What are settlement agreements?
A settlement agreement is a legally binding contract between an employer and an employee.
It typically arises in the context of employment disputes or termination of employment. In a settlement agreement, both parties agree to resolve any outstanding disputes or claims without going to an employment tribunal.
The benefit to the employer is that the employee has waived their rights to make a claim.
The benefit to the employee is they are compensated, usually with a financial payment beyond their statutory entitlement.
Key elements of a settlement agreement typically include:
- Compensation: The agreement often includes a financial settlement, where the employer agrees to pay a specified amount to the employee.
- Confidentiality: Settlement agreements often include confidentiality clauses that prevent both the employee and the employer from discussing the details of the agreement or the dispute with others. This ensures the matter remains private.
- Waiver of Claims: The employee agrees to waive their right to pursue any legal claims against the employer related to the employment or dispute. This can include claims of unfair dismissal, discrimination, or breach of contract.
- Reference: Sometimes, settlement agreements specify the content of the reference an employer will provide for the departing employee. This can be important for the employee’s future job prospects.
- Non-Disparagement: Both parties agree not to make negative or disparaging statements about each other. This can be Particularly useful where there is a damaged relationship.
It’s important to note that settlement agreements must be voluntary, and employees must seek legal advice before signing them to understand their rights and the consequences of the agreement fully.
Employers if you need any advice or assistance on suggesting/introducing a settlement agreement please let us know, as there are conditions an agreement must meet to be valid.
Employees we are also able to advise, negotiate and sign off any agreements if you have been offered one by your employer.
If you have a question relating to Employment Law, whether you are an employee or an employer, we’d be more than happy to help. Please feel free to contact us by using the contact details below:
Email – info@mylawsolicitors.co.uk
Telephone – 01924 654194
Note: Any guidance provided in our blogs is tailored to the specific scenario and is relevant based on the information available at the time the guidance was provided. It is important to note that individual circumstances may vary, and the advice given may not cover all potential factors or changes that could impact the situation. Before acting on any guidance in our blogs, it is recommended to seek legal counsel or professional advice for a comprehensive assessment of your specific case.
