--- name: lawve-ai/settlement-agreement-review-andrew-bird source: https://app.decimal.ai/s/lawve-ai-settlement-agreement-review-andrew-bird@1/SKILL.md source_sha256: df7870c97a4a --- # /settlement-agreement-review 1. Flag apparent gaps against the s.203 ERA 1996 conditions for a solicitor to confirm. This skill does not rule on validity. As legal context: if a condition is genuinely missing, the agreement does not contract out of statutory rights and the employee can still claim — so each gap matters and must be confirmed by a qualified adviser. 2. Review the substantive terms against the party's position (employer or employee). 3. Surface tax issues (ITEPA 2003 — termination payments, PENP). Never present computed figures as authoritative — they are prompts for an accountant to sign off. 4. Output a marked-up version with comments or a clean draft. --- # Settlement agreement (s.203 ERA 1996) ## Purpose A settlement agreement is the standard vehicle for compromising employment claims. It must comply with the conditions in s.203 ERA 1996 `[CITE NEEDED — s.203 ERA 1996]` (and equivalent provisions in other statutes — EqA 2010 s.144 `[CITE NEEDED — s.144 EqA 2010]`, TULR(C)A 1992 s.288, etc.) to validly settle the statutory claims it purports to cover. Otherwise the employee remains free to bring a claim. This skill flags apparent gaps in those conditions; it does not rule on whether an agreement is valid — that is for a qualified adviser to confirm. The other valid vehicle is an ACAS COT3 (recorded by the ACAS conciliator) — no s.203 conditions apply. COT3s are simpler; settlement agreements allow more bespoke terms. ## s.203 statutory conditions (cumulative — all must be satisfied) 1. **In writing.** 2. **Relates to the particular complaint** — generic "all claims" wording without identifying the claims is not enough. List each statutory cause of action by name and section. 3. **Independent adviser** — the employee must have received advice from a "relevant independent adviser" (qualified lawyer, certified trade union official, certified advice centre worker, or other prescribed adviser). 4. **Adviser identified** — name and address in the agreement. 5. **Adviser insured** — a contract of insurance or indemnity provided by a professional body covering the adviser against the risk of loss arising from the advice. 6. **Statement that the conditions are satisfied** — express recital. As legal context: a genuinely missing condition is fatal — the agreement may still settle contract claims (which don't need s.203 compliance) but won't bar statutory ET claims. Do not treat your read of the conditions as a ruling. Flag any condition that looks missing or doubtful for a solicitor to confirm rather than declaring the agreement invalid. ## Substantive terms — checklist ### Payment - **Sum** — total compensation payment. - **Breakdown by head** (every figure below is `[NOT TAX ADVICE — recompute, accountant sign-off]`): - Statutory redundancy (s.135 ERA `[CITE NEEDED — s.135 ERA]` — tax-free up to £30k `[SME VERIFY — current £30k threshold]`, doesn't count to PENP). - Notice / PILON — taxable as earnings (s.402B ITEPA `[CITE NEEDED — s.402B ITEPA 2003]` — PENP regime). - Ex-gratia compensation for loss of office — first £30k tax-free under s.401-403 ITEPA `[CITE NEEDED — s.401-403 ITEPA 2003]` `[SME VERIFY — current £30k threshold]`, balance taxable as employment income. - Restrictive covenant payment — taxable as earnings (s.225 ITEPA `[CITE NEEDED — s.225 ITEPA 2003]` — restrictive undertakings). - Injury to feelings (discrimination cases) — typically tax-free if causally linked to the discrimination rather than termination (Moorthy litigation `[CITE NEEDED — Moorthy v HMRC]`; HMRC position contested — `[SME VERIFY — current HMRC view]`). - Pension contribution. - Legal fees contribution (`[SME VERIFY — typical £500-£750 plus VAT]`, paid direct to the adviser). - **Tax indemnity** — employee indemnifies employer against any further income tax / NICs claimed by HMRC on the termination payment. Standard for employer; employee should resist a broad indemnity that catches tax the employer should have deducted. - **Payment date** — typically within 14-28 days of the termination date / signature. ### Confidentiality and non-disparagement - Mutual non-disparagement preferred from employee's side. - Confidentiality — usually two-way; carve-outs for spouse/partner, professional advisers, regulators (whistleblowing — must not gag protected disclosures, see s.43J ERA `[CITE NEEDED — s.43J ERA 1996]`), HMRC, and court orders. Recent law has tightened on NDAs in discrimination/harassment cases — `[CITE NEEDED — Victims and Prisoners Act 2024]` `[SME VERIFY — Victims and Prisoners Act 2024 NDA restrictions in regulated professions]`. ### Reference - Agreed wording attached as a schedule. - "Factual reference only" is a common employer position. Employee should push for a positive agreed reference. - Obligation on employer to give substantially the same reference to any future enquirer for [X years / indefinitely]. ### Warranties and reps - Employee typically warrants no other unresolved complaints and no knowledge of any matter that would give rise to a complaint. - Employee returns property, deletes data. - Employee waives reinstatement / re-engagement. ### Restrictive covenants - Either confirm existing covenants remain in force (employer position), or release them (employee position). - Garden leave already served counts against post-termination restraint enforceability. ### Claims covered - List each statutory claim by name. Generic "all claims" tail is acceptable as a backstop but does not save a missing specific complaint. - Carve-outs (standard): accrued pension rights, personal injury (latent / unknown), enforcement of the agreement itself. ### Governing law / jurisdiction - Laws of England and Wales. Exclusive jurisdiction of E&W courts (with ET retained jurisdiction over the underlying employment claims pending settlement). ## Workflow ### Step 1 — Apparent statutory status (flag, do not rule) Run through the s.203 checklist. Flag any condition that appears missing or doubtful for a solicitor to confirm. Do not declare the agreement valid or invalid — report apparent status only. ### Step 2 — Substantive review Walk through each substantive term against the checklist. Flag terms that are unusual, missing, or commercially adverse to the user's side. ### Step 3 — Tax review Review the breakdown. If PILON is being paid, work the PENP formula as a cross-check only — `[NOT TAX ADVICE — recompute, accountant sign-off]` on the result and on every figure. PENP formula: (BP × D) / P — where BP = basic pay in pay period before notice, D = days in unworked notice, P = days in pay period `[SME VERIFY — s.402D ITEPA formula and definitions]`. Do not present the computed PENP or any net figure as authoritative; it is a prompt for an accountant. ### Step 4 — Mark up Output either: (a) commented review with risk flags, or (b) clean draft. ## Output (review mode) Render the sections below as the finished review — do not echo this template back, and do not invent terms to fill a section; if the agreement is silent on a head, say so. Lead with the not-legal-advice line. A reviewer-note line: *not legal advice; flags apparent issues only; verify with a solicitor before relying on anything below; this skill does not rule on the validity of the agreement.* **Apparent s.203 status** (s.203 ERA / s.144 EqA) — a table of the six conditions, each marked Present / Apparently missing / Unclear, with a note. Then one line: **Apparent status (verify with a solicitor): [conditions appear satisfied / [N] condition(s) appear missing — confirm with a solicitor].** Never state "Valid" or "Invalid". The conditions to check: - In writing - Specific complaints identified (note any that appear missing) - Independent adviser - Adviser named and addressed - Adviser insured (recital) - s.203 conditions satisfied (recital) **Substantive review** — a table by clause (payment breakdown, confidentiality, reference, warranties, restrictive covenants, claims schedule, tax indemnity): position, risk to the user's side, suggested change. **Tax analysis** — every figure carries `[NOT TAX ADVICE — recompute, accountant sign-off]`. Cover PILON / PENP, s.401-403 ITEPA treatment, other heads, and any net-to-employee estimate — all as prompts for an accountant, never as authoritative figures. **Recommended changes** — numbered list of specific edits in priority order. **Markers used inline** as you go: - `[CONDITION GAP — flag for solicitor to confirm]` — a s.203 condition that appears missing or doubtful (not a ruling that the agreement is invalid). - `[NOT TAX ADVICE — recompute, accountant sign-off]` — on every tax figure. - `[CITE NEEDED — authority]` — a statute or case referenced without a verified citation. - `[SME VERIFY — item]` — a threshold, market figure, or contested position counsel should confirm (e.g. HMRC view on injury-to-feelings tax; Victims and Prisoners Act 2024 NDA restrictions; PENP figures). ## What this skill does not do - Provide legal advice. It flags apparent issues for a qualified adviser to confirm. - Rule on the validity of the agreement. It reports apparent s.203 status only — a solicitor confirms validity. - Provide the independent advice the employee needs — that must come from a qualified adviser per s.203(3A) ERA 1996 `[CITE NEEDED — s.203(3A) ERA 1996]`. - Compute tax authoritatively. Every figure needs accountant / tax counsel sign-off. - Verify case law or statute against a live source — check any authority it cites before relying on it. - Cover Scotland / NI (different statutory framing).