A settlement agreement is a contract which is normally used to record the terms of a person’s departure from their employer. They are usually used by employers when faced with a dispute involving a member of staff. By signing a settlement agreement, an employee agrees to give up any right to sue their employer in return for the employer usually paying a sum of money which is often referred to as a Termination Payment. The employer usually also agrees to pay for the cost of the legal advice obtained by the employee.
In order for the agreement to be binding, the employee must obtain advice from an independent solicitor. In doing so, it is important that the solicitor is experienced in advising on settlement agreements in order to secure the best possible terms for the employee.
We are highly experienced at advising employees on settlement agreements and looking at the terms in order to check whether it is in the employee’s best interests to sign. Is there provision for a reference to be provided? Is the Termination Payment sufficient or should it be increased? Is the payment structured in a tax efficient way? Does the agreement attempt to restrict an employee from working for a competitor? – These are just some of the issues we look at when advising employees when they are presented with a settlement agreement by their employer.
If you have been asked to sign a settlement or compromise agreement by your employer, please contact a member of our team who will be able to guide you through the process in order to secure the best possible terms for you.