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A settlement agreement can bring an employment relationship to a clear and agreed end, but the document may also affect what you can do after you leave. Restrictive covenants are often one of the most significant parts to check, particularly if you intend to join a competitor, contact former clients or set up on your own.

They are not automatically unfair simply because they limit your options. Equally, they are not automatically enforceable because they appear in a contract or settlement agreement. Their effect depends on the wording, your role, the business interest being protected and the circumstances in which the restriction is used. Before signing, it is worth understanding exactly what you are being asked to agree to – and whether the compensation reflects that commitment.

What are restrictive covenants?

Restrictive covenants are contractual promises that limit certain activities after employment ends. They commonly appear in a contract of employment and may be repeated, varied or reaffirmed in a settlement agreement.

Employers use them to protect legitimate business interests, such as confidential information, customer relationships, supplier connections and the stability of their workforce. They should not simply prevent someone from earning a living or remove ordinary competition from the market.

A settlement agreement may state that your existing restrictions continue unchanged. It may introduce new terms, extend the duration of earlier restrictions or clarify how they will operate after your employment ends. This is why an agreement should be read alongside your original employment contract, any later variations and, where relevant, bonus or share-plan documents.

The restrictive covenants you may see

The exact drafting varies, but most post-termination restrictions fall into a small number of categories.

Non-compete restrictions

A non-compete clause prevents you from working for, being involved with or sometimes investing in a competing business for a defined period. It may apply to a particular sector, service line, geographical area or group of clients.

This is often the most commercially significant restriction. A broad clause can make it difficult to accept a new role quickly, even where your proposed employer operates across a much wider market than your former employer. The practical question is not only whether the clause might be enforceable, but whether a new employer will be prepared to wait or take the risk.

Non-solicitation and non-dealing restrictions

A non-solicitation clause generally prevents you from approaching former clients, customers, suppliers or employees to encourage them to move. A non-dealing clause is wider: it may stop you from doing business with certain clients even if they approach you first.

The difference matters. If you work in sales, recruitment, consulting or a relationship-led role, a non-dealing restriction can affect the clients you are able to serve in your next position. The agreement should make clear which people or organisations are covered, often by reference to those you dealt with during a defined period before leaving.

Non-poaching restrictions

These clauses limit efforts to recruit former colleagues. They are commonly included for managers, senior specialists and employees with influence over teams.

A carefully drafted restriction may be reasonable where it protects a team from targeted approaches. A clause that appears to stop ordinary professional contact, or affects every employee regardless of whether you worked with them, may be harder to justify.

Confidentiality and trade secrets

Confidentiality obligations are sometimes described separately from restrictive covenants, but they often work alongside them. They may prevent the use or disclosure of confidential business information after employment ends. Protection for genuine trade secrets can potentially last longer than a typical non-compete or client restriction.

A settlement agreement will also usually contain its own confidentiality clause about the negotiations and the agreement itself. That is different from a restriction on using business information. Both should be reviewed, including any exceptions for speaking to a spouse or partner, professional advisers, HMRC, a regulator, the police or where disclosure is required by law.

Are restrictive covenants enforceable in the UK?

Post-termination restrictions are generally enforceable only if they go no further than reasonably necessary to protect a legitimate business interest. Courts look closely at the position when the covenant was agreed, rather than with the benefit of hindsight after a dispute has arisen.

There is no single acceptable time limit. A three-month restriction may be reasonable for one employee and excessive for another. Six or twelve months may be easier to justify for a senior executive with access to key client relationships, strategic plans or sensitive pricing information. It depends on the role, the industry, the information involved and how long the employer genuinely needs protection.

Scope is just as important as duration. A restriction may be vulnerable if it covers clients you never dealt with, activities outside your actual role, or a territory where the employer has no meaningful business. It may also be difficult to enforce if vague terms leave you unable to tell what work is prohibited.

However, an arguable legal challenge is not the same as a stress-free outcome. An employer may seek an urgent court injunction if it believes a former employee is about to breach a restriction. That can create expense, delay and uncertainty for you and your new employer. Clear advice before signing is therefore far more valuable than having to assess the wording under pressure later.

Why settlement agreements need particular care

Signing a settlement agreement normally involves waiving specified statutory employment claims in return for agreed compensation. The agreement must meet legal requirements, including that you receive independent legal advice for the waiver to be valid.

That legal advice should not be treated as a formality. It is an opportunity to examine the whole document, including restrictive covenants, confidentiality, agreed reference wording, payment terms, tax treatment and notice arrangements.

For some employees, the proposed settlement payment is enough to justify a period outside the market. For others, a non-compete term could interfere with a planned move, reduce future earnings or place them at a disadvantage when speaking to recruiters. If the employer is seeking a new or wider post-termination restriction, that may be a reason to negotiate both the wording and the financial package.

It also matters whether you are placed on garden leave. Garden leave can keep you employed, paid and bound by your contractual duties during your notice period. Employers sometimes combine garden leave with post-termination restrictions. The overall period during which you cannot compete may be commercially important, even where each clause looks ordinary in isolation.

Terms worth checking before you sign

Start by identifying whether the settlement agreement preserves existing covenants or creates additional obligations. A clause saying that you confirm or reaffirm restrictions can have real consequences, especially if there is doubt over whether an earlier contract was properly issued or varied.

Then look at the defined terms. Who counts as a restricted client, prospective client, supplier, employee or competitor? Is the definition tied to people you had material dealings with, responsibility for or confidential knowledge about? The more precise the wording, the easier it is to understand and the less likely it is to capture irrelevant relationships.

Check the duration and when it begins. A restriction may run from the termination date, the end of garden leave or another stated date. It should be clear whether periods overlap or run consecutively.

Consider your next step realistically. If you have already been offered a new role, compare the restriction with the duties, market and client base of that role. If you are not yet sure what comes next, think about the work you may reasonably want to pursue. You do not need to disclose more to your employer than is necessary, but you should obtain advice based on your actual plans.

Finally, check whether the agreement requires you to tell a prospective employer about the restrictions or provide a copy of them. This can be reasonable in some senior roles, but the obligation should be clear and proportionate.

What can be negotiated?

Restrictive covenants are often negotiable, particularly where they are newly introduced or substantially expanded. A practical negotiation may seek a shorter non-compete period, a narrower list of clients, removal of a non-dealing restriction or an express carve-out for a known future role.

In some cases, the sensible outcome is not removing every restriction. An employer may have a genuine interest in protecting confidential information or a small group of key clients. Narrowing the clause to those interests can give the employer reassurance while allowing you to move on with confidence.

Compensation can also be part of the discussion. If you are being asked to accept a restriction that meaningfully limits your career options, it is reasonable to consider whether the settlement payment reflects that value. The answer will depend on your seniority, notice entitlement, the strength of any potential claims and the terms already in your contract.

Get clarity before committing

A restrictive covenant may affect your next job long after the settlement payment has been spent. Do not assume the wording is standard, harmless or beyond discussion. Independent legal advice can explain what the clause means in plain English, identify where the commercial risk sits and help you decide whether to sign as drafted or seek better terms.

A fair agreement should give both sides certainty: your employer can protect what genuinely needs protection, and you can leave with a clear understanding of the opportunities still open to you.

A proposed exit can arrive just before a bonus is due, halfway through a performance year, or while results are still being signed off. That timing is rarely incidental. Settlement agreement bonus payment rights can be a significant part of the overall value of an offer, particularly for employees whose pay includes commission, annual incentives, deferred bonus or long-term awards. Before signing, establish what you have already earned, what you may lose by leaving and whether the agreement deals with the point clearly.

A settlement agreement is intended to give both sides certainty. For an employee, that certainty should include a clear account of money owed, the basis for any bonus payment and the date it will be paid. A general compensation figure may sound acceptable until you discover it includes a bonus that should have been paid separately, or that it requires you to give up a valuable claim without proper recognition.

When do bonus payment rights arise?

The starting point is not the settlement agreement itself. It is your contract of employment, bonus plan rules, commission scheme, offer letter and any consistent practice in how the employer has paid bonuses in previous years. The detail matters.

A bonus may be contractual, meaning the employer has agreed to pay it if stated conditions are met. It may be discretionary, giving the employer a degree of choice over whether to make an award and how much to award. It may also sit somewhere between the two: the employer decides the size of the overall bonus pool, but employees who meet stated criteria are then entitled to payment under the scheme.

Calling a scheme “discretionary” does not give an employer unlimited freedom. The precise wording and the way the scheme has operated can matter. An employer should not normally exercise a discretion irrationally, arbitrarily or in bad faith. Equally, a discretionary scheme does not automatically create a right to a full bonus just because you performed well. The facts, the documents and the reason for the proposed departure all need to be considered.

Commission is often easier to assess because it may be linked directly to completed sales, revenue or other measurable performance. Even then, check whether commission is earned when a sale is made, when a client pays, when the invoice is raised or on another specified event.

The date that can decide the issue

Many schemes require an employee to be employed, and sometimes not under notice, on the bonus payment date. Others require active employment at the end of the financial year. These are often called forfeiture or “good leaver/bad leaver” provisions.

Those conditions may affect your position, but they should never be read in isolation. If your employer is asking you to leave under a settlement agreement shortly before a payment date, that is a point to raise. You may be able to negotiate payment of all or part of the expected bonus, an extension of employment until the relevant date, or wording that treats you as a good leaver for scheme purposes.

Settlement agreement bonus payment rights: what the document should say

Do not rely on a verbal assurance that your bonus will be “looked after”. If a payment is agreed, it should be recorded accurately in the settlement agreement or a clearly identified schedule.

The document should state whether the amount is a contractual bonus, commission, an ex gratia payment, a payment in lieu of a bonus, or part of the wider termination package. It should also state the gross amount, how it has been calculated, whether it is subject to any adjustment, and when payment will be made.

This distinction is more than administrative. A clause saying that the settlement sum is in “full and final settlement of all claims” may be wide enough to compromise an argument about an unpaid bonus. If the employer accepts that a bonus or commission is already due, it is usually preferable for that payment to be separately identified rather than absorbed into an unexplained figure.

Check, too, whether the agreement says you waive rights under any bonus plan, share plan, incentive arrangement or commission scheme. That may be appropriate where the settlement payment compensates you for the loss. It may not be appropriate where the value of the award has not been recognised.

Watch for performance and clawback wording

A bonus may be described as subject to final company results, individual performance assessment, board approval, audit adjustment or compliance checks. These can be legitimate scheme conditions. However, the agreement should make clear whether the employer has already made a decision, when it will do so and whether you will receive payment if the relevant criteria are met.

Clawback and malus provisions also deserve attention, especially for senior employees and regulated roles. They may allow an employer to reduce, recover or defer an award in defined circumstances. Ask whether any such provision is actually engaged and whether the agreement introduces broader obligations than the original scheme rules.

Notice, garden leave and bonus entitlement

Your termination date can alter the outcome. If you remain employed through your notice period, you may meet an employment-on-payment-date condition that would otherwise be missed. If you are placed on garden leave, you remain employed, but the bonus scheme may contain separate rules about eligibility while you are absent from duties or under notice.

Sometimes an employer will propose immediate termination and payment in lieu of notice. That may be convenient, but it can remove the possibility of becoming eligible for a forthcoming bonus. In other cases, extending the termination date may delay a new job or create tax and practical consequences. There is no universal best answer. The right approach depends on the likely bonus value, the scheme rules, your next steps and the employer’s willingness to negotiate.

For employees on maternity leave, sick leave, family leave or another absence, take particular care with any proposed reduction or exclusion. The reason for any treatment must be lawful and consistent with the applicable scheme and employment protections.

Tax treatment of bonus payments

A bonus, commission payment or payment for work already performed will usually be treated as earnings. Income tax and National Insurance contributions will normally be deducted through PAYE. Labelling it as compensation in the agreement does not necessarily change its tax treatment.

A genuine termination payment may have different treatment, but tax is fact-specific and the agreement should not make unrealistic promises. The first £30,000 of certain qualifying termination payments can often be paid without income tax, while notice pay and earnings are generally taxable. Employers may be cautious where payments have mixed purposes, and that is understandable. What matters is that the categories and deductions are clear.

You should also check whether the stated figures are gross or net. A payment described as £20,000 can mean very different things depending on whether tax is deducted and whether it includes notice pay, holiday pay, bonus or compensation.

How to approach a bonus negotiation

A practical negotiation starts with evidence, not just an expectation. Gather the relevant scheme rules, payslips, performance records, sales data, bonus letters and any written confirmation of targets or awards. If colleagues have historically received payments in similar circumstances, that may provide useful context, although every case turns on its own terms.

It can help to set out a short, reasoned position: the bonus basis, the relevant period, the point at which it was earned, the estimated calculation and the settlement term you want. For example, you may seek payment of accrued commission, a pro-rated annual bonus, payment on the normal bonus date, or an additional termination sum reflecting the likely loss of an award.

There is often room for commercial agreement even where the strict legal entitlement is uncertain. An employer may prefer a clean, confidential resolution to a dispute over a bonus, particularly where the settlement agreement is intended to settle potential claims. Conversely, an employer may resist paying a full annual award if results are not final or the scheme gives genuine discretion. Clear advice helps you decide where to press and where to accept a sensible compromise.

Get the agreement reviewed before you sign

For a settlement agreement to validly waive statutory employment claims, you must receive independent legal advice on its terms and effect. That review should not be limited to checking the signature page. It is an opportunity to identify whether bonus, commission, share awards, notice pay, holiday pay, references, restrictive covenants and tax have been dealt with fairly.

At Arcos Settlement Agreements, the focus is on clear, independent advice in plain English. A careful review can identify omissions, explain the practical risk and, where appropriate, help you seek improved wording or payment before the agreement becomes binding.

Do not let a deadline turn an unclear promise into a lost payment. If a bonus is part of your remuneration, ask for the calculation, the scheme basis and the agreed treatment in writing, then make your decision with the full financial picture in view.

A proposal to settle can arrive at a difficult moment: after a redundancy consultation, a grievance, a disciplinary process or a conversation suggesting that your role is no longer tenable. Tribunal claims may be mentioned as part of that discussion, but the immediate question is usually more personal: should you accept the offer, negotiate it, or protect your right to take the matter further?

A settlement agreement can provide certainty, compensation and a clean exit. It can also require you to waive valuable legal rights. The right decision depends on the facts, the strength of any potential claim, the terms offered and what matters most for your next step.

What are tribunal claims?

Employment tribunal claims are legal claims brought by an employee or worker against an employer. They can arise when the employment relationship has broken down, but a tribunal is not simply a forum for every workplace disagreement. A claim needs a recognised legal basis and must be started within the relevant time limit.

Common examples include unfair dismissal, constructive dismissal, discrimination, unpaid wages or holiday pay, whistleblowing detriment, breach of contract and failure to consult properly during a redundancy process. Some claims require a minimum period of employment, while others do not. For example, ordinary unfair dismissal normally requires two years’ continuous service, whereas discrimination and whistleblowing claims can arise from day one.

The potential value of a claim is not limited to lost salary. Depending on the circumstances, compensation may include notice pay, holiday pay, loss of earnings, injury to feelings in discrimination cases, or an award for a statutory redundancy entitlement. Equally, not every concern will result in a successful or valuable claim. Evidence, dates, the employer’s explanation and steps taken during the process all matter.

Why settlement agreements refer to tribunal claims

An employer will usually offer a settlement agreement to achieve finality. In return for an agreed payment and other terms, the employee agrees not to bring specified claims arising from their employment or its termination.

That certainty can benefit both sides. An employee may receive compensation sooner than they would through a contested process, avoid the stress and uncertainty of litigation, and secure a positive reference or an agreed announcement. An employer gains confidence that the departure will not lead to future litigation about known issues.

However, a settlement agreement should not be treated as a standard formality. Its wording determines which tribunal claims are being waived, what you will receive, what you can say about the agreement, and whether restrictive covenants or confidentiality obligations will affect your future plans.

A payment described as compensation may look attractive, but its true value depends on the whole package. Notice pay, accrued holiday, unpaid bonus, commission and expenses may already be owed under your contract. They should not necessarily be presented as the price of giving up potential claims.

Time limits can change the balance

Time limits in employment law are strict. Many employment tribunal claims must be started within three months less one day of the act complained of or the termination date. Claims for statutory redundancy pay and some breach of contract matters can have different limits, often six months less one day.

Before submitting a tribunal claim, you will normally need to notify Acas and take part in Early Conciliation. This pauses the usual time limit while conciliation is ongoing, but calculating the final deadline can be complicated. Do not assume that an internal grievance, appeal, negotiation or a promise to continue discussions will protect your position.

This matters when a settlement offer has a short deadline. You may need time to understand the terms and negotiate, but you should also preserve your legal position. An employer may agree a reasonable extension, particularly where independent legal advice is being obtained. If it does not, prompt advice is sensible.

When a settlement agreement is legally valid

For a settlement agreement to waive statutory employment rights, it must meet specific legal requirements. It must be in writing, relate to particular complaints or proceedings, and identify the independent adviser who has advised you. The adviser must have appropriate professional indemnity insurance, and the agreement must confirm that the legal conditions have been met.

You must also receive independent legal advice on the agreement and its effect on your ability to pursue tribunal claims. This is not a box-ticking exercise. Proper advice should explain the claims you may have, the rights you are waiving, the financial terms and any provisions that may create difficulties after you leave.

Employers commonly contribute towards the cost of this advice. That contribution is useful, but it does not mean the adviser acts for the employer. Your adviser should be independent and focused on whether the agreement is fair and appropriate for you.

What to review before you sign

The central issue is often compensation, but the non-financial terms can have lasting consequences. A careful review should consider the reason given for termination, the termination date, whether you will work your notice or be placed on garden leave, and whether all contractual sums have been identified correctly.

Pay close attention to the breakdown of the proposed payment. Salary, notice pay, holiday pay and bonuses may be subject to tax and National Insurance in different ways from certain compensation payments. Tax wording should be accurate rather than overly optimistic. If the agreement includes an indemnity requiring you to reimburse the employer for unexpected tax, its scope deserves particular care.

A reference can be as valuable as an additional payment, especially where you are moving into a regulated, senior or client-facing role. Where possible, the agreed wording should be attached to the agreement. It is far more reassuring than a vague promise that a reference will be provided.

Confidentiality clauses need a similarly practical approach. They can protect legitimate business information and allow both parties to move on with dignity. They should not prevent you from speaking to your legal adviser, accountant, immediate family, medical professional or relevant regulator. They must also not improperly restrict protected disclosures, such as whistleblowing.

Finally, check restrictive covenants. A settlement agreement may repeat, amend or extend clauses restricting future work, clients or colleagues. If you are considering a new role, a business venture or contact with former clients, these provisions need to be assessed against your actual plans.

Can you negotiate a better outcome?

Often, yes. A settlement agreement is a proposal, not an instruction to sign. Negotiation may focus on the compensation figure, payment of notice or bonus, a contribution to legal fees, a reference, the announcement of your departure, or removing unnecessarily broad obligations.

The appropriate approach depends on the circumstances. Where there is a strong potential claim, procedural failings or clear evidence of unfair treatment, there may be greater scope to negotiate. Where the employer has followed a fair process and the payment is already generous, the priority may be to improve practical terms rather than pursue a substantial increase.

It is also worth considering the cost of rejecting an offer. Tribunal litigation can take time, requires evidence and carries no guaranteed outcome. Most claimants do not recover their legal costs even if they succeed, except in limited circumstances. Settlement can be the sensible choice without meaning that you had no valid concerns.

A practical way to respond

Start by keeping the agreement, relevant correspondence, your contract, payslips and notes of important meetings. Avoid signing under pressure or relying solely on an informal explanation of what the document means.

Arrange independent legal advice promptly, particularly if a deadline is approaching. Your adviser can explain your potential tribunal claims in plain English, identify sums that may already be due, assess the restrictions you would accept and advise whether the proposed terms are reasonable. They can also raise amendments without turning the process unnecessarily confrontational.

For employers, the same principle applies from the other side. A carefully drafted agreement, realistic time for advice and clear treatment of pay, reference and confidentiality issues reduce the prospect of later dispute. An agreement obtained through pressure or unclear drafting is less likely to deliver the certainty it was intended to achieve.

The decision to settle is not only about whether you could bring a claim. It is about whether the agreement gives you fair value, proper protection and enough confidence to take your next professional step on terms you can live with.

A proposed settlement agreement may offer welcome financial certainty, but its confidentiality wording can affect what you are able to say long after your employment ends. A confidentiality clause settlement agreement should protect legitimate private information without leaving you unclear, isolated or unable to speak to the people you need to speak to.

For employees, the concern is often simple: “Will I be allowed to tell my partner, explain my departure to future employers, or raise serious concerns?” For employers, the aim is usually to secure a discreet, dignified exit and reduce the risk of damaging public dispute. Both are reasonable objectives, but the wording needs to be precise and legally appropriate.

What is a confidentiality clause in a settlement agreement?

A confidentiality clause is a contractual term that restricts the sharing of specified information. In a settlement agreement, it commonly covers the existence of the agreement, its financial terms, the circumstances of the employee’s departure, and information about the employer’s business.

It may also include a non-disparagement provision. This is different, although the two are often placed together. Confidentiality concerns sharing information; non-disparagement concerns making negative or damaging statements. Neither should be drafted so broadly that an employee cannot discuss ordinary matters necessary for life and work after leaving.

The clause may be mutual, meaning the employer also agrees not to disclose or make adverse comments about the employee. A mutual obligation can be especially valuable where a workplace dispute has affected the employee’s professional reputation.

Confidentiality provisions are common, but they are not simply standard wording to accept without question. The scope, exceptions and duration can have real practical consequences.

What a confidentiality clause should cover – and what it cannot prevent

A well-drafted clause identifies the information that is genuinely confidential. This could include the settlement sum, the negotiations, customer information, trade secrets and sensitive personal data. It should not use vague wording that appears to cover every aspect of the employee’s experience indefinitely.

The agreement should also state clearly who the employee may speak to. In most cases, sensible permitted disclosures include discussions with a spouse, civil partner or close family member, legal advisers, accountants or tax advisers, medical professionals and, where relevant, a prospective employer. Those people may need to keep the information confidential themselves.

There are important legal limits. A settlement agreement cannot lawfully stop someone from making a protected disclosure, often called whistleblowing. It also cannot prevent a person from reporting suspected criminal conduct to the police, co-operating with a regulator or complying with a legal duty, court order or tax requirement.

These protections should not be left to assumption. Clear written carve-outs reduce the risk that an employee feels intimidated from raising a legitimate concern. If the clause suggests that no disclosure can ever be made to anyone, it requires careful review.

Confidentiality is not the same as silence about your career

A confidentiality clause should allow an employee to give a straightforward explanation of their departure when applying for a new role. The agreed wording might be as simple as saying that employment ended by mutual agreement, or that the employee left following a restructure.

This is closely connected to the reference clause. If the employer has agreed a reference, the wording should be attached to the agreement or otherwise settled in writing. It is far easier to manage questions from recruiters when the agreement gives a clear and accurate account of what may be said.

Checking a confidentiality clause settlement agreement

The key question is not whether confidentiality is included. It is whether the obligation is proportionate and workable in your circumstances. An employee leaving after a minor redundancy exercise may need a different clause from a senior executive involved in commercially sensitive negotiations or a serious workplace complaint.

When reviewing the wording, focus on these points:

• What information is covered? The definition should be specific. A clause covering the agreement and its terms is very different from one covering all information relating to your employment, colleagues and experiences.
• Who can you speak to? Ensure there are express exceptions for your adviser, immediate family and appropriate professional support. Consider whether you need to tell a mortgage lender, insurer, medical practitioner or prospective employer.
• Is the obligation mutual? If you are restricted from discussing the circumstances of your departure, consider whether the employer and named individuals should give the same undertaking.
• Are legal and regulatory disclosures protected? The agreement should preserve your ability to whistleblow, report crime, co-operate with regulators and comply with legal obligations.
• How long does it last? Some obligations may reasonably continue indefinitely, particularly for trade secrets. A broad restriction on personal discussion may be harder to justify and should be considered carefully.

A clause can also contain a financial remedy for breach, such as repayment of the settlement sum or an indemnity for the employer’s losses. These provisions deserve particular attention. A remedy that is disproportionate or unclear can create unnecessary pressure and may be a point for negotiation.

When it may be sensible to negotiate the wording

Negotiation is not necessarily confrontational. Often, a targeted amendment gives both sides greater certainty. The employer receives proper protection for sensitive business information, while the employee knows they can obtain support and move forward professionally.

For example, an employee who has experienced discrimination, harassment or a dispute about health may reasonably ask for express permission to speak to their GP, therapist or support network. A senior employee may need permission to disclose limited information to a future employer carrying out due diligence. Someone with a complaint already raised internally may need the clause to confirm that they can continue to co-operate with an investigation or regulator.

The settlement payment can also influence the discussion. Where an employer seeks a wider confidentiality commitment than usual, the employee may decide that additional compensation is appropriate. There is no fixed formula. The right approach depends on the seniority of the role, the sensitivity of the information, the circumstances of the exit and the restrictions being requested.

Do not overlook existing contractual duties either. Many employees are already bound by obligations concerning confidential business information, intellectual property or restrictive covenants. A settlement agreement should make clear whether those duties continue, are replaced or are varied. Overlapping clauses can create confusion where clarity is needed.

The role of independent legal advice

For a UK settlement agreement to validly waive statutory employment claims, the employee must receive advice from an independent adviser on the terms and effect of the agreement, including its effect on their ability to pursue claims. The adviser must also meet the relevant legal requirements, and the agreement must identify them.

That advice is not a formality. It is the opportunity to understand what you are giving up, assess whether the compensation reflects the claims and rights being waived, and identify terms that should be changed before you sign.

An adviser can explain the confidentiality clause in plain English, distinguish reasonable business protection from unnecessarily broad restrictions, and raise amendments on your behalf where appropriate. Employers commonly contribute towards the cost of this advice, but the adviser’s duty is to the employee, not the employer.

Arcos Settlement Agreements can review the full document, including confidentiality, references, compensation, tax treatment and post-termination restrictions, so you can make an informed decision rather than sign under pressure.

A practical approach before you sign

Read the clause alongside the rest of the agreement, rather than in isolation. Check whether the agreed reference matches what the employer can say externally, whether any announcement wording has been agreed, and whether your obligation conflicts with a future role or ongoing complaint.

It is also wise to avoid discussing the proposed deal widely before it is finalised. Confidentiality during negotiations may apply even if you ultimately do not sign. Keep copies of the draft, any relevant correspondence and the proposed reference, then share them with your independent adviser.

A fair confidentiality clause should give you protection as well as impose responsibilities. If its wording leaves you uncertain about getting advice, caring for your wellbeing or explaining your next career move, ask for clarity before you commit to it.