“Subject to contract” is a legal term used when two parties are negotiating a contract.

In an employment context, the wording “subject to contract” normally means that, where an offer is being put forward by an employee or an employer, the terms of that offer are incapable of being accepted until both parties have signed the relevant contract (whether it is a bonus agreement, contract of employment or a settlement agreement).

In settlement agreement negotiations the wording “subject to contract” (and “without prejudice”) should always be used when negotiating the terms of the settlement agreement (the contract of settlement between an employer and an employee) to avoid a situation where, if you put an offer forward in an email, your employer could potentially accept the terms of that offer and treat it as a binding contract.