Settlement Agreements – Two sides of the same coin

Settlement Agreements, once known as Compromise Agreements are legally binding agreements entered into by an employer and employee to settle any potential claims or complaints that an employee may have against their employer.

Usually they are entered into where the parties have reached the conclusion that the employment relationship can no longer continue but they can also be used where things end amicably, for example where an enhanced redundancy package is being offered. They can also be used where the employment relationship is going to continue and are being used to settle a dispute between the parties.

The benefit of a Settlement Agreement is that they are entered into voluntarily and provide finality and closure either at the end of an employment relationship or dispute.

They also often provide an employee with financial compensation and provide peace of mind to employers enabling them to move forward without the burden of wondering whether or not a former employee may try to bring some sort of claim against them in the future.

Whether you are an employer or employee, it is crucial that you take legal advice before entering into an agreement and for an employee, advice must be sought from an independent legal advisor in order for the agreement to be binding and enforceable.

Regardless of whether you are an employer or employee, these agreements need to be drafted carefully to ensure that they are legally binding.

 As an employee you need to be confident that the financial compensation you are receiving is  appropriate and you also need to be aware of what potential claims you have or may have against your employer and what those claims could be worth.

As an employer it is vital to ensure that there are provisions in the agreement to protect your business, such as clauses dealing with confidentiality and clauses to prevent the employee from making derogatory comments about you or your business which may damage your or its reputation.

It is not a one size fits all and at Guardian Law we have experience in dealing with Settlement Agreements from both side’s perspective.

So whether you are an employer who needs advice on whether it is appropriate to offer a Settlement Agreement and help with drafting it or an employee who needs advice on an agreement you have received, please contact us @ support@guardianlaw.co.uk.

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