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Settlement agreements are legally binding contracts for an employer and employee to settle any claims that have arisen under the employment relationship or due to the termination of employment.
These agreements result in the employee waiving their rights to bring a claim against the employer in return for a severance payment. For further information on settlement agreements, please contact us today.
Settlement agreements can be used in a wide variety of employment issues to resolve a grievance that has arisen or to deal with the termination of employment including:
● disputes over unpaid wages● equal pay● holiday pay issues● dismissal and redundancy● harassment or discrimination claims
They can be very useful in avoiding protracted procedures for performance, disciplinary or redundancy situations, which are stressful for everyone and can be very costly and time consuming.
What does a settlement agreement include?
Where these agreements are used in relation to the termination of employment, they can cover a whole range of issues such as:
● the relevant notice period● what the redundancy package will be for the employee● holiday pay and any applicable bonuses● what tax-free sum is being offered● confidentiality clauses and competition clauses
These agreements are a full and final settlement and means that the employee cannot bring a future claim against their employer in relation to the issues covered by the agreement.
Since the employee will be waiving future employment claims, including contractual, common law and statutory rights, there are various requirements that need to be in place to protect the employee and make sure that the agreement is fair.
Settlement Agreement Solicitors in Essex & East London
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Requirements of a settlement agreement
These agreements can be very technical and use complicated legal language. It is therefore very important that they are carefully compiled and analysed to make sure that they are valid.
To be legally binding, the following requirements are necessary:
● the employee must have had independent legal advice before they agree to the settlement agreement● they must relate to a particular complaint or proceeding● the employee needs to sign the agreement● the agreement must state that the requirements regulating the agreement have all been satisfied
Discussions relating to a settlement agreement are generally confidential and so if they do not work out, anything discussed cannot be used in a court hearing at a later date.