Settlement agreement

This agreement includes the legal provisions to qualify a compromise agreement so as to prevent a later claim before an employment tribunal. It is drawn primarily with a view to settling a claim by a more expensive employee. The agreement can however, be used with the same effect for a case involving a more junior staff member
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About this document

All things come to an end. This agreement allows you to end your agreement wisely and with care. The document is suitable for many types of agreement, however, will mostly be used in employment situations.

If an employee and employer agree to end the contact on terms other than those in the contract of employment it is crucial to ensure that the agreement is mutual in order to avoid tribunal claims later. This sort of agreement is subject to strict criteria. Unless you use the right document, your agreement will not qualify.

This agreement includes the legal terms necessary to “qualify” a compromise agreement so as to prevent a later claim before an employment tribunal. The compromise agreement has been drawn primarily with a view to settling a claim by a higher paid employee but of course the agreement can be used with any level of employee, from junior to a director.

Note: many professional advisers overlook the necessity for the employee to have a prospective or actual claim. In most cases it will be necessary to have terminated the employment before this type of agreement can be used to any effect. However, that is not to say “without prejudice” negotiations cannot take place in the knowledge that a termination is proposed.

Who will use this document?

  • An employer in any organisation wishing to set the terms for termination of employment
  • An employee whose employment has been terminated, who wishes to negotiate terms for settlement of claims

Application and features

  • Suitable for any employee: drawn to settle very large claims with senior staff, but suitable also for junior staff
  • Helps prevent potential applications to employment tribunal
  • Covers court and tribunal claims


  • Continuation of employment for fixed period until the “termination date” - as short or long a period as you wish
  • Agreement on extent of continuing entitlement to pay and benefits
  • Return of organisation's property
  • Return of car
  • Guarding secrets and information
  • The compensation package
  • Restrictions on future competition by the ex-employee
  • Press release and publicity
  • Information to qualify the agreement under relevant employment legislation

This document was written by an attorney for Net Lawman. It complies with current South African law.

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