A Settlement Agreement is a legally binding agreement made between an Employer and Employee. A Settlement Agreement can settle any claims which an Employee has, or may have, against an Employer.
Ordinarily, a Settlement Agreement is entered into towards the end of an Employee’s employment with the Employer. It sets out the agreed terms of departure between the parties and once signed, generally prevents the Employee from bringing legal action against the Employer in respect of his/her employment and/or its termination.
The main benefit of entering into a Settlement Agreement for an Employer is that it provides certainty and amounts to a clean break with the Employee. This means that an Employer does not have to worry about potential future litigation by the employee in respect of his/her employment and/or its termination.
Such an agreement will normally also contain terms which ensure confidentiality and prevent the Employee from making derogatory statements about the Employer in the future.
The benefit for the Employee is that they will usually receive a termination payment, which will normally be tax efficient, and/or other benefits such as provision for a job reference.
The Settlement Agreement will only become binding once an Employee has received independent legal advice as to the terms and effect of the agreement, usually by a qualified solicitor, and that solicitor has attached a certificate confirming the advice that has been given.
Once concluded it generally amounts to a full and final settlement of any claims that the Employee has, or may have, against the Employer in respect of his employment and/or it’s termination.
The advantage of a Settlement Agreement for both parties is that it can facilitate an easy, amicable, and speedy resolution of the ending of an employment relationship.
At Mark Reynolds Solicitors our Employment Law team are able to offer advice to Employers in relation to Settlement Agreements and how they can be beneficial to your company or organization. We can also draw up a Settlement Agreement on your behalf and carefully tailor this to a particular Employee. This will give you peace of mind and enable you to concentrate on running your business.
We are more than happy to advise employees as to the terms and effect of their Settlement Agreement and to negotiate any terms on your behalf so that you know you are receiving a fair package that you are entitled to.