Libraries
760+ HR templates
Everything your business needs to stay compliant
Policies, contracts, letters, guidance and HR support tools for UK employers.
View full libraryPolicies, contracts, letters, guidance and HR support tools for UK employers.
View full libraryThis Settlement Agreement Cover Letter provides a clear introduction to a proposed settlement agreement and explains the key arrangements for reviewing and considering the offer. It helps employers present the agreement professionally while making clear that the proposal is subject to contract and requires independent legal advice before it can become binding.
Use this template to:
This template brings together the key information, sections and considerations you need to create a clear, comprehensive and professional HR document. Preview the document below.
Templates. Knowledge. Guidance. Everything you need, all in one place.
[Sender name]
[Sender address]
[date]
[Recipient name]
[Recipient address]
Dear [Recipient first name],
Without Prejudice and subject to S111A Employment Rights Act 1996
Further to our recent discussions, I am writing to provide you with a formal proposal to resolve the matters discussed and to bring your employment with [Company Name] to an agreed conclusion on the terms set out in the enclosed Settlement Agreement.
The proposed agreement sets out the terms on which the parties would agree to end your employment, including the proposed termination date, payment arrangements and any other agreed terms.
Proposed settlement
Subject to agreement and completion of the Settlement Agreement, the principal terms currently proposed are:
The enclosed Settlement Agreement contains the full proposed terms. In the event of any difference between this covering letter and the Settlement Agreement, the terms of the final Settlement Agreement will apply.
Independent legal advice
Before you can sign the Settlement Agreement, you will need to obtain advice from an independent adviser who
You've seen 40% of how the Settlement agreement cover letter template is structured. Get the complete editable template instantly and customise it for your organisation.
This cover letter provides a professional way to introduce a proposed settlement agreement and explain what the employee needs to do before deciding whether to accept it. It can accompany the formal agreement and provide useful context without attempting to replace the legal terms contained within the agreement itself.
The letter explains that the employer is making a formal settlement proposal and can briefly set out the circumstances in which the proposal is being made. The wording should remain factual and should not suggest that the employee is required to accept the offer.
The cover letter can summarise the principal elements of the proposed settlement, such as the proposed termination date, settlement payment, treatment of salary and benefits, holiday arrangements and any agreed reference. The formal settlement agreement should contain the definitive contractual terms.
A settlement agreement can only validly waive specified employment tribunal or court claims where the statutory requirements are met, including the employee receiving advice from a relevant independent adviser. The letter can explain this requirement and identify any proposed contribution towards the employee's reasonable legal costs.
The employee should be given a reasonable opportunity to consider the written proposal and obtain independent advice. Acas's Code of Practice recommends allowing at least 10 calendar days to consider formal written settlement terms and obtain independent advice, although the appropriate period can depend on the circumstances.
The letter can explain how the employee should respond, who they should contact with questions and what happens if the proposed terms are accepted. It should also make clear that the agreement is subject to contract and does not become binding until the relevant requirements have been satisfied and the agreement has been properly signed.
Related HR resources and workflow
Explore the HR resources that may be relevant before and / or after using the Settlement agreement cover letter, helping you understand the wider process, maintain appropriate documentation and follow a consistent approach.
A carefully worded letter for employers who wish to open discussions with an employee about a potential settlement agreement and propose an agreed financial and employment exit arrangement.
A settlement agreement can provide a structured way for an employer and employee to agree the terms of resolving an employment dispute or bringing the employment relationship to an agreed end.
Use these best practice actions, recommended timescales and process stages to understand when and how the Settlement agreement cover letter should be used, helping ensure each step is handled consistently and appropriately documented.
Understand the common mistakes to avoid when using this HR template, helping you reduce risk, prevent unnecessary costs and ensure the process is handled correctly.
Yes. An employee does not have to accept a settlement agreement. They can reject the proposal or negotiate different terms. Employers should make the voluntary nature of the proposal clear when making the offer.
Acas recommends allowing at least 10 calendar days to consider formal written settlement terms and obtain independent advice. Depending on the circumstances, a longer period may be appropriate.
Yes, if the agreement is intended to validly waive the relevant employment tribunal or court claims, the employee must receive advice from a relevant independent adviser who meets the statutory requirements.
There is no general legal requirement for the employer to pay the employee's legal costs. However, Acas notes that employers should consider offering a contribution towards the cost of independent advice, and the proposed contribution can be included in the settlement terms.
Yes. A settlement agreement is normally subject to negotiation. The employee can propose changes to matters such as the settlement payment, termination date, reference or other contractual terms before deciding whether to accept the final proposal.
AI can generate generic settlement correspondence, but settlement agreements involve specific UK employment law requirements and should be handled carefully. HRDocBox provides structured HR documentation designed around UK employment practice, helping employers present settlement proposals consistently while recognising where independent legal advice is required.
How this content is developed and reviewed
The Settlement agreement cover letter template is developed using a practical HR methodology that considers current UK employment legislation, ACAS guidance, CIPD good practice and the real-world HR process it supports. Templates and supporting information are regularly reviewed and updated, with additional reviews triggered by significant changes to legislation, guidance or established HR practice, helping ensure each document remains practical, relevant and suitable for UK employers.
Darryl Horn, Chartered HR Director
Darryl is a Chartered HR professional with over 25 years' experience in senior HR and employee relations roles.
He has extensive practical experience of managing settlement agreement HR processes and founded hrdocbox to provide businesses with practical, professionally developed HR resources grounded in UK employment law and best practice.
HRDocBox has been creating practical UK HR documents since 2009.
"Darryl provides support and advice with excellent judgement, and has a strong understanding of people, policies and UK employment legislation."
"He is someone I trust; consistent, dependable, and committed to doing things properly."
Settlement agreement toolkit
6 templates
£34.90
Whether you employ 5 people or 50, hrdocbox gives you the structure, documents and expertise needed to manage employees professionally and legally.
Professionally written and fully compliant with UK employment law
Access a free contract template instantly - or save 10% on any document today.
Use this code at checkout for 10% off anything!
Includes instant download, updates, and full access to your HR templates.
Termination library
137 templates
Full library
780 templates