References, confidentiality and other settlement agreement terms

Most people focus on the payment in a settlement agreement, but the other clauses can affect your career for years. A weak reference clause, an over wide confidentiality term or a harsh warranty can cost you more than a few thousand pounds of compensation.

This guide explains the clauses you will usually see and what to push for. For the basics, read our guide to settlement agreements explained.

The reference clause

Employers are not generally obliged to give a reference, and Acas guidance says that if one is agreed, the wording should be agreed as part of the settlement. Leaving it out is a common mistake.

What to ask for:

• An agreed reference attached as a schedule, so the exact wording is fixed
• A commitment to give it on request to any prospective employer
• Oral references consistent with it, so a manager cannot undermine it on the phone
• Requests routed to HR, not a manager you have fallen out with

A factual reference (job title and dates) is the minimum. A fuller reference describing your duties and strengths is often achievable, especially where you are leaving on performance grounds that you dispute. Be aware that employers still have a duty not to give a misleading reference, so they may refuse wording they believe is untrue.

Confidentiality clauses

Most agreements say you must keep the terms, and often the circumstances of your departure, confidential. These are sometimes called non-disclosure agreements (NDAs).

Check that you can still tell:

• Your spouse or partner and immediate family
• Your legal and financial advisers
• HMRC and other regulators
• The police, or anyone you are required to tell by law

A confidentiality clause cannot stop you reporting a crime or cooperating with the police. The Employment Rights Act 2025 goes further and will make confidentiality terms void where they try to prevent workers speaking about harassment or discrimination, subject to limited exceptions. At the time of writing this is only partly in force, with full commencement waiting on regulations, so ask your solicitor how it applies to your agreement. If your exit involves harassment at work, raise this early.

Non-derogatory statements

You will usually be asked not to make negative comments about the employer, its directors or staff. Push for this to be mutual. Most employers will only agree to instruct named individuals, such as your manager and the board, not to criticise you, because they cannot control every employee. That is still worth having.

The agreed announcement

How your departure is explained to colleagues and clients matters. Agree a short, neutral statement, for example that you are leaving "to pursue other opportunities", and who will send it.

Restrictive covenants

If your contract includes non compete, non solicitation or non dealing clauses, the settlement may repeat them. This is a chance to narrow them. Ask to shorten the period, reduce the geographical area or release you entirely. If the employer insists on keeping them, it is common for part of the payment to be attributed to them, which affects tax. See our guide to settlement agreement tax.

Warranties

You may be asked to confirm, or "warrant", that:

• You have no other claims against the employer
• You have not committed gross misconduct
• You have not found a new job or received an offer

If a warranty turns out to be untrue, the employer may be able to claw back the payment. Read them carefully and disclose anything relevant to your solicitor. If you have already accepted a new role, say so.

Return of property and leaving date

Expect clauses requiring you to return laptops, phones and documents and to delete company data. You can ask to keep a device after it is wiped. Check your leaving date carefully, because it can affect bonuses, share vesting and pension rights.

Garden leave

Some agreements place you on garden leave for your notice period. You stay employed and paid but cannot work elsewhere. That may suit you, or it may delay a new job, so it is negotiable.

Which terms are worth negotiating?

Many of these clauses cost the employer little and matter a lot to you, which makes them ideal trade offs. Our guide to negotiating a settlement agreement covers how to put them on the table alongside the money.

Get every clause checked

Your solicitor must explain the terms and effect of the whole agreement before you sign, not just the payment. Match My Solicitor connects you with specialist employment solicitors who review settlement terms every day. Get matched with a solicitor for free.