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Termination document package
Settlement agreement document library

Settlement agreement proposal letter template

When to use it

This is a standard letter which can be used where there has been previous or there is ongoing disciplinary or performance management actions and the Company would like to enter discussions with the employee about ending their employment relationship.

[Company name]

[Sender address]


[Recipient name]

[Recipient address]

Dear [Recipient first name],


We are writing to you because, as you are aware, we have had some concerns about your [conduct/attendance/performance] [delete as appropriate and specify sufficient detail about previous disciplinary/performance management action taken, and about the ongoing concerns, to allow the employee to make an informed decision about his/her options].

We consider that, in these circumstances, one option is to offer you a settlement agreement to bring our employment relationship to an end, and we invite you to consider the proposal set out below.

If we are unable to reach such an agreement, then you should be aware that it is our intention to proceed to the next stage of our disciplinary [or performance management] procedure [insert brief details of where the employee can reasonably access the appropriate written procedure.]

There is no obligation for you to enter into discussions with us in relation to this proposal. If you choose to do so or not, please also note that any correspondence or discussions which may follow this letter will have no bearing on any disciplinary [or performance management] procedure or decision taken by us, in the event that we are unable to reach an agreement.

[You would recei

The full Settlement agreement proposal letter template will be available once purchased.

Reviewed 30 April 2022

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Settlement agreement explained

A Settlement Agreement is a legally binding contract made between an employee and employee. It is usually entered into at the termination of employment and sets out the full terms between the parties.

Settlement agreements can also be used to resolve an ongoing workplace dispute, for example, a dispute over holiday pay. These agreements can be proposed by either an employer or an employee, although it will normally be the employer.

Once a valid settlement agreement has been signed, the employee will be unable to make an employment tribunal claim about any type of claim which is listed on the agreement.

Where the employer and employee are unable to reach an agreement, the settlement discussions cannot usually be referred to as evidence in any subsequent unfair dismissal claim. Where the settlement discussions are held to resolve an existing dispute between the parties they cannot be used as evidence in any type of claim.