A settlement agreement is a binding legal agreement between an employer and an employee under which an employee waives and relinquishes all legal rights to pursue any claims against a former employer, in consideration of the provision of a payment and/or certain benefits and/or a reference.
Because the purpose of the agreement is to provide an exit by the employee under terms that the employee will not sue the employer, there are a wide variety of circumstances in which it may be offered. Sometimes an employee can take the initiative to request an agreement, otherwise it is normally done as part of a grievance, disciplinary or redundancy procedure.
The first thing would normally be to take legal advice so they understand the strength of their legal position, which will then affect their ability to negotiate the financial terms of the agreement. They should ensure they assemble all relevant correspondence, emails, letters, policies and procedures relevant to the particular issues, which may lead to a settlement agreement.
A settlement agreement is only legally binding if it is signed off by a solicitor or other acceptable legal advisor, who has provided independent legal advice about the terms and effect on the employee of signing the agreement. As part of this process a competent solicitor will advise whether or not the terms offered are sufficient in the circumstances.
This will depend on, a) the length of service of the employee and, b) the strength of the employee's legal case against the employer.
In addition to a monetary sum employees are often offered the continuation of certain benefits and also an agreed reference.
With the advice of their solicitor/advisor employees are free to go back and try to negotiate the terms depending on the strength of their case.
If you think that you may be in a position where you need to negotiate a settlement agreement, call to speak to one of our expert employment law solicitors today.
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