Settlement Agreements
A settlement agreement is a document which sets out terms and conditions agreed by those involved. This can be used by both parties in a dispute to resolve a problem, including tribunal claims or other court proceedings or to potentially end employment.
To resolve a dispute or potential dispute, settlement agreements are often used in employment law contexts to settle claims related to:
- Unfair dismissal
- Redundancy
- Discrimination
- Breach of contract
Key Components of a Settlement Agreement
Consideration: This is the payment or other benefit that the employee receives in exchange for agreeing to settle the claim. It can include:
- Severance pay
- Continuation of benefits
- References
- Non-compete or non-solicitation clauses
Release of Claims: The employee agrees to waive all claims arising from the employment relationship, including any potential future claims.Confidentiality: The parties agree to keep the terms of the settlement confidential.Important Considerations
- Legal Advice: It is crucial for both the employee and employer to seek independent legal advice before entering into a settlement agreement.
- Time Limits: There are often time limits for bringing employment claims. If a settlement agreement is reached before these deadlines, it can prevent the employee from pursuing legal action in the future.
- Tax Implications: The financial aspects of a settlement agreement may have tax implications. It is important to consult with a tax professional.
It is crucial for both the employee and employer to seek independent legal advice before entering into a settlement agreement.
