United sacked Moyes on Tuesday, just 10 months into the Scot’s six-year contract.
The past few days have seen seen Moyes and LMA representatives holding talks with faltering Premier League champions United and on Friday the LMA said terms had been agreed.
“The League Managers Association and Manchester United are pleased to confirm that terms of settlement have been agreed between the Club and David Moyes in respect of the termination of his employment,” the LMA said in a statement.
“A settlement agreement is in the process of being finalised. No further comment will be made in relation to this issue.”
The LMA statement did not say how much Moyes, the man retired former United manager Alex Ferguson wanted to replace him after he stood down at the end of last season, would be paid as part of his severance deal.
Following Moyes’s sacking, there were widespread reports in the British media that his pay-off would be capped at less than £5 million out of his £30 million deal ($50m, 36m euros).
It was reported that he had lost out on a larger compensation package through an ‘ejector seat’ clause in his contract, limiting his money to 12 months’ salary if the club failed to qualify for the Champions League, something that was confirmed after United’s 2-0 defeat by Everton.
United are currently seventh in the table and, having been knocked out of both domestic cups and the Champions League, will endure a trophy-less season.
This campaign will see United record their worst points total in the Premier League era and their highest number of home defeats since 1978 — including 3-0 drubbings by bitter rivals Liverpool and Manchester City.