotiated if necessary.

Can I Tell a Future Employer Why I Left?

Settlement agreements often allow an employee to give a general explanation for their departure.

For example, the parties may agree wording such as:

• Mutual agreement
• Redundancy
• Another agreed explanation

If this matters for future recruitment, the permitted wording should be addressed explicitly.

Non-Derogatory Statements

A settlement agreement may include a clause preventing you from making derogatory or disparaging statements about your employer.

Where possible, you may wish to seek a reciprocal obligation protecting you from derogatory statements by:

• The Employer
• Relevant directors
• Named senior employees

A company cannot necessarily guarantee what every employee will ever say, so the wording of any mutual obligation should be realistic and enforceable.

Restrictive Covenants

Existing post-termination restrictions are frequently reaffirmed in settlement agreements.

These can include:

• Non-competition restrictions
• Non-solicitation restrictions
• Non-dealing restrictions
• Non-poaching restrictions
• Confidentiality obligations

You should compare the settlement wording with your existing employment contract.

An agreement should not quietly introduce significantly more onerous restrictions without those changes being identified and considered.

It may sometimes be possible to negotiate:

• A Shorter duration
• Narrower customer restrictions
• Removal of a non-compete
• Permission to join a named competitor
• Complete waiver of particular covenants

For further guidance, see Restrictive Covenants.

Breach of the Settlement Agreement

Settlement agreements commonly explain what happens if either party breaches the agreement.

For example, the agreement may provide for consequences if:

• The Employer fails to pay
• The Employee breaches confidentiality
• A Warranty proves false
• Property is not returned

Some agreements contain repayment or indemnity provisions.

A clause requiring repayment of substantial compensation for any minor technical breach may need careful review.

It may be appropriate to negotiate wording so that serious consequences apply only to:

• Material breaches
• Deliberate breaches
• Breaches causing actual loss

Amounts that you were already unconditionally entitled to receive, such as outstanding wages, should not necessarily be treated in the same way as additional settlement compensation.

Legal Fees

You must receive the required independent advice for the settlement agreement to validly settle relevant statutory claims.

However, there is no statutory obligation requiring your employer to pay your legal fees.

In practice, employers commonly agree to contribute towards the cost of independent advice.

The amount varies considerably depending on:

• Complexity
• Seniority
• Length of the agreement
• Negotiation required
• Contractual issues
• Share schemes
• Restrictive covenants

The agreement will normally specify:

• Maximum contribution
• Whether VAT is included
• Whether payment is made directly to the adviser

Qualifying legal costs paid directly by the employer to the employee's solicitor in connection with the termination settlement can generally receive favourable tax treatment.

If significant negotiation or additional advice is required beyond explaining the agreement, you should establish at the outset whether the employer's contribution will cover that work.

Entire Agreement Clause

Settlement agreements commonly contain an entire agreement clause.

This broadly provides that the written agreement records the complete agreement between the parties regarding the matters it covers.

The purpose is to reduce later arguments that additional promises were made outside the written document.

You should therefore make sure that any term important to you has actually been included.

For example, do not rely purely on an informal promise concerning:

• Bonus
• Reference
• Shares
• Restrictive covenants
• Announcement wording

if it does not appear in the final agreement.

Can I Make a New Subject Access Request After Signing a Settlement Agreement?

A settlement agreement may contain wording asking you not to make a future Subject Access Request, or SAR.

However, an agreement does not automatically give an employer a blanket exemption from its statutory data protection obligations.

If you later make a valid SAR, the employer must consider it under the applicable UK data protection law.

An employer may be able to refuse or charge for a request where the statutory rules concerning a manifestly unfounded or excessive request are satisfied.

However, the threshold is significant and each request should be assessed on its own circumstances.

The mere fact that a person previously agreed not to make a SAR does not automatically prove that a later request is manifestly unfounded.

For further guidance, see Data Protection.

What is a Manifestly Unfounded SAR?

Current ICO guidance indicates that a request can potentially be manifestly unfounded where the person:

• Clearly has no genuine intention to exercise their access rights
• Is using the request maliciously purely to harass or disrupt the organisation

The employer should have strong evidence supporting that conclusion.

A genuine request for access to personal information will not normally become manifestly unfounded merely because:

• It is inconvenient
• It is made during a dispute
• A previous request has been made

Can I Agree to Withdraw an Existing SAR?

A settlement agreement can record that you will withdraw an existing SAR as part of resolving a wider dispute.

It might similarly record the withdrawal of:

• A Grievance
• An Appeal
• Other ongoing internal processes

However, contractual wording relating to statutory data protection rights should be considered carefully.

The existence of a settlement agreement does not itself alter the legal grounds on which an organisation can refuse a future valid data-rights request.

Can a Settlement Agreement Require Me Not to Complain to the ICO?

Such clauses require particular care.

An employer should not assume that a private agreement can simply remove statutory regulatory rights or prevent the ICO exercising its own regulatory functions.

If the agreement seeks to settle an existing data dispute, it can record:

• The Resolution reached
• Withdrawal of a current complaint

However, an excessively broad attempt to prevent any future use of statutory data protection rights may be legally problematic.

Can I Take My Story to the Media After Signing an NDA?

Possibly not.

Where a valid confidentiality clause prohibits disclosure of settlement terms or specified circumstances to the media, deliberately giving that information to:

• Newspapers
• Television
• Websites
• Social media

could potentially breach the agreement.

The employer may then consider contractual enforcement.

Possible consequences can include:

• Injunction proceedings
• Damages
• Recovery claims
• Legal costs

However, confidentiality obligations remain subject to statutory and contractual exceptions.

For example, an NDA cannot be used to prevent lawful protected disclosures or reporting a crime to the police.

The forthcoming 2027 reforms concerning workplace harassment and discrimination will further change the legal landscape.

If you are considering making a public disclosure about matters covered by an agreement, the precise wording and applicable legal exceptions should be reviewed before doing so.

What is the Tax Treatment of a Settlement Agreement?

Settlement agreements often contain several different types of payment, and each must be considered separately.

Payments Normally Taxed as Earnings

These will generally include:

• Salary
• Holiday pay
• Bonus
• Commission
• PILON
• PENP
• Payments for restrictive covenants

Income Tax and applicable National Insurance will normally be deducted.

Qualifying Termination Payments

Certain genuine termination payments can fall within the special termination-payment tax rules.

The first combined £30,000 of qualifying payments can generally be free from employee Income Tax.

Examples can potentially include:

• Statutory redundancy pay
• Relevant enhanced redundancy compensation
• Genuine compensation for loss of employment

The £30,000 limit is a combined threshold rather than a separate exemption for every payment.

Payments Above £30,000

Qualifying termination payments above the £30,000 threshold are generally subject to Income Tax.

The employer also generally pays Class 1A National Insurance on the qualifying termination award above the threshold.

The employee does not generally pay employee National Insurance on the part of a qualifying termination award above £30,000 merely because it exceeds that threshold, although ordinary earnings and PENP remain subject to the normal NIC rules.

Employer Pension Contributions

An employer may sometimes make an agreed contribution directly into a registered pension scheme as part of the settlement.

Such contributions can potentially receive different tax treatment from a cash termination payment.

However, pension contributions remain subject to:

• Annual allowance rules
• Pension scheme requirements
• Other applicable tax rules

The proposed pension treatment should be agreed and checked before payment.

Employer-Paid Legal Fees

Where an employer pays qualifying legal fees directly to your solicitor in connection with advice concerning the termination settlement, those fees can generally be paid without being treated as taxable income in the same way as a cash payment made directly to you.

The settlement agreement should clearly record the employer's contribution and payment arrangements.

Because settlement agreements can include several different payment categories, the overall tax treatment should be checked carefully rather than assuming that a payment described as "compensation" or "ex-gratia" is automatically tax-free.