The agreement will specify when the employment will end and usually state why, even if this is only ‘by mutual agreement’. The sum of money to be paid will be included together with the date on which it will be paid.
The first £30,000 of any payment is usually exempt from tax, but the agreement should include an indemnity given by the employee to make any payment required by HM Revenue & Customs.

Other payments such as accrued holiday, outstanding salary and bonuses will also be included. Any notice period will be dealt with in the agreement, specifying whether this will be worked or whether a payment in lieu will be made. The most important clauses for an employer relate to a waiver of the employee’s right to bring legal action, confidentiality and future behaviour that could damage your business. The agreement should ensure as far as possible that the employee cannot make a future claim, for example, for unfair dismissal or breach of contract. It is not possible for a waiver to be made in respect of certain potential claims, for example, a discrimination claim.

The confidentiality clause will prevent the employee from revealing information about the settlement agreement as well as from revealing details of your business to any third party.
Restrictive covenants will stop the employee from soliciting your clients after they have left and from setting up nearby in competition.
You can agree the terms of any reference to be provided to the employee, which may be a bargaining tool in your favour.
There are limits to what can be prevented by the terms of a settlement agreement and care must be taken that it has not been too widely drafted. If this happens, then a court will not enforce the terms of the agreement.